Internal Investigations: Protecting the Attorney- Client Privilege
I like to repeat myself – attorneys are valuable for only two reasons: (1) attorney-client privilege; and (2) advice of counsel defense. I know I am not supposed to denigrate my profession but these are two important reasons, especially the attorney-client privilege.
In the context of corporate internal investigations, the attorney-client privilege is an essential tool when conducting internal investigations involving serious issues. I am not suggesting that every internal investigation should be conducted under the attorney-client privilege; rather, the attorney-client privilege should be used in every serious internal investigation.
Given the increasing importance of internal investigations to the resolution of any government enforcement action, companies have to be careful to take appropriate steps to preserve the privilege. Here are a few suggestions – I am sure there are more but these are suggestions that I have applied in my practice:
At the beginning of any internal investigation, counsel should identify the purpose of the investigation and specifically how the results will be used, if at all. If, for example, the matter under investigation is likely to result in litigation, then the privilege should be preserved. On the other hand, if the investigation is only for an internal purpose, or a minor disciplinary action, then the privilege may be less important to protect.
If the privilege is going to be applied, then the investigation should make it clear, at the inception, with documented guidance from the company’s Chief Legal Officer that the specific investigation is being conducted under a claim of privilege. Thereafter, and at every step, counsel and investigators have to state unequivocally before any interview that the investigation is being conducted under the privilege, and that it is the company’s privilege, so that waiver or any claim belongs to the company not to any individual. The company should document carefully the legal basis for the investigation, the specific assertion of the privilege, and provide basic guidance on how the privilege should be preserved.
If in-house or outside counsel needs to obtain data from within the company (e.g. emails, documents), counsel should make clear and document that the collection and use of such information as part of the internal investigation is for the purpose of providing legal advice and counsel to the client company. Counsel should advise in writing and orally those who collect such information of the confidentiality of the information and the fact that such information is being collected under the company’s privilege.
If outside counsel conducts the investigation under its privilege and retains any consultants or experts who will assist in the investigation, outside counsel should, in writing, directly retain the consultants or experts and make sure that the information supplied to outside counsel is provided to outside counsel with clear documentation and notations that such information is being provided to outside counsel for purposes of providing legal advice and counsel to the clienbt company.
Confidential and privileged communications should be directed to counsel and not to high-level executives or managers in the company. Executives, managers and employees should not communicate among themselves about privileged matters – it should be directed specifically to the counsel handling the matter. All too often, companies believe that they are preserving the privilege when they communicate between or among themselves and add an attorney to the cc or bc line – in the latter case, such a claim, if challenged, will be rejected.
All communications and copies of documents or email messages (whether hard copy or electronic) should be marked with (e.g. attorney-client privilege markings “Protected by Attorney-Client Privileged” or “Prepared for Counsel and Protected by Attorney-Client Privilege.”)
In conducting interviews, counsel should fully advise any subject of the investigation of his/her “Upjohn” rights, and should do so in writing, and with clear waiver language and witness signature and date, so that there is adequate documentation that the witness was advised of his/her rights and chose to go forward with the interview.
Executives, managers and employees should not forward any attorney-client privileged communications (especially any third party) without first checking with counsel to prevent an inadvertent or unintended waiver claim.
All discussions, meetings or communications involving the fact that an internal investigation is ongoing, the process, or any conclusions (tentative or otherwise) should be conducted with counsel present and engaged.
Your comments concerning emails should be etched in stone. In 2007, Principal Real Estate Investors partnered with Vested Housing Group, LLC to build apartments in Nevada. The venture went sour, and later litigation ensured (Vested Housing Group, LLC v. Principal Real Estate Investors, LLC, No. 2:13-cv-01643-RCJ-PAL. and Henderson Apartment Venture, LLC v. Miller, No. 2:09-cv-01849-RCJ-PAL).
The presiding judge requested hundreds of emails from Principal in which Principal claimed attorney-client privilege. The judge denied their claim, and Principal was required to produce.
Because dozens of privileged emails had been circulated to various individuals within the company, the judge ruled that they had waived the attorney/client privilege, and those confidential emails were admitted into evidence.