Investigations serve as a foundation for successful management of potential enforcement actions and/or prosecutions and mitigating potential penalties. This list is meant as a guide to counsel conducting investigations and is not all-inclusive as every situation is unique.
10. Listen for the Whistle Laws such as Dodd-Frank and the Affordable Care Act have elevated whistleblowers’ status. Recent SEC enforcement actions and fines related to the use of confidentiality agreements demonstrate the importance of taking steps to ensuring that clients’ internal policies do not impede an employee’s ability to report wrongdoing. Companies should develop internal processes that encourage employees to report concerns internally before contacting government agencies.
9. Develop a Plan An effective investigation starts with a plan that addresses key considerations—What is the investigation’s scope? How extensive is the alleged misconduct? Who, where, and when did the misconduct originate? Who knew what and when? The investigation should be broad enough to determine exactly what misconduct may have occurred. At the same time, the investigation’s scope must be managed so to limit disruptions to business operations and ensure confidentiality.
8. Identify Where Information Is Located Immediate steps must be taken to determine where relevant information resides, and how it can be preserved, retrieved, and reviewed. Custodians should be identified who can assist in locating repositories of relevant information—in both hard copy and electronic format. Information technology personnel, and in many cases independent forensic experts, should be involved to ensure that all electronically stored information is properly searched.
7. Preserve, Preserve, Preserve As soon as the company is on notice of potential wrongdoing, it must take steps to preserve relevant information. A document-retention memorandum should be circulated to all custodians who may possess relevant information. The document hold ensures that all relevant information is preserved at the earliest possible moment, which is essential if the company is ever subject to a government investigation. Failure to preserve documents may result in obstruction-of-justice charges.
6. Know Your Client Will the investigation be undertaken by management or independently by the board of directors or board committee? The engagement letter should clearly identify the client. Clarity on this issue is necessary to preserving the attorney-client privilege and attorney work-product privilege as counsel will need to provide specific disclosures, often referred to as Upjohn warnings, when conducting interviews.
5. Employ an Effective Interview Strategy Counsel should be well-versed in what the documents reveal (and what requires further explanation) prior to conducting interviews. As interviews often provide the best insight into critical issues, steps should be taken to encourage candor in the witness. Proper preparation is the key. Interviews should be sequenced in a way that allows counsel to gather information from less culpable employees first before confronting more culpable witnesses.
4. Details, Details, Details No details should be minimized, as their importance may not be realized immediately. Best practice is to conduct interviews with a note taker who will memorialize the interview. Accurate and detailed interview memoranda will assist counsel in preparing either written or oral investigative reports.
3. Keep It Confidential Counsel should realize that the factual landscape is likely to evolve as facts are learned. Maintaining confidentiality minimizes the risk of disseminating inaccurate information. It will also help counsel avoid waiving privilege. Dissemination of information should occur only on a “need to know” basis.
2. Prepare for Attention The media may come calling. Any media statement must be crafted to avoid harming the company’s legal status. “No comment” is typically ill-advised as it allows the media to spin the story. The message should be honest and emphasize that the company is committed to learning the facts.
1. Carefully Assess the Most Appropriate Reporting Mechanism Reporting results of an investigation should be avoided until you are confident that all relevant information has been gathered and analyzed. Do not report outside the company until internal reporting protocol is complete. Exposure to the company may be impacted by when and how facts are communicated, and to whom. Accordingly, a well-thought-out strategy is critical.