United States: Conducting Effective Internal Investigations - A Checklist For In-House Counsel

Every general counsel over the course of his or her career will face the need to conduct an internal investigation into events at the company. Many of these may be routine in nature, such as matters dealing with individual employees or human resources issues. But at times the company may be required to examine issues affecting the core of its business, with potential serious impact on its financial performance or with regulatory exposure. The most serious issues— such as those involving the accuracy of the financial statements or misconduct of senior management—will be investigated at the board level. Even in board-level investigations, a prudent general counsel should take steps to help ensure the integrity and success of the investigation. A properly conducted investigation may help protect the company—as well as its in-house lawyers—from the potential fallout from instances of corporate misconduct. Here is a checklist of ten issues every general counsel should consider in any internal investigation.

1. Understand Your Role

The general counsel should play a central role in any internal investigation. Even in board-led investigations where independent outside counsel has been retained, the general counsel is likely to be a primary source of contact for the investigation team. This is an important function, and one that allows in-house counsel to facilitate and centralize the flow of information to the investigation team. By being in the middle of the information flow, in-house counsel can help ensure that requested materials are being provided promptly and that company employees are making themselves reasonably available to the investigators. It also allows the general counsel to track that various responsibilities related to the investigation (maitaining timeline, documenting process, controlling legal spend) are being met.

2. Create a Working Group

As part of ensuring the efficient flow of information to the investigation team, the general counsel should identify at the outset a working group to be the contact points for any investigation related issues or requests for information or interviews. The working group could be formed from members of the legal department but likely would benefit from representatives of appropriate business units of the company. Any persons on the working group must clearly be free from any past involvement with the issues investigated. One role of the working group will be to ensure that all requests for information and interviews come through the working group only, and that information provided to the investigators (other than perhaps IT data pulls) comes from the working group. Maintaining this discipline will allow the working group to keep accurate records of what information has been provided, working as a helpful backstop on the investigators.

3. Document the Process

The need for this may not seem obvious, but in-house counsel should help ensure that the inves- tigatory procedures are properly documented. In large investigations, which by necessity are often conducted at frenetic pace, this basic aspect of lawyering can slip. We have been brought into ongoing investigations conducted by other firms where the blocking- and-tackling of adequately recording information has broken down. This is an area where the working group with its disciplined record keeping of information provided to the investigation team can help. Keep in mind that in dealing with regulators, auditors, or other stake- holders, not only the findings of an investigation but also the fact an investigation was conducted and how it was conducted can help the company in reaching favorable res- olutions. There is no excuse for not having excellent records.

Preserve Evidence

While it seems axiomatic that steps must be taken at the outset of an investigation to ensure relevant evidence is preserved, it bears repeating. Time and again we have come into matters where companies have failed to take adequate steps to suspend regular document retention programs and document the steps that were taken to maintain necessary files. The maintenance of electronic record systems is particularly important. In cases where timely preservation notices were not put in place, a company can find itself having to prove a negative to regulators or private litigants that relevant information was not lost.

Control Scope

Investigators must be given latitude to conduct necessary procedures to determine the facts and make accurate findings. But outside legal counsel need not be given a warrant to investigate the company writ large. An investigation should be focused and directed in scope, with a clear time horizon for when it is expected to be concluded (understanding, of course, that new issues can arise and scope expand). An investigation is like any other large and expensive project at the company; it benefits from project management. The general counsel can help keep investigations on pace by tracking workflows to see that deliverables are being met.

Control Legal Spend

Investigations must be pursued to completion with necessary resources committed to see that the investigation is properly supported. Senior management or the board will often give instructions to the general counsel to do "whatever it takes" to get things right. But get- ting things right need not bankrupt the company. In retaining outside investigation counsel, the same principles of prudent fiscal management should apply as with any other project requiring outside legal expertise. In-house counsel should be able to negotiate budgets or pursue alternative fee structures with investigation counsel as with other legal vendors to the company.

Know When Outside Expertise Is Required

While some problems at the company can be investigated capably with existing legal or compliance personnel, significant investigations almost invariably will require the assistance of outside subject matter experts. The most common type of expertise companies require in such circumstances is independent counsel. As with hiring lawyers to work for the company on any other matter, the general counsel should ensure that proposed outside investigation counsel has the necessary expertise for the project at hand. For investigations of issues that may have regulatory exposure, the company ideally should choose investigation counsel with experience in dealing with those same regulators (SEC, DOJ, etc.) at high levels. Other types of outside experts, such as forensic accountants or persons with industry-specific knowledge, may also benefit the investigation.

8. Understand Limitsof Privilege

The law is generally well settled that communications between counsel for the company and its current employees regarding information the employees obtained during their employment, and that is relevant to the legal advice that counsel is providing to the company, is covered by the attorney-client privilege. The Supreme Court clarified this principle for matters determined under federal common law in Upjohn v. United States. Since Upjohn, more than 30 states have adopted this standard, and only a handful have diverted from Upjohn to any degree. While the court in Upjohn limited its decision to apply to current employees, Chief Justice Burger expressed in a concur- ring opinion that the same principle should apply to former employees as well. Since that time, the majority of states—and virtually all courts interpreting federal common law— have found that the Upjohn standard should apply to former employees.

In an investigation, the same stan- dards of attorney-client privilege apply as in any other legal matter for the company. But some perils can exist. Executives of the company will often come to the general counsel asking for direction as to whether they should hire their own lawyer and, if so, who that should be. These discussions can place the general counsel in a sensitive position between the investigation process and the persons being investigated. The role of the general counsel as an attorney only for the company must made clear. Such conversations between the general counsel and executives and any comments that are made in those conversations may also be discoverable in later litigation or government inquiries.

Understand When to Self-Report

One of the most important decisions the company will make during the pendency of an investigation is whether to self-report instances of misconduct to regulators. This is never an easy decision, and it is one that will have a significant impact on the course of the company in the years that fol- low. These issues should be discussed with outside counsel with expertise in the subject area and brought to the attention of senior management and (where applicable) the board.

Notify Your Constituencies

Lastly, an internal investigation can discover issues affecting the com- pany in significant areas, including in its financial reporting. For public com- panies, the general counsel should consider notifying the company's outside disclosure counsel of the investigation and the issues under review. Depending on circumstances, sometimes even the existence of an investigation can raise disclosure obli- gations under the securities laws. The company's auditors and board should be similarly kept informed.

A well-organized and well executed internal investigation provides the foundation for the company to make informed decisions on how to correct problems that arise and miti- gate the potential institutional harm from corporate misconduct. The more robust and fulsome the response to problems that occur, the stronger the company will be able to argue to regulators that appropriate steps were taken to remediate wrongdoing. Making sure investigations are con- ducted properly and completed in a timely manner benefits everyone at the company, not the least of whom its chief legal officer.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.