United States: Key Issues And Best Practices For Corporate Internal Investigations

Last Updated: March 28 2018
Article by Adam P. Schwartz and Erin J. Hoyle

Corporations today face a strict regulatory environment and close scrutiny surrounding corporate activity. Public and private companies face the potential of not only governmental investigations, but also private complaints with significant allegations that attempt to call a corporation's conduct into question. Frequently, corporate scrutiny focuses on compliance issues — whether companies comply with the legal obligations and ethical practices applicable to their businesses. To prevent or mitigate the risks associated with this environment, corporations often appoint outside counsel to conduct an internal investigation of any potential or active compliance issues.

Participating in an internal investigation can be daunting to a young lawyer, who is more familiar with the structured, rule-based arena of litigation than in the unfamiliar tasks of document collection, interview memorandums, Upjohn warnings, and report drafting. There are no easy precedents or treatises to research, and no uniform rules or procedures to follow. Instead, internal investigations offer new legal issues and tasks that a typical young lawyer has yet to encounter. The following tips should assist young lawyers in becoming valuable assets to internal investigations.

Proper Preparation

As with any new assignment, begin by taking time to understand the background of the investigation, including (i) the company; (ii) the allegations prompting the investigation; (iii) the applicable legal framework; (iv) any key individuals identified in the allegations and their roles in the company; (v) the client's expectations; and (vi) the law of attorney-client privilege and work product protection.

Maintaining the attorney-client privilege and work product protection is critically important to the success of an internal investigation. Counsel's legal advice to the client is protected by the attorney-client privilege, and the documents counsel creates in the course of the investigation are protected by work product protection. To protect against an inadvertent waiver, the client and counsel should:

  • Provide Upjohn warnings at all witness interviews and instruct witnesses to keep the discussions confidential.
  • Ensure that any non-attorneys involved in the investigation work at the direction of designated attorneys.
  • Include legends on documents and communications indicating that they are protected by the attorney-client privilege or work product protection where applicable.
  • Avoid disclosing any documents or other information about the investigation to individuals outside of the attorney-client privilege and work product protection. (For example, if the client is the audit committee, sharing documents or other information with the full board may waive privilege.)

An initial review of applicable privileges and protections will ensure proper steps are taken to preserve and protect them.

Document Collection and Review

Document collection and review are critical to reconstructing past events and assisting further fact-finding during witness interviews. Becoming familiar with the allegations, underlying legal framework, and key individuals at-issue will help assess which documents, files, and search terms would make a good starting point for a review. As witnesses are interviewed, pay particular attention for additional locations of potentially responsive documents.

Most importantly, make a record of the review process, including which documents have been collected and reviewed, the location of the documents, what search terms were applied, the number of documents and pages reviewed, and who conducted the review. Develop a comprehensive and efficient system of tagging documents by topic and individual to avoid rereviewing large quantities of documents when assisting with the compilation of witness and topic binders for interview preparations and any interim or final reports.

Witness Interviews

By reviewing documents and potentially attending some client meetings, you will likely know the facts of the investigation better than others involved in it. Partners and senior associates are relying on that knowledge, particularly during witness interviews, to make sure they don't miss key facts or lines of questioning.

Before the interview, clarify with the partner whether and how to raise any issues or topics that arise during the interview. An interviewer may make a conscious decision not to ask a question found on the interview outline. If you are unsure whether a topic was skipped due to a conscious decision or was simply overlooked, ask for a break in the interview so you can discuss the point away from the witness.

At the interview, have the Upjohn warnings handy and ensure they are given to and understood by each witness. With your expertise on the facts of the investigation, correct any factual misstatements by fellow counsel. Should the interviewer ask if they've missed anything, raise any topics that have not been addressed.

Reliable Interview Notetaking

Reliable notetaking is an essential skill for a young lawyer to master. The purpose of notetaking is not to provide a transcript. Instead, be as thorough as possible, without recording every word verbatim. Evaluate the significant substance of the interview, and concentrate on accurately recording the substance.

Verbatim notetaking has serious work product consequences. Interview notes or subsequent summary memorandum may not be considered protected work product if they simply transcribe the interview.

Discuss your partner's preference for taking notes on a laptop versus by hand. Although laptops have their advantages, such as typing speed and ease of converting typed notes into a polished interview memorandum, notetaking by laptop may not be appropriate under all circumstances. Laptops can be distracting during an interview or make witnesses more cautious in their responses. If you do use a laptop, always remember to bring a flash drive or other device to back up your notes after each interview and bring a notepad should technology issues arise.

Concise and Organized Interview Memoranda

Less is more with interview memoranda. Internal investigations often involve many witnesses and an urgency associated with the release of findings. When in need of a quick refresher on a particular interview, no one wants to spend two hours reading a memo to decipher its substance.

An interview memorandum is meant to be a coherent and concise reference point for accessing the substance of the interview. Accordingly, determine whether drafting the memo in bullet-point form with short narratives is the most appropriate format. By removing any unnecessary verbiage that accompanies the typical legal memo, you can significantly decrease the length of the memo without sacrificing substance.

Reporting Findings and Conclusions

At the conclusion of the investigation, a report (either oral or written) of the findings and conclusions is expected. A young lawyer may be tasked with formulating a first draft of any tentative findings that outline the final report. The report should detail the work of counsel, its legal conclusions, and its legal advice.

If the client, such as the audit committee, intends to provide a report of the investigation to another recipient, such as the full board, the client should prepare a report setting out its findings and conclusions, but the client's report should not include a detailed recitation of facts or counsel's legal advice. This allows the client to maintain attorney-client privilege and work product protection.

Conclusion

Conducting an internal investigation can be a complex matter, fraught with pitfalls for the inexperienced practitioner. When a corporation is confronted with evidence or allegations of potential wrongdoing, conducting an effective corporate investigation, protected by the attorneyclient privilege, can mitigate potential risks. A young lawyer can play an important role in such investigations by understanding the intricacies of attorney-client privilege and work product protections, coordinating document collection and reviews; leading preparations for witness interviews; taking reliable interview notes; drafting concise and accurate interview memoranda; formulating tentative findings; and drafting written reports or oral presentation outlines. Overall, thoughtful, proactive preparations will reduce mistakes, ensure important investigatory standards are met, and help evidence the corporation's efforts to identify and resolve any actual or perceived compliance issues.

Originally published in Trial Advocate Lawyer, Winter 2018 (Volume 37, No. 1). ©2018 The Florida Defense Lawyers Association. Reprinted with Permission.

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.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions