United States: Got Privilege? When It Comes To Internal Investigations, Think Again …

Seyfarth Synopsis: A recent decision out of the U.S. District Court for the District of Columbia serves as a helpful reminder on the difficulties of maintaining privilege during internal company investigations. But with a clear understanding of the limitations of the attorney-client privilege, thoughtful preparation of the investigation's goals, and pro-active planning, employers can put themselves in the best possible position to control what information becomes public and maintain work-product and attorney-client privileges.

When conducting an internal investigation, every in-house counsel pays particular attention to maintaining privilege throughout the investigation. But maintaining privilege can be very difficult. A recent decision from the U.S. District Court for the District of Columbia tackles this issue, and it provides useful lessons for helping to ensure that confidential and privileged internal investigation notes and reports remain confidential and privileged.

Background on the Case

In Banneker Ventures, LLC v. Graham, the U.S. District Court for the District of Columbia ordered the production of 51 interview memoranda prepared by an outside law firm during an internal company investigation. The Washington Metropolitan Area Transit Authority (WMATA) had been in negotiations with Banneker Ventures, LLC over a development project. When negotiations broke down, Banneker's attorney sent a letter to WMATA outlining what Banneker believed to have been improper actions on the part of WMATA and its Board of Directors. WMATA briefly responded to the letter, but did not reopen negotiations on the project.

After more than two years, WMATA retained an outside law firm to conduct an investigation into the actions of WMATA's Board in connection with the project. The investigation took approximately five months, included interviews of 34 individuals (including 19 current or former WMATA Board members or employees), and resulted in the drafting of 51 interview memoranda. These memos were created by the outside attorneys conducting the investigation, and they were marked "attorney work product."

In addition, the outside law firm prepared an investigative report for WMATA, which included references to and citations from the interview memoranda. The WMATA Board subsequently voted to publicly release the investigative report, but the Board did not release any of the 51 interview memos.

Banneker eventually sued WMATA for breach of contract and other claims, and during discovery, Banneker sought all 51 of the interview memos. After considering whether the memos were protected by the attorney work-product doctrine or the attorney-client privilege, the court ordered WMATA to produce the memos.

The Court's Reasoning

The Court first addressed whether the interview memoranda were protected attorney work-product. To be work-product, they must have been prepared "in anticipation of litigation or for trial." The Court looked at the time between Banneker's letter to WMATA and the start of the investigation, and it tried to ascertain the intent behind the investigation. WMATA argued that Banneker's letter caused it to believe litigation was probable. Although not articulating any specific amount of time, the Court found that the more than two years between the letter and the start of the investigation was too long for the investigation to have any link to the letter sent by Banneker's attorney. In addition, the Court reasoned that the interview memos would have been created in the ordinary course of business, with or without litigation. The WMATA Board had stated that the investigation was to formulate and recommend changes to policies, standards, and procedures; the Court said this was a business—not litigation—goal. And the Court concluded that none of the interview memos were protected by the attorney work-product doctrine.

The Court next addressed the attorney-client privilege. To be privileged, the documents must have been "confidential communications between attorneys and their clients made for the purpose of obtaining or providing legal advice." The interview memos clearly fit this criteria. However, Banneker argued that WMATA had waived the attorney-client privilege for the interview memos when it publicly released the investigative report. The Court agreed, reasoning that the report and the memos concerned the same subject matter and the report cited extensively to the memos, even containing references to at least 23 different witness interviews. The Court also explained that WMATA could not use the investigative report to its advantage during litigation while withholding the remaining information in the interview memos (this invokes the old maxim that a party cannot use privileged information both as a sword and a shield). But the Court did give WMATA some relief, allowing WMATA to redact any information from the interview memos on subjects that were not included in the investigative report. In other words, by publicly releasing the report, WMATA had only waived privilege on the subject matters that were actually contained in the public report.

Takeaways and Best Practices

This decision can serve as a useful reminder to both in-house attorneys and outside counsel on the importance of carefully planning all internal investigations. Following are some tips to assist employers when conducting internal investigations.

  1. Clearly articulate the reasons for and the goals of the investigation. Often investigations, such as workplace harassment and other company investigations, are conducted for multiple purposes. When the investigation is conducted in anticipation of litigation, that reason should be clearly articulated. Management directing the investigation and the individuals conducting the investigation—whether in-house attorneys or outside counsel—should clearly understand the reasons for and the goals of the investigation.
  2. Expect interview notes to be discoverable. Remember that privilege does not attach to underlying facts. In many cases, interview notes will be discoverable in a subsequent lawsuit. Accordingly, interview notes should contain only clear statements of facts and information gathered during the interview. It is important to thoroughly train the interviewers to include only appropriate information in their notes, especially if the company is conducting the investigation itself.
  3. Prepare an Executive Summary. An executive summary can provide a broad overview of the investigation and its results, while at the same time protecting confidential and privileged information that should be reserved to a more select audience. When preparing an executive summary, carefully scrutinize the amount of detail necessary and consider whether citation or detailed discussion of the underlying investigation documents is necessary.
  4. Consider whether a public or more general release serves the company's purposes. Be especially careful when releasing information or conclusions gathered during the investigation to anyone outside of the organization. As the Banneker case makes clear, public disclosure can result in waiver of the attorney-client privilege. Remember that this may also include disclosure to government agencies or other third-parties. If some disclosure is necessary, consider whether a confidentiality agreement or a joint-defense agreement serves the company's interest.
  5. Maintain realistic expectations. Finally, no amount of planning can guarantee that an investigation will not become public. Remember that anything created during an investigation may become public. Accordingly, handle all communications, notes, and any other documents created during the investigation with this in mind.

Internal investigations are a necessary part of any company's business, and this recent decision can serve as a helpful reminder of the importance of thoroughly planning any investigation. By knowing the rules relating to privilege and pro-actively planning any internal investigation, employers can put themselves in the best possible position to control what information becomes public and maintain work-product and attorney-client privileges.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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