Conducting Privileged Internal Investigations

In-house attorneys receiving a whistleblower complaint, government inquiry or other alert must decide whether and how to conduct an internal investigation. If they choose to do it in-house, they must manage many complex issues to ensure that the investigation and its results remain protected from discovery in subsequent litigation. The legal advice component is especially troublesome for in-house lawyers. Courts recognize that in-house lawyers communicate about business-related, as well as legal, issues, and will not assume that a communication involves legal issues simply because an in-house lawyer is present. The legal advice presumption afforded outside counsel may persuade the in-house lawyer to retain a law firm to conduct the investigation. But not every whistleblower complaint or government subpoena necessitates the retention of outside investigation counsel.

When a company determines to keep the investigation in-house, its legal department must ensure that it conducts the investigation in a privileged manner. If delegating the investigation to non-lawyers, prepare a memorandum that emphasizes that the investigation is confidential and for legal advice purposes. Instruct and train non-lawyer investigators on how to conduct privileged interviews.

Another consideration is whether the privilege protects communications between in-house lawyers or their designees who interview consultants or third-party contractors during an investigation. Although not addressed in every jurisdiction, the privilege should cover these communications under the functional-equivalent doctrine, which holds that the privilege applies to third-party communications if the third party was acting as the functional equivalent of an employee.