When organizations receive a regulatory subpoena or notice of investigation, after the
initial panic, fear and confusion, the immediate focus is often compliance: gathering,
processing, and producing relevant documents within the strict deadlines imposed by
regulators. Yet, in many cases, the story does not end there. A subpoena from a
regulator—such as the SEC, DOJ, FCA, or other oversight bodies—may be the first
step in a broader sequence of legal challenges. Frequently, regulatory scrutiny evolves
into formal enforcement proceedings, shareholder lawsuits, or parallel civil litigation.
For legal and compliance teams, this creates a complex challenge: how to conduct
document review in a way that satisfies the regulator’s requirements while also
anticipating and preparing for future litigation. A well-designed review strategy not only
reduces regulatory risk but also protects the organization’s litigation position down the
line. Flexible staffing is increasingly playing a role in helping to manage these high
stakes matters.
Information Review: The Immediate Priorities
Regulatory subpoenas typically come with strict deadlines and broad requests for
documents. The primary goal in the early stages is compliance: ensuring that
responsive material is collected, reviewed, and produced in accordance with the
regulator’s instructions.
Key priorities at this stage include:
- Identifying custodians and data sources: Regulatory bodies usually expect
comprehensive coverage across all relevant custodians and their devices
including phones and laptops, emails, chat systems and cloud storage. - Preserving relevant data: Early legal holds must be placed to avoid spoliation,
which can create exposure both with the regulator and in future litigation. - Ensuring accuracy and completeness: Regulators demand precision; incomplete
productions or inadvertent privilege or confidentiality claims can escalate scrutiny.
At this stage, organizations often deploy review teams focused on responsiveness,
privilege, and confidentiality. However, when potential litigation is looming, this is only
half the battle.
The Dual Purpose of Document Review
What makes regulatory subpoenas particularly challenging is that the same set of
documents may later be central to civil or criminal litigation. A shareholder action,
competitor lawsuit, or class action claim may be filed based on the facts uncovered in
the regulatory probe.
For this reason, document review for regulatory subpoenas must be designed with dual
purposes in mind:
- Immediate regulatory compliance.
- Future litigation preparedness.
This requires a layered review strategy. Instead of tagging only for regulatory
responsiveness, reviewers must also identify materials that touch on broader issues of
liability, causation, damages, and potential defenses.
Issue Tagging: Thinking Beyond the Subpoena
Traditional subpoena responses might focus only on whether a document is responsive,
privileged or contain protected personal data. But when litigation is a real possibility,
issue tagging becomes critical.
Examples of useful issue tags include:
- Regulatory Issues: Responsive to the specific subpoena categories.
- Potential Liability: Evidence of misconduct, negligence, or regulatory breach.
- Key Players: Documents referencing executives, decision-makers, or board
members. - Damages and Harm: Communications about financial loss, customer impact, or
reputational damage. - Defenses: Materials that demonstrate compliance efforts, remedial measures, or
alternative explanations. - Litigation Sensitivity: High-risk documents likely to be cited in pleadings or used
in depositions.
By implementing thoughtful tagging, organizations create a roadmap not only for
regulatory production but also for litigation strategy. A document tagged today for
regulatory responsiveness may become tomorrow’s trial exhibit—or, just as importantly,
a piece of exculpatory evidence.
Managing Privilege Across Contexts
Privilege review is another area where regulatory and litigation needs intersect. While
regulators may allow for privilege redactions, any waiver—even inadvertent—can carry
over into subsequent litigation.
Organizations should therefore adopt rigorous privilege review protocols, including
multiple layers of privilege review (first-level, quality control, and senior attorney
checks). An investment in privilege review during a subpoena response can save
significant litigation headaches later.
Leveraging Technology for Multi-Use Review
Technology-assisted review (TAR), analytics, and AI-driven platforms are increasingly
essential in handling regulatory subpoenas with litigation implications. These tools allow
review teams to:
- Identify themes and clusters of documents relevant to both regulatory and
litigation issues. - Apply predictive coding to prioritize high-value documents for early review.
- Conduct sentiment analysis or communication mapping to uncover patterns that
regulators (and opposing litigants) are likely to focus on.
Crucially, technology enables efficient re-use of work product. For example, issue tags,
privilege calls, and relevance determinations made during the regulatory review can be
preserved and migrated into future litigation platforms, reducing duplication of effort and
saving significant costs.
Flexible Staffing: Meeting the Challenge at Scale
Regulatory subpoenas often demand rapid ramp-up of large review teams. When
litigation is also a possibility, the need for skilled reviewers who can apply nuanced
issue tagging and make defensible calls becomes even greater.
Here, flexible staffing models provide a vital solution. Instead of relying solely on
in-house teams or fixed outside counsel resources, organizations increasingly turn to:
- Contract attorney pools: Experienced lawyers trained in eDiscovery platforms
who can be scaled up or down as the matter evolves. - Specialist review providers: Teams with expertise in regulatory matters and
litigation readiness. - Hybrid models: A blend of internal staff, outside counsel, and contract lawyers
overseen by experienced project managers.
Flexible staffing ensures organizations can respond swiftly and efficiently to regulatory
deadlines while still investing in the careful tagging and analysis required for litigation
readiness.
Collaboration Between Legal, Compliance, and Business Teams
A subpoena response with litigation implications is not just a legal exercise—it is a
cross-functional effort. Legal teams must work hand-in-hand with compliance, risk
management, IT, and business stakeholders to ensure:
- All relevant data sources are preserved and collected.
- Business context is understood for issue tagging and defense strategy.
- Communications to regulators and, eventually, courts are consistent and
coordinated.
Strong internal collaboration also positions organizations to demonstrate to
regulators—and later to judges or juries—that they took compliance seriously and acted
in good faith.
Strategic Benefits of Future-Focused Review
While a dual-purpose review is resource-intensive and costly at first, the benefits are
substantial:
- Cost Savings: Work done for the regulatory subpoena can be leveraged in
litigation, avoiding redundant review. - Risk Reduction: Early identification of “smoking gun” documents allows legal
teams to prepare mitigation strategies. - Stronger Defense: Issue tagging and privilege protection create a ready-made
litigation playbook. - Flexibility: With the right staffing model, organizations can respond
proportionately to regulatory deadlines and litigation developments.
In short, forward-thinking document review creates efficiency and resilience in the face
of multiple legal challenges.
Conclusion
A regulatory subpoena is rarely an isolated event. For many organizations, it is the
opening act in a much longer legal drama. By approaching document review with both
regulatory compliance and litigation preparedness in mind, companies can protect
themselves on multiple fronts.
The key lies in layered issue tagging, rigorous privilege and personal data review, smart
use of technology, and flexible staffing solutions that allow legal teams to scale quickly
without compromising quality.
Ultimately, the organizations that thrive under regulatory and litigation scrutiny are those
that view document review not as a narrow compliance exercise, but as a strategic
opportunity: a chance to understand their risk, build their defense, and demonstrate
their commitment to compliance and accountability.