The “right” lawyer depends on the context
When it comes to representing the audit firm’s interests in an SEC or DOJ investigation, it may be entirely appropriate that the lawyer or law firm that has previously represented the firm in other contexts also defend the audit firm’s interests in what may be a protracted, years-long investigative process with potential litigation at the end.
Choosing a law firm that has done work for the firm, is familiar with audits and the audit process, and has developed a solid rapport with in-house counsel is often a very good idea and can cut down on the costs associated with bringing in lawyers who know nothing of the audit firm or audits. This must always be subject, however, to making sure that the law firm has the necessary expertise with the relevant agencies. It seldom makes sense to use the lawyer who regularly assists the firm with its government contracting issues in an SEC enforcement investigation into whether the auditor knew of should have known that its audit client’s financial statements were intentionally misstated. If the government contracts lawyer doesn’t have colleagues at the firm with the SEC or DOJ backgrounds necessary to handle such an investigation, the company needs to find a new firm that does have such expertise; this is no time for on-the-job learning.
One fraught area can be the decision whether and when to secure separate counsel for individual audit partners or professionals. Separate counsel is required when the firm’s and the individual’s interests materially diverge and the law firm representing the auditor cannot ethically represent the individual partner or employee as well. Sometimes this is apparent right away and at other times this only becomes apparent later during the course of an investigation. In either event, the lawyer that ends up representing an individual (or, sometimes, a group of individuals) must be as qualified and well-versed in the relevant legal issues and have experience with investigations of the same type, or there could be serious missteps, to the detriment of both the individual and the firm. No one is well-served if the lawyer taking on the representation is not qualified to do it.
