Wednesday, June 17, 2015

Internal Investigations -- Attorney Client Privilege (William Siegel)

By Bill Siegel

When investigating internal allegations of company wrong doing, companies must take care to ensure the preservation of  the attorney-client privilege and the confidentiality of its internal communications.   
To protect the privilege, the purpose of the investigation must meet the particular requirements of the state in which the company is located.  Those requirements may sometimes be difficult to assess. Some jurisdictions, for example, require that a “significant purpose” of the communication with the attorney must be for legal advice.  Other jurisdictions require that the legal advice must be the “primary purpose” of the communication and, still others impose a  “but for” test – such that, but for the need for legal advice, the communication would not have been made.
Regardless of the jurisdiction, however, it is important that those who communicate with the attorney charged with the investigation must be instructed, preferably in writing, that any communication with the attorney must remain strictly confidential.

To help ensure that the privilege remains inviolate, a company should employ outside counsel, whether in a consulting or investigative role, to assist with the investigation.  If a company opts to use in-house counsel to conduct the investigation, however, it should be made clear that in-house counsel is in charge of the investigation.  While the use of non-attorneys should ordinarily be limited as such use could impact the privilege, those charged with interviewing witnesses should operate only under the attorney’s direct supervision.
Whether the investigation is conducted by in-house or outside counsel, witnesses must be advised that the purpose of the communication is legal advice.  If government regulators are involved, a company’s employees should not be discouraged from speaking with them.  The employees should be permitted to disclose their knowledge of pertinent underlying facts to the regulators, but they should be counseled against the disclosure of any communications with company counsel.

Finally, to the extent applicable, especially in whistleblower cases or in those instances where fraud has been alleged, companies should ensure the partition of their investigation from any employee performance evaluations.  This demarcation will assist the company in  avoiding a potential retaliation claim while still maintaining the viability of the attorney-client privilege.

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