Conducting Internal Investigations Amid Heightened Government Scrutiny of Corporate Practices Evaluating Whether to Investigate, Determining Scope, Selecting Investigators, Managing Privilege Issues, and More Today’s faculty features: 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. TUESDAY, MARCH 10, 2015 Presenting a live 90-minute webinar with interactive Q&A Fritz E. Berckmueller, Partner, Calfee Halter & Griswold, Cleveland Theresa L. Davis, Partner, Reed Smith, Chicago
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Conducting Internal Investigations Amid Heightened Government Scrutiny of Corporate Practices Evaluating Whether to Investigate, Determining Scope, Selecting Investigators, Managing Privilege Issues, and More
• Advise whether/how to share results by audience, use, type
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IV. POST-INVESTIGATION STRATEGIES
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Documenting the Investigation: Credibility Determinations
• Demeanor and body language
• Reaction to allegations
• Did person’s chronology of events match or contradict others? If not, how did it diverge?
• Does the version make sense – could it have happened that way?
• Was he or she cooperative or reluctant?
• Did he or she make conflicting or contradictory statements?
• Did the verbal account differ from the written account? 45
Documenting the Investigation: Credibility Determinations (cont’d)
• Did he or she provide circumstantial or corroborating evidence?
• What did he or she admit?
• What did he or she deny?
• Has a significant period of time passed from when the witness observed the behavior to when the witness discussed the behavior at the interview?
• Does the witness display a great level of certainty?
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Privilege Considerations in Conducting Investigation • Privilege Considerations Critical When Determining Whether and How
to Memorialize Interviews
o Notes/memoranda should bear legends “Attorney-Client Privilege and Attorney Work Product”
o Initial paragraph of memo should indicate:
• Memo contains attorney’s mental impressions and strategies
• Attorney’s thought processes and opinions are intertwined with factual information
• Statements ascribed to witness are not verbatim transcripts
o Ultimately, memos should be drafted with recognition that they may become public
o Notes/memoranda should be kept in secure location to prevent unauthorized disclosure/dissemination and establish expectation of confidentiality
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Privilege Considerations in Conducting Investigation • Early Determination of End-Product of Investigation
o Presentation of findings – oral or written report?
o If written report, should it be disclosed to government?
McNulty Memo/Fillip Policy – U.S. Attorney’s Office
Seaboard Report - SEC
o Majority view – disclosure of information to government waives privileges with respect to information
o Divided view –
“Selective Waiver” – confidentiality agreement with government agency maintains privilege as to other parties
“Common Interest Privilege” – Disclosure to auditors and others with whom company has a “common interest” or where necessary for effective consultation between client and lawyer
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Privilege Considerations in Conducting Investigation
• Disclosure of Final Written Report to Government
o Waiver of other investigation documents
Underlying notes and memoranda
Underlying documents quoted or paraphrased in report
Drafts of reports
o FRE 502
Statutory presumption against subject matter waiver
Unless “fairness” requires further disclosure to prevent selective and misleading presentation of evidence
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Implementing Decision/Action
Meet with accused employee and review action to be taken (complete all documentation)
Explain/describe allegations.
Describe investigative process.
Describe findings.
Describe action to be taken and explain why.
Meet with complaining / reporting employee(s) if appropriate:
Explain findings, conclusion and reasoning.
State action being taken.
Tell employee to report perceived retaliation.
Tell employee how to challenge decision if he or she disagrees with action.
Ask for continued confidentiality consistent with law. 50
Reporting the Results of the Investigation
Notification of the Investigation o Advantages of voluntary disclosure
Decreases risk of corporate prosecution
Mitigating factor in sentencing/penalties
Create cooperative relationships with government/regulator
Reduce risk/cost of litigation and defense
Qui tam suits – could avoid government intervention
o Disadvantages of voluntary disclosure
Making mountains out of molehills
Deputized agents of government
Premature disclosure could dictate course/scope of investigation
Identification of culpable employees and required disciplinary action
Public company disclosure mandatory if potentially material issue 51
Reporting the Results of the Investigation
Reporting the Results of the Investigation o To whom should reports be made?
Maintaining the privilege
Timing of reports
Nature of reports
Written
Oral
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Attorney-Client Privilege Issues
Special Committee Investigations – Who Holds Privilege? o Disclosures to full board or other members of corporation could
result in waiver of privilege
OM Group Sec. Litig., 226 F.R.D. 579 (N.D. Ohio 2005) – held audit committee waived privilege as to documents underlying detailed investigation presentation made to full board
Ryan v. Gifford, 2007 WL 4259557 (Del. Ch. 2007) – held special committee waived privilege when committee presented findings to full board, including directors suspected of wrongdoing
o Remedy?
Two-tiered reporting structure
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Productions in Government Investigations
• Significant risk when party produces documents to comply with subpoena or government investigation, intentional, limited waiver may subject party to claims of waiver by subsequent third party (civil) litigants