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David Fagan

David Fagan co-chairs the firm’s top ranked practice on cross-border investment and national security matters, including reviews conducted by the Committee on Foreign Investment in the United States (CFIUS), and is a partner in the firm’s data privacy and cybersecurity practice.

David has been recognized by Chambers USA and Chambers Global for his leading expertise on bet-the-company CFIUS matters and has received multiple accolades for his work in this area, including being named The American Lawyer’s Dealmaker of the Year three times. His work includes successfully securing three of the four Presidential approvals in the history of CFIUS; securing the only Presidential order protecting a client against a proposed hostile takeover; and negotiating the only “golden share” the U.S. government has taken in a U.S. company. Clients laud him for “[seeing] far more matters than many other lawyers,” his “incredible insight,” and “know[ing] how to structure deals to facilitate regulatory reviews” (Chambers USA).

For more than two decades, David has handled transactions for clients across every sector subject to CFIUS review, including some of the most sensitive and complex matters that have set the template for CFIUS compliance and security agreements in their respective industries. He is also routinely called upon to rescue transactions that encounter challenges in CFIUS; provide strategic counsel to clients on navigating and addressing U.S. national security considerations in commercial transactions; and negotiate solutions with the U.S. government, including equity arrangements, that protect national security interests while preserving shareholder value and U.S. business interests.

In the enforcement area, David has represented clients in numerous enforcement actions pursued by CFIUS, including two of the three largest penalty cases resolved with CFIUS.

Reflecting his experience on complex U.S. national security matters intersecting with China, David is regularly engaged by the world’s leading multinational companies to advise on emerging legal issues, including outbound investment restrictions and regulations governing information and communications technologies and services (ICTS), as well as strategic legal projects related to the evolving U.S.-China competitive landscape. 

In addition, in the foreign investment and national security area, David routinely advises clients on matters requiring mitigation of foreign ownership, control, or influence (FOCI) under applicable national industrial security regulations. His work includes advising many of the world’s leading aerospace and defense companies and private equity firms, as well as telecommunications transactions subject to public safety, law enforcement, and national security review by Team Telecom.

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On the heels of Russia’s invasion of Ukraine, pandemic-induced supply chain disruptions, and U.S.-China tensions over Taiwan, 2022 accelerated a sweeping effort within the U.S. government to make national security considerations—especially with respect to China—a key feature of new and existing regulatory processes. This trend toward broader national security regulation, designed to help maintain U.S. strategic advantage, has support from both Republicans and Democrats, including from the Biden Administration. National Security Advisor Jake Sullivan’s remarks in September 2022 capture the tone shift in Washington: “…[W]e have to revisit the longstanding premise of maintaining ‘relative’ advantages over competitors in certain key technologies…That is not the strategic environment we are in today…[w]e must maintain as large of a lead as possible.”

This environment produced important legislative and regulatory developments in 2022, including the CHIPS and Science Act (Covington alert), first-ever Enforcement and Penalty Guidelines promulgated by the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) (Covington alert), President Biden’s Executive Order on CFIUS (Covington alert), new restrictions under U.S. export control authorities targeting China (Covington alert), and proposals for a new regime to review outbound investments by U.S. businesses (Covington alert). The common thread among these developments is the U.S. government’s continuing appetite to use both existing and new regulatory authorities to address identified national security risks, especially where perceived risks relate to China.

With a Republican majority in the U.S. House of Representatives riding the tailwinds of this bipartisan consensus, 2023 is looking like a pivotal moment for national security regulation—expanding beyond the use of traditional authorities such as trade controls and CFIUS, into additional regulatory domains touching upon data, communications, antitrust, and possibly more. In parallel, the U.S. focus on national security continues to gain purchase abroad, with foreign direct investment (“FDI”) regimes maturing in tandem with CFIUS, and outbound investment screening gaining traction, for example, in the European Union (“EU”). It is crucial for businesses to be aware of these developments and to approach U.S. regulatory processes with a sensitivity towards the shifting national security undercurrents described in greater detail below.

Continue Reading Will 2023 Be an Inflection Point in National Security Regulation?