By: Michael J. March
Internal investigations are a vital tool for organizations, including non-profit entities and their boards, to address allegations of misconduct, ensure compliance with laws and policies, and mitigate legal and reputational risks. However, conducting an internal investigation is not a simple task. It requires careful planning, execution, and documentation, as well as an awareness of the potential implications and challenges of the process. This article will discuss some of the key aspects of internal investigations, including how to conduct them, why they are needed, and privilege concerns.
Internal investigations are started to identify, assess, and address potential violations of laws, regulations, company policies, or ethical standards. They may be triggered by reports of employee misconduct, financial discrepancies, regulatory inquiries, whistleblower complaints, or other signs that something may be amiss within the organization. Internal investigations serve to uncover misconduct or non-compliance, allowing leadership to address risks before they escalate. Prompt self-scrutiny helps preserve evidence, develop remediation strategies, and demonstrate proactive corporate stewardship to regulators and stakeholders.
Internal investigations can help the organization discover and stop any wrongdoing that may have occurred within the organization, such as fraud, corruption, harassment, discrimination, or breach of contract. Internal investigations can also help the organization identify and correct any gaps or weaknesses in its internal controls, policies, or procedures that may have facilitated or enabled the misconduct.
Internal investigations can help the organization demonstrate its compliance with laws and regulations, as well as its commitment to ethical and lawful conduct. Internal investigations can also help the organization cooperate with government agencies or regulators that may be investigating the same or related allegations, or that may require the organization to self-report any misconduct.
Internal investigations can help the organization prepare for any potential litigation or arbitration that may arise from the allegations, either as a plaintiff or a defendant. Internal investigations can help the organization gather and preserve relevant evidence, assess the strengths and weaknesses of its case, and develop legal strategies and arguments.
Depending on the nature and scope of the allegations, an internal investigation may involve different steps and considerations, but generally, it should follow these basic principles:
Before starting an internal investigation, the organization should define the purpose, goals, and scope of the investigation, as well as the roles and responsibilities of the investigation team. The organization should also assess the potential legal and reputational risks, the need for external counsel or experts, and the applicable laws and policies. A clear and detailed investigation plan can help ensure efficiency, consistency, and credibility of the investigation process.
As soon as an internal investigation is initiated, the organization should take steps to preserve all relevant documents and data that may be evidence of the alleged misconduct. This includes issuing litigation hold notices to custodians, suspending document deletion policies, and securing physical and electronic records. Preservation is essential to prevent spoliation, loss, or tampering of evidence, and to comply with legal obligations and requests.
The organization should identify and collect all potentially relevant documents and data from various sources, such as email accounts, shared drives, databases, mobile devices, or third parties. The organization should use appropriate methods and tools to collect and process the data, such as ediscovery software, forensic experts, or data vendors. The organization should also review the collected data to identify and analyze the key facts and issues related to the allegations, using search terms, filters, analytics, or other techniques.
The organization should consider conducting interviews with relevant witnesses, such as employees, managers, customers, or vendors, to obtain additional information and insights on the allegations. The organization should prepare for the interviews by reviewing relevant documents, drafting interview questions, and selecting interviewers. The organization should also provide appropriate warnings and instructions to the interviewees, such as the Upjohn warning, which is more fully described below.
The organization should prepare a report that summarizes the investigation process, the findings, the conclusions, and the recommendations. The report should be clear, accurate, and objective, and should address the allegations, the evidence, the legal and policy implications, and the potential remedial actions. The report should also be protected by privilege and confidentiality, and should be distributed only to authorized parties.
One of the main challenges in conducting internal investigations is to protect the privilege and confidentiality of the investigation materials, such as communications, documents, interviews, and reports. Privilege and confidentiality are important to preserve the integrity and effectiveness of the investigation, as well as to avoid or limit disclosure to third parties, such as government agencies, regulators, or litigants. However, privilege and confidentiality are not absolute, and may be subject to various exceptions, limitations, or waivers, depending on the jurisdiction, the context, and the circumstances. Therefore, the organization should be aware of the following privilege concerns in internal investigations:
The attorney-client privilege protects the communications between an attorney and a client that are made for the purpose of seeking or providing legal advice. The work product doctrine protects the materials prepared by or for an attorney in anticipation of litigation or for trial. These privileges apply to both in-house and outside counsel, and to both individual and corporate clients. However, these privileges may not apply or may be waived if the communication or material is not made or prepared for a legal purpose, is shared with a third party, or is used to further a crime or fraud.
The Upjohn warning is a notice given by an attorney to an employee of a corporate client during an internal investigation interview, informing the employee that the attorney represents the corporation, not the individual, and that the privilege and confidentiality of the interview belong to the corporation, which may decide to waive or disclose them.
The common interest doctrine is an exception to the general rule that sharing privileged information with a third party waives the privilege. The doctrine allows parties who share a common legal interest to exchange privileged information without waiving the privilege, as long as the communication is made in furtherance of that interest and is kept confidential.
Cross-border investigations involve multiple jurisdictions that may have different or conflicting laws and rules regarding privilege and confidentiality. For example, some jurisdictions may not recognize the attorney-client privilege for in-house counsel, or may have broader or narrower definitions of legal advice, work product, or common interest. Some jurisdictions may also have mandatory disclosure obligations or data protection regulations that may affect the collection, transfer, or production of privileged information. Therefore, the organization should consult with local counsel and experts to understand and comply with the applicable laws and rules in each jurisdiction, and to adopt appropriate measures to protect its privilege and confidentiality.
Hiring an attorney for internal investigations is crucial for several reasons. Attorneys bring expertise in navigating complex legal landscapes, ensuring that the investigation is conducted in compliance with relevant laws and regulations. They can help maintain the integrity and confidentiality of the investigation, protecting privileged information from unnecessary disclosure. Additionally, attorneys can provide valuable guidance on potential legal risks and liabilities, helping the organization to mitigate these effectively. By involving an attorney, organizations can enhance the credibility and thoroughness of their investigations, ultimately safeguarding their interests and reputation. Call our firm today.