A Guide to Corporate Internal Investigations

In-house teams at public and private companies are confronted almost daily with evidence or allegations of potential internal wrongdoing. These scenarios may vary widely in severity and magnitude—from notification of a government investigation into potential violations of federal law by a member of senior management, to a routine internal complaint of violations of the company code of conduct or employee policy. In most instances, the company would be best served by conducting some type of internal review into the allegations. However, deciding whether and how to conduct an internal investigation requires consideration of a variety of factors. These typically include the nature of the corporation, the specific conduct, subject matter, and alleged actor(s) at issue, the applicable law, and, where appropriate, the government’s enforcement priorities. And if an internal investigation is undertaken, there are a number of decisions that should be made at the outset, including who should conduct the investigation, the goals and parameters of the review, and whether a report—written or oral—will be issued. This article sets forth a framework of best practices and considerations for conducting effective internal investigations, as well as the most common pitfalls to avoid.

I. DECIDING WHETHER TO INVESTIGATE -

The threshold issue to be considered upon learning of potential wrongdoing is whether to initiate an internal investigation at all. On balance, most scenarios warrant some kind of internal investigation, both for business purposes and in the event of scrutiny by government regulators or potential private litigants. U.S. regulators increasingly expect that companies will monitor their own conduct and report potential wrongdoing to the appropriate enforcement agencies. Likewise, private plaintiffs are filing more cases with significant allegations that attempt to call corporations’ conduct into question. Under the right circumstances, conducting an effective internal investigation protected by the attorney-client privilege can benefit the company in a number of ways...