Within days of the Wall Street Journal’s late January report that casino mogul Steve Wynn had allegedly engaged in years of sexual misconduct against employees, the board of Wynn Resorts announced it was hiring employment attorneys at O’Melveny & Myers to investigate the allegations.
But according to some shareholders, the investigation came far too late. The Wynn Resorts board of directors was hit Feb. 6 with a shareholder derivative suit in Nevada state court over its failure to investigate the alleged misconduct. The board and the company’s general counsel had known about former chairman and CEO Wynn’s alleged sexual misconduct for years, but took no steps to investigate it until it received media attention, plaintiffs alleged.
“The Wynn Board knowingly failed to investigate the credible allegations and continued to support Mr. Wynn’s positions of leadership, compensation and suitability as a gaming operator,” the complaint says.
A week later, the Wynn board announced it had replaced O’Melveney with Gibson Dunn, charging it with conducting a broader investigation into company-wide policies and procedures to address sexual misconduct.
Gibson Dunn is no stranger to high-profile investigations. The firm had previously been hired by New Jersey Governor Chris Christie’s administration to investigate the George Washington Bridge scandal, and, more recently, was hired by the California Senate to investigate sexual harassment claims brought against senators.
In recent months, as press scrutiny of workplace sexual misconduct has intensified, companies in the public spotlight have turned to large law firms to investigate alleged assault and harassment.
Immediately following the news of Harvey Weinstein’s alleged serial sexual abuse, The Weinstein Company hired Debevoise & Plimpton to conduct an internal investigation. In January, Los Angeles Times publisher Tronc said it had hired Sidley Austin to investigate allegations against the paper’s senior executive, and later that month, Morgan Lewis’s internal investigation of alleged sexual misconduct at the Humane Society of the United States was leaked to The Washington Post. This month, law firm Baker McKenzie hired Simmons & Simmons to investigate its response to an associate’s allegation that a male partner sexually assaulted her.
Such engagements are highly coveted by the nation’s top law firms because they strengthen a firm’s reputation and generate additional business and revenue. For example, the University of Rochester reported that it paid Debevoise $4.5 million for its investigation of just one professor’s alleged misconduct, and New Jersey paid Gibson Dunn more than $8 million for its Bridgegate investigation.
For the corporations facing workplace misconduct allegations, law firms are part of a public relations strategy to regain trust and credibility.
“I think you find now that there are a lot more of these investigations, because you are seeing more of a reputational price to pay when you don’t take these types of allegations seriously,” said Tracey Wallace, a principal at employment law firm Jackson Lewis.
In some instances, organizations facing intense public scrutiny have even opted to make the results of their investigations public, a move that risks waiving attorney-client privilege. This month, a special committee of the NPR board released a report prepared by Morgan Lewis following the firm’s investigation into allegations of sexual harassment by NPR’s former senior vice president of news.
The U.S. Olympic Committee has hired Ropes & Gray as an independent investigator to examine what, if anything, USOC officials knew about Larry Nassar’s decades-long sexual abuse of athletes. The law firm has set up a hotline and email address specifically for the investigation, which will be led by former federal prosecutors Joan McPhee and James Dowden. The firm will make its final written report available to the public, according to USOC.
But these high-profile cases represent only a small slice of this legal practice area. Internal investigations have been taking place for decades, and most have taken place outside of the public eye, according to the investigations lawyers who spoke with Big Law Business.
Since the 1998 U.S. Supreme Court decisions in Faragher v. Boca Raton and Burlington Industries, Inc. v. Ellerth, employers have been able to avoid liability for alleged unlawful sexual harassment if they take reasonable care to prevent and correct the misconduct and if the employee fails to take advantage of any preventive or corrective opportunities provided by the employer. Conducting an internal investigation can be an important part of showing the company took those reasonable steps.
Outside investigators are typically brought in when there are multiple allegations of sexual misconduct, when allegations are severe, or when C-suite executives are involved. Investigations typically consist of reviewing policy documents and interviewing the accusers, the accused, supervisors, and other witnesses, according to Wallace.
Independent investigations, like the one commissioned by the Wynn Resorts board, are conducted much like other internal investigations. The difference has more to do with what’s done with the results of the investigation. Law firms may or may not be asked to provide a formal report of their findings, and they may or may not go on to serve as defense counsel.
“It’s hard for the public to tell because you don’t see the retainer agreement,” said Melanie Leslie, dean of the Benjamin N. Cardozo School of Law at Yeshiva University, New York. “A lot of the scandals we’ve seen, you see them saying we’re conducting an investigation, but the role of counsel seems to have been to assess liability.”
To address this skepticism, some companies turn to former public servants with solid reputations for integrity and independence. When Uber launched an investigation into alleged patterns of sexual discrimination at the company, it hired former Attorney General Eric Holder, now at Covington, to lead the charge.
The law firms hired to do this work are typically those with significant employment law experience, or those with a deep investigations bench, often led by a former prosecutor. Some firms have recently combined the two areas of expertise with task forces dedicated to sexual misconduct claims.
Earlier this year, Morrison & Foerster and Stroock & Stroock & Lavan both created workplace sexual misconduct task forces that combine experience in employment law with white collar and prosecution work. MoFo’s team is led by Carrie H. Cohen, a partner who previously worked as a plaintiff’s’ employment lawyer and an Assistant United States Attorney in the Southern District of New York.
Former federal judge Shira Scheindlin, who is leading Stroock’s team alongside former New York Attorney General Robert Abrams, said her prior work combating gender discrimination in the profession will lend credibility to the firm’s investigations team. Scheindlin, who co-chairs the New York State Bar’s Task Force on Women’s Initiatives, recently spearheaded an effort to show how there are much fewer female lead counsel appearances in New York courts.
Scheindlin said she’s not interested in investigating alleged misconduct at the company’s existing clients.
“If one of them was in big trouble, we would actually refer them to another big firm, because we do want to be kept as employment counsel and don’t want to jeopardize that,” she said. “If it’s a long-time client, I want that client, in terms of PR, to say it was the most independent investigation.”
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