When corporations suspect wrongdoing, they may choose to conduct internal investigations to discover the facts. Outsiders -- the government, the media, shareholders, civil litigants -- often clamor for the disclosure of investigatory reports, interview notes and memos, expert materials, and attorney-client communications. One misstep, and a court may conclude that privileges were waived and force these materials to be disclosed. What may a corporation do to minimize this risk?
- Plan, plan, plan. Devise a strategy before launching an investigation. By carefully considering your approach in advance, you may avoid problems later.
- Retain outside counsel. When courts evaluate a corporation's assertion of the work product doctrine or the attorney-client privilege, they will ask if counsel is acting in a legal or business role. Because in-house counsel typically perform many roles, courts may conclude that the investigation was conducted for routine business purposes and reject the privilege. If possible, retain outside counsel to make clear that the investigation will be conducted in anticipation of litigation (in which case the investigation materials will be protected by the work product doctrine).
- Know the rules. Understand the elements of any applicable privilege or protection, as well as the rules for determining if a privilege has been waived. Be careful: there are different standards for waiver depending on which privilege or protection is being asserted.
- Document the purpose of the investigation. The case for privilege will be strengthened if the investigation's purpose is documented in writing. Obtain written authorization from the highest possible authority, preferably a board resolution from a special committee of independent directors. That resolution should reference any pending or potential litigation and should clearly state that the investigation is being conducted to assist counsel in rendering legal advice about potential liability.
- Document your efforts to ensure confidentiality. Mark all documents created during the investigation as confidential and subject to the attorney-client privilege and work product doctrine. While these labels likely will carry little weight in court, they do remind junior lawyers and non-lawyers not to disclose these materials to third parties.
- Limit disclosure of investigatory materials to a small group of client representatives. Especially when members of the board of directors are part of the investigation, you should limit disclosure to a small group of upper management or subcommittee.
- Limit the creation and distribution of drafts. Mark drafts with a "draft" designation. Never distribute drafts to anyone outside the core group. To further reduce the possibility that your preliminary findings are disclosed to third parties, consider implementing a general policy of destroying drafts -- unless there is a legal obligation to keep them.
- If you choose to disclose the results of your investigation to the government, disclose only facts. Under the Justice Department's recent modification of its corporate charging guidelines, federal prosecutors may no longer demand that corporations waive the privilege to demonstrate cooperation with the government's investigation. Instead, the government will evaluate whether a corporation has disclosed key facts. To minimize the risk of privilege waiver, disclose facts -- in the form of documents or redacted interview memos -- but do not disclose attorney analysis or attorney-client communications.
- Be careful how you use the results of an investigation. If you find yourself in litigation over the subject matter of the investigation, tread lightly. If a court determines that you have made "testimonial" use of the investigation (for example: "We conducted an extensive investigation into plaintiff's allegations and determined that they lacked any merit"), you may have waived any privilege and the court may order you to turn over investigative materials. While it is safe to disclose evidence uncovered during an investigation in litigation, be careful not to bring up the investigation itself.
- Say it and forget it; write it and regret it. Even though the government may no longer pressure corporations into waiving privileges, there is always a danger that attorney-client and work product communications may be disclosed. Thus, the best approach is to limit written communications regarding the investigation -- particularly e-mails -- and to convey sensitive and important conclusions in person or over the telephone.
This article originally appeared on the American Bar Association Section of Litigation’s website for the Criminal Litigation Committee.
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