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CHICAGO — Carol Lam, one of the recently and controversially deposed U.S. attorneys, told a group of Chicago lawyers at a seminar last week that companies they represent should have a solid ethical and legal framework for handling unexpected fraud allegations lest things “go badly very quickly.” Lam, who is now senior vice president and legal counsel for San Diego, California-based Qualcomm, told the attorneys gathered for the American Bar Association event that companies should scope out conflicts of interest or potential conflicts and encourage employees to debate and review processes, even if it’s time-consuming. The former federal prosecutor for the southern district of California told the group that initial decisions a company makes when faced with an internal problem or government investigation can ultimately have a crucial impact on how the probe unfolds. “If you make the wrong decisions initially there’s no saving your internal investigation,” said Lam, who was introduced at the seminar by Patrick Fitzgerald, U.S. Attorney for the Northern District of Illinois. She noted that government prosecutors are likely to be skeptical of internal investigations and that they tend to target corporate fraud where wrongdoers appear to be at the head of a corporation. “Where you don’t want to find yourself is in the middle of an investigation having constructed a system where you’re going to be stuck,” she said at the event, which was also sponsored by Perkins Coie. In-house attorneys have to be prepared for the possibility that employees or managers may have broken the law, that they may have to be fired and that there may be a duty to notify the board of directors that there has been misconduct at the top of the company, Lam said. A company can advocate on its own behalf, but don’t try to spin government investigators or keep internal probe results from them, she said. “Unless you’ve found a real fool for a prosecutor that really gets you no closer to square one than when you started out so don’t even try it,” Lam said.

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