United States: An Inside Job: Highlights From November's ACC Presentation

Last Updated: November 24 2017
Article by Elisabeth M. Koloup

On November 8, 2017, Suzzanne W. Decker, a Principal in the Miles & Stockbridge Labor, Employment, Benefits & Immigration practice group, and Sandra McLelland, Managing Counsel at Under Armour, presented a webinar to members of the Association of Corporate Counsel ("ACC") on preserving the attorney-client privilege in corporate investigations and the extent to which internal communications may be protected by the attorney-client privilege or the attorney work-product doctrine.

Companies routinely perform internal investigations in response to employee grievances, whistleblower complaints and product concerns, among other allegations of corporate wrongdoing. These investigations are generally conducted pursuant to applicable personnel policies and are often handled by non-attorneys such as HR personnel, sometimes at the direction of in-house counsel. While the attorney-client privilege and work-product protections may apply to internal investigations, the application of any privilege is fact specific, which makes it difficult to predict whether or not a court would uphold the privilege in a particular case. In addition, the burden rests with the employer to establish that any internal communication or documentation is privileged.

Recently, some courts have held that communications and documentation created during an internal investigation are protected by the attorney-client privilege so long as a significant purpose of the investigation is to obtain or provide legal advice, even if the investigation is not conducted by an attorney. However, there are certain situations in which the privilege with respect to those communications and documents may be waived, so it is important that companies be able to identify those situations and have internal policies in place aimed at minimizing the risk of waiver and preserving the privilege when possible.

This article will cover the highlights of the webinar, including types of privileged communications, scenarios in which the privilege can be waived, best practices for preserving the privilege, and when to involve outside counsel. These topics are especially relevant today, as businesses' grow increasingly reliant on electronic communications in the workplace.

Privileged Communications

Attorney-client privilege generally applies to internal corporate investigations, so long as the primary purpose of the investigation is to obtain or provide legal advice—even if an investigation is conducted pursuant to corporate policies or regulatory obligations. See In re Kellogg Brown & Root, Inc., 756 F.3d 754, 760 (D.C. Cir. 2014). This rule also applies even if the investigation is not conducted by an attorney.

So what exactly is protected under the privilege? Generally, confidential communications between the company and its attorney(s) for the purpose of obtaining legal advice are considered privileged communications. This may include: requests for legal advice from in-house or outside counsel, disclosures of facts to in-house or outside counsel regarding internal investigations, requests by in-house or outside counsel to business people for information needed to provide legal advice, and legal advice provided by in-house or outside counsel. In Upjohn Co. v. U.S., 449 U.S. 383 (1981), the Supreme Court of the United States established the following guidelines for determining when the privilege applies to corporate employees:

  • Whether the communications were made by a corporate employee at the direction of superiors for purpose of obtaining legal advice (versus business advise);
  • Whether the communications contained information necessary for counsel;
  • Whether the matters being communicated were within scope of the employee's corporate duties;
  • Whether the employee knew that the communications were for the purpose of the corporation obtaining legal advice; and
  • Whether the communications were ordered to be kept confidential by the employee's superiors.

When Can the Attorney-Client Privilege Be Waived?

Common situations creating a waiver of the privilege may include:

  • When the investigation is disclosed by the employer to establish a defense in legal proceedings, depending on the extent to which it seeks to rely on the substance or findings of the investigation.
  • Intentional disclosure, and perhaps inadvertent dissemination, of otherwise privileged information or documents to more people than only those who need to know or have such information. This often happens when combining legal and business or other non-legal matters in one communication.
  • Where a certain state or international jurisdiction does not recognize the attorney-client privilege between a company and its in-house counsel. For example, the attorney-client privilege does not extend to in-house counsel in much of Europe where it generally only extends to written communications from an "independent," outside lawyer.

Recommended Practices to Limit the Risk of Waiving the Privilege:

  • Anticipate potential types of future investigations and have a plan.
  • Develop a specific team for each type of investigation.
  • Avoid direct involvement of in-house counsel in investigations; instead, direct and manage specifically trained human resources personnel in conducting internal investigations. These individuals should closely supervise the investigation and report to in-house counsel regarding the investigation to avoid creating conflicts of interest.
  • Train and educate employees on the important concepts of privilege.
  • Create and implement internal policies and procedures for preserving and managing documents and data.
  • Minimize the number of internal employees privy to information regarding internal investigations.
  • Avoid being the ultimate decision-maker or playing a business role in employment decisions regarding termination and remedial action. Instead, the decision-making process with regard to internal investigations and remedial actions should be handled at the management level.
  • Preserve confidentiality of emails and other written communications.

When to Involve Outside Counsel

While these practices can help in preserving the attorney-client privilege during internal investigations, there are certain situations in which the privilege simply will not apply. In the following situations, for example, it can be helpful or even necessary for in-house counsel to involve outside counsel in order to preserve the privilege:

  • For objectivity in conflict of interest situations.
  • When serious or potentially serious allegations are involved.
  • When investigator and/or in-house counsel lacking in specific or relevant expertise as it relates to a certain matter critical to the investigation.
  • Complex choice of law situations and situations involving international jurisdictions.
  • When in doubt (involving outside counsel in attorney-client communications ensures they remain privileged).

A company can be best served if in-house counsel can identify these situations and make an educated determination of whether to involve outside counsel.

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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