Opening Remarks With Steve Gunby: New Regulations Impacting White Collar Investigations

As a CEO, you have PR people and PR people write introductions to you. It's amazing what they will write about you, and some of that story was actually true. The main one being how bad I was in that interview. I don't know if anybody ever met Justice O'Connor, but apparently she was known to have a prosecutorial stare. When she was grilling somebody, she would ask you a question and then stare in your eyes for 45 seconds. Nowadays, you would know that on Google, you'd prepare. There would be books on how to prepare for an interview. There probably were some books, but I didn't know about it. I showed up green, she stared that stare on me, and I froze. I remembered I stole a nickel out of my mother's purse once, and I fell apart. I don't know what she thought I would do as a clerk, but clearly it wasn't to work for her. So that part of the story is true. One of the best things about this job, 30 years later, I stayed in touch with the legal profession. My best friends are still the guys I roomed with from law school. But this job gave me an opportunity to re-engage with some of you and some of your peers, and see where this profession has gone. To some extent, the conference we are doing with the Wall Street Journal grows out of some of the observations that some of you shared with me and some of your peers shared with me. Let me talk a little bit about that. When I was in law school, I had a joint degree, so I was one of the few people in law school who thought, 'Wow, a great job, the best job in the world would be to be the general counsel of a company. You'd have some legal stuff, you'd have the interest, you'd have the law. It would be fabulous.' I got zero support for that position 30 years ago. The position was, at least in my law school, not seen as prestigious. It was seen as boring. Why would you want to do that? In fact, I remember having this conversation with an adviser, and he expressed deep surprise that a guy he respected a lot, a guy by the name of Nicholas Katzenbach, would think it was okay to take this job as a general counsel of what was then the most prestigious company in America, IBM. He was shocked. So I got zero support for that. 30 years later, I come into this job and I start talking with some of you, some of the lawyers in major law firms. I start recruiting a general counsel, and I'm just shocked by the quality of the people who are in that role. So let me talk about some of the things that occurred to me about why that was. You probably know more, and that has led to this conference. One of them has to do with the session we did last time, which is the advent of crises in companies. There were probably crises in companies last time. We talked about Black Swan events. Black Swan events are defined as events that can transform your company, kill your market value, hurt your regulatory standing, cost you executives, hurt your reputation. Two times ago, we talked about cyber breaches. The interesting thing is nobody there really thought that was a Black Swan event. Everybody knew that it could happen to us. So there are Black Swan events that we think of as Black Swan events, but we know they actually can happen. More to the point, when I talk with many of you, the number and type of events that you wake up at 2 o'clock in the morning worrying about has broadened. Last time, I held up a page of 30 different types of Black Swan events that colleagues of yours have shared with us that they're worried about. This list wasn't 30 of them 10 years ago. Many of these are not on the list. Obviously, cyber attacks weren't on the list 10 years ago. Supply chain disruptions weren't on the list. Getting attacked for greenwashing wasn't on the list. Being attacked from the left and the right for the same political positions that you're having, being attacked for something one of your executives did 15 years ago in your company and what you responded to 15 years ago. Many of the subjects that we're talking about today, the number of potential Black Swan events seems to be burgeoning. Our sense is that some colleagues of mine are writing an article that says if you're a new general counsel taking on a job in a major company, particularly highly regulated ones, the probability of facing zero of those over a 5-year period approaches zero. And we know what the consequence of not handling those well is: Wells Fargo, FTX, and a whole list of others. The third issue that led us to put this conference together with the Wall Street Journal is what we feel like is a changed role and expectation of the general counsel in those crises. There's obviously the chief legal adviser. I did a cyber simulation. How many people here have been part of a cyber simulation? Okay. I did a cyber simulation a couple weeks ago in my company. Lots of people in the room. You sit there, you have this ransomware thing. You've got ransomware. You're in the day, hour one of this. You've got a ransomware thing. Lots of people have views on who to communicate with. Do we tell her? Do we call the FBI? Do we tell our clients? Should we tell our clients soon so they can take preparation? We don't know whether the ransom is real. What are we doing with the investigation? Are we going fast enough on the investigation? Should we be hiring somebody else from the outside on the investigation? Should we call the FBI? Lots of questions, lots of people's opinions in the room. I turn to Curtis. Curtis, what do you think? Curtis is my general counsel. And we end up following Curtis's advice. I don't think that just happens in my company. You have all these situations where something, some fire is out there in the company. You don't know how bright it is, you don't know how broad it is. Do you investigate? People tell you it's isolated. Do you agree with them? Do you fight the organizational barriers of going beyond them? All those sorts of judgments. Those aren't legal judgments. They're rooted in legal judgments, but they're management issues. What we are observing is in many companies, the general counsel is not only the chief legal adviser, he or she is