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Regulatory: The do’s and don’ts of corporate internal investigations—Part 3

A primer on identifying your client and preparing for witness interviews

This is the third in a series of six articles on the “Dozen Do’s and Don’ts of Corporate Internal Investigations.” Read the first and second installments.

As part of our series on corporate internal investigations, we have discussed the importance of developing internal processes that motivate employees to report compliance concerns, developing a process that ensures an efficient and thorough investigation, searching the right places for relevant information and ensuring that evidence is properly preserved. This segment addresses the importance of precisely identifying the client in an investigation (“Do Identify Your Client”) and thoroughly preparing before interviewing witnesses (“Do Come Armed.”)

5. Do identify your client

Identifying the client with precision is essential. A threshold determination must be made as to whether the investigation will be led by management, or conducted independently through the board of directors or a board committee. This will inform who counsel will take direction from and who they will share results with. Will counsel report directly to senior management or in-house counsel? Or will counsel report only to the board or a board committee? Counsel’s engagement letter should clearly address these issues.

Multiple groups of actors in a corporation make the attorney-client relationship complex. The client in an internal investigation will almost always be the entity rather than any specific individual. Accordingly, the attorney-client privilege belongs to the company and not to any individual employee. Failure to be clear on this point could result in the inadmissibility of witness admissions, discoverability of witness statements in subsequent litigation or government enforcement actions, and potential disqualification of counsel. Counsel must, therefore, take necessary steps to preserve attorney-client privilege and attorney work product privilege.

This includes providing specific disclosures—commonly known as Upjohn warnings—when conducting witness interviews. An Upjohn warning states that: –

  1. The attorney represents the corporation and not the individual employee
  2. The interview is covered by the attorney-client privilege, which belongs to and is controlled by the company, not the individual employee
  3. The company may decide, in its discretion, whether to waive the privilege and disclose information from the interview to third parties  

It is also important to identify your client in order to avoid conflicts of interest. In some circumstances it may be permissible to represent officers and employees as well as the corporate entity if their interests are not adverse. Although joint representations may result in efficiencies and cost-savings, they may also restrict options. Counsel should exercise an abundance of caution before entering any joint representation, as conflicts of interest can lead to disqualification of counsel and malpractice claims. Counsel must assess potential conflicts of interest at the outset and, if appropriate, address potential conflicts in the engagement letter.

ABA Model Rule 1.13 allows a lawyer representing an organization to represent directors, officers, employees, shareholders or other constituents subject to the requirements of ABA Rule 1.7. Rule 1.7 states that, “A lawyer may not represent a client if the representation will be directly adverse to another client, or if there is a significant risk that the representation of one client will be materially limited by responsibilities to another client.” Often, when a corporate officer or employee is suspected of fraud or other misconduct, a conflict likely exists and each should engage separate lawyers. Counsel should also be mindful that conflicts may emerge over the course of an investigation as new facts are uncovered. As a result, it is important to maintain flexibility. When in doubt, the safest course is usually to advise that an officer or employee secure separate counsel.

6. Do come armed

Once counsel has identified the client and launched the investigation, their primary job is to collect information. In almost every case, company personnel will be the primary source of information. Before conducting interviews, however, counsel should arm themselves with information that will help guide the interview. As discussed in our previous piece, the company must determine where relevant information resides, secure it and analyze it prior to interviewing employees. The proper use of documents helps shape the line of questioning in an interview and assists counsel in making credibility determinations of key witnesses. The best practice is to mark documents used in an interview and attach them to the interview memorandum and/or the investigation report if one is prepared.

Our next segment will address the next two of our Dozen Do’s and Don’ts of internal investigations: “Don’t Start At The Top” and “Don’t Be a Lone Ranger.”

Contributing Author

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Sean O'D. Bosack

Sean O'D. Bosack is a shareholder in the Litigation Practice Group in the Milwaukee office of Godfrey & Kahn and a member of the White Collar...

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