From investigation to insurance eligibility, authors Edward Glickman, Scott Sherman and Josh Lewin describe a few scenarios you can expect to encounter when you are asked to join a special litigation committee.
This article is the second in a two part series. Part 1 explains the underlying reasons for SLCs, the lawsuits in which SLCs are involved, the powers of the SLC and the process the SLC must undertake to remain independent and disinterested in the process. This installment explores the investigation process an SLC undertakes; the SLC decision-making process; the options available to the SLC including dismissals, settlements and pursuing litigation; and how company insurance can play in. Overall, this two-part series is designed to provide a high-level overview with key insights to directors on what they need to know when facing the question – what does it mean to be a member of an SLC?
The Investigation
The purpose of the SLC’s investigation is to determine whether the claims asserted have merit and whether it is in the best interest of the company to pursue those claims. The thoroughness and good faith of the investigation may be used to challenge the SLC’s conclusions. Thus, it is important to undertake a formal, well-documented, and extensive investigation. This will allow you to…