becoming the line manager in charge of crisis. When the Wall Street Journal and I talked about it, our view was there are lots of conferences on the legal issues. There aren't that many where you get a chance to talk about what he did or she did in that situation. What did you sweat? How did you make that judgment? That's what we're trying to do with this conference. We're trying to do that through panelists who have great expertise, who can share it, and who can help stimulate your thoughts, but also through an opportunity to meet colleagues at the tables and cocktails afterwards and in Q&A and share your own experiences. This is a work in progress. We hope to get input from you to continue to fine-tune it. But so far, thank you for those of you who've come back and for the input we've gotten. May suggested to me that not everybody in this firm, despite her nice words, knows what we do. So let me take a minute on that, and then I'll turn it over to the panelists. Let me make a bold statement for those of you who don't know what we do. You will not believe it, and then I'm going to try to convince you it's true. FTI, I believe it's true to say, is involved in helping more companies on the major crises types of crises we just talked about than any other professional services firm in the world. For those of you who are a little skeptical, when I've talked to people, the answer really is, 'How is that possible? Nobody in my organization has ever met you.' So let me try to bridge that for you. The answer is that historically, this company only went to market through major law firms. So we did the Wells Fargo investigation with Sherman and Sterling, the AMX investigation with Debevoise, the Clifford Chance with the Wirecard, I don't know who we're working with, Latham and Watkins was with Kirkland, the Hertz bankruptcy is with White and Case, PG&E was with Milbank. I can go through all of these. Historically, we never met our ultimate client. In fact, when I got here, I thought that was odd. I came from BCG. You met your clients. And people said, 'No, no, no, they don't want to meet you. They don't want to meet us.' They said no because so many times in crisis, we're going to testify, we're going to have to do this under privilege, so we have to be hired through the outside law firm. So I said, 'Fine, but they not really want to meet? They're the ones writing the bill.' And they said no. Luckily, I then went to Davos a couple years later and sat down with one of your peers. Had a great coffee with him. He had done his research, and he said, 'You know, it was a nice coffee. I looked, we spent over the last couple years $200 million on FTI services over the last four or five years. Not every year, not every service, not every client. And you're the first person I've ever met from your company.' So I brought that back, and even though I was an outsider from outside the company, I said, 'You know, I'm not sure it's a crime to actually get to know our ultimate client.' So this conference is a little bit emerging from this. Our company goes to market in five segments, but the way we work on your problems is integrating those segments. Our largest segment is a corporate finance segment that grew out of our bankruptcy practice. We are the largest bankruptcy firm in the world. We're number one or two in more markets than anybody else. Which means 15 years ago, PwC did Lehman Brothers. Now we get Hertz Global, we get LATAM Airways, we get Steinhoff, all the biggest global assignments. That practice has now gone into less crisis stuff in addition, cost out, some of the private equity guys here work with us on cost out and so forth. But that's the roots. It's a crisis route. Our economics business is the biggest group of economists in the world who testify on Samsung Apple on the value of a chip, to Microsoft Activision clearance, AT&T Time Warner clearance, with the leading group of antitrust clearance and testifiers. And just to confuse everybody, we do that under another brand name which is called Compass Lexecon. So I see some nods. How many of you did not know that Compass Lexecon was part of FTI? Yeah, right. Okay, so we've got work to do. We have a strategic communications business that's a crisis communications business. We don't do consumer ads, but we have a firm that's built around crisis communications. Almost everything we do, everything that keeps you up at 2 o'clock in the morning, has a content element to it. It also has a communications element. So Colonial Pipeline had a content issue: what happened in the breach, what to do to fix it. It also had a tremendous amount of instantaneous communications issues. And so we have what I believe is now the leading, either the first largest or second largest crisis communications firm in the world. The last set of practices work together. We have a data analytics firm, a e-discovery part, and then a series of expert investigators. Those are the people who come together and work on the stuff we're going to be talking about today. Those are e-discovery people, data analytics people, but also experts in different types of investigations: cyber, crypto, environmental investigations, and so forth. That's the group. They're in three different businesses if you look at our reporting, but those are the people who worked on the Wells Fargo investigation, the AMX investigation, the Wirecard investigation. Those are the people who helped get us $11 billion back from Madoff and so forth. So that's what we do. We are 8,650 billable professionals globally, which is larger than any of the law firms you work with. We're in 30 countries around the world. We've doubled in the last six years. We're a public company, so you can actually verify some of this, at least if we're not doing what we're not supposed to be doing here and committing fraud. We're about a $7 billion market cap. It leaves us with a tremendous set of great professionals who love helping companies on the sorts of things we are doing today, and who actually now, even though they're shy, would be happy to meet you as well. With that, let me turn this over to Almar and Prit for getting on with the session. Thank you very much.