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The Nuts and Bolts of Your First Investigation

By Justin L. Heather – March 12, 2015


Investigations are a different animal, and can be quite intimidating for the uninitiated. As litigators, we are trained to be zealous advocates for our clients. In the context of investigations, that duty of advocacy is somewhat tempered by the fact-finding nature of investigations. More importantly, the procedures for conducting an investigation are somewhat different from traditional litigation methods.


The purpose of the following is to provide a general overview of some of the primary differences between standard litigation and investigations. This article does not address the peculiarities of different statutory frameworks and regulatory regimes, or provide a detailed analysis of the variances attendant to employee, accounting, or other types of investigations. Rather, this introduction should help young lawyers to better understand the investigations process.


Internal or Government-Initiated
There are essentially two types of investigations: internal investigations and those initiated by government entities or regulatory bodies. Internal investigations may arise as a result of governmental inquires or may ultimately lead to some form of direct reporting to the government. Government investigations maybe self-initiated or prompted by external sources. It is important to understand the phase of any investigation, be it internal or government, as different phases have different dynamics and may require distinct approaches.

For example, in a purely internal investigation, lawyers must be aware if and how a client has been presented with a potential problem—e.g., through a whistleblower, government inquiry, or some other manner—and must determine whether an actual problem exists. As part of any internal investigation, counsel will be called upon to gather and marshal facts, determine whether a legal or ethical violation has occurred, and determine whether any such violation is systemic or a one-off occurrence. In this way, investigations are different from litigation because lawyers are not necessarily called on to “defend” a client in the typical sense. While counsel remains an advocate for the client, and must truly represent client interests and defend them where necessary, counsel must understand the unique nature of the investigative role.


Preservation and Documentation
Litigation holds are fairly routine once litigation is contemplated. No matter the sophistication of the client, lawyers must consider drafting and distributing litigation-hold letters/memoranda once there is a reasonable likelihood of litigation. In the absence of a litigation hold, files could be inadvertently destroyed as part of routine document retention and destruction policies and procedures. The destruction of documents during an investigation may lead to claims of spoliation, adverse factual findings, and severe monetary penalties. Indeed, in certain circumstances, criminal penalties may attach to the intentional or reckless destruction of evidence related to an investigation.


It is, therefore, imperative that investigative counsel document all steps taken to preserve electronic records and physical evidence relevant to an investigation. These procedures must be detailed, captured in written form, and often require extensive coordination with company management, in-house counsel, and internal and sometimes external information technology professionals. This detailed documentation will prove essential during later stages of an investigation to demonstrate the thoroughness and completeness of the investigation. Young lawyers are often called upon to draft such memoranda and should keep in mind that more is more when detailing the steps taken by counsel and the company to preserve information, including factual interviews to locate and preserve such records.


Ethical and Privilege Considerations
In the litigation setting, companies often retain counsel to represent both the company and its employees, subject to the potential of conflicts arising in the future. Under Upjohn v. United States, 449 U.S. 383 (1981), and its progeny, companies may invoke the attorney-client communications privilege between company lawyers and non-management employees, rejecting the prior, narrower “control group” test. In other words, employee interviews and communications with investigating counsel may be considered privileged during the course of investigations. Counsel should ensure that it makes clear to employees that conversations in the course of the investigation may be privileged but that the privilege lies with the corporation and not the individual.


Waiving privilege, at least intentionally, is virtually unheard of in civil litigation. These considerations are especially important in the context of investigations. As part of their efforts to cooperate with governmental authorities, and in turn to avoid criminal sanctions, companies often waive certain privileges with respect to government reporting following internal investigations. As a result, an Upjohn warning must be given prior to conducting any employee interviews to make clear both that counsel represents the company, not the employees individually, and that the company may later choose to waive the privilege.


Reporting
In litigation, lawyers typically do not provide a detailed factual report. Statements of facts in briefs on summary judgment, pretrial orders, etc., provide facts but are part of the advocacy process. On the other hand, investigations require that lawyers prepare detailed factual reports to either company management and directors or an outside entity. Indeed, the entire process of the investigation is designed for the purposes of gathering information and providing a detailed report on the matter.


A fundamental aspect of any investigation is the all-important employee interviews. Young lawyers often serve as “provers” for these interviews, attending interviews taken by more senior lawyers, taking notes during the course of those interviews, and preparing the first drafts of interview memoranda. Lawyers should make sure that Upjohn warnings are not only given at the outset of any employee interview but also noted in the resulting memorandum memorializing the interview as well. These memoranda may ultimately be produced as part of the written report resulting from the investigation, and they should be as complete as possible.


Consequences
Unless they have experience in white-collar or criminal matters, most litigation attorneys deal exclusively with civil actions where monetary damages and injunctive relief are the norm. Depending on the statutory framework, criminal sanctions are often a possible consequence of government investigations. The stakes are only higher where an individual’s liberty is at stake. For that reason, counsel must be mindful of the consequences of their actions and the results of any investigation. Understanding the overall nature of investigations, and how they differ from standard litigation, is essential to being a productive member of the investigative team.


Keywords: litigation, investigations, nuts and bolts, young lawyers


Justin L. Heather, YAC content manager, is with the Quinlan Law Firm LLC in Chicago, Illinois.


 
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