Broadcom Ruling Highlights Potential Pitfalls in Internal Investigation

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On April 1, 2009, a federal judge suppressed evidence obtained during interviews of Broadcom Corporation’s then CFO, William J. Ruehle, by an outside law firm that was conducting an internal investigation on behalf of Broadcom while simultaneously representing Ruehle in related litigation. United States v. Nicholas, slip op., No. SACR 08-00139-CJC (C.D. Cal. Apr. 1, 2009). The court concluded that the law firm had breached its duty of loyalty to Ruehle by disclosing attorney-client privileged information to prosecutors without his consent and referred the firm to the California State Bar for potential disciplinary proceedings.

Although the ruling arose from a criminal case, it addresses important legal representation issues common to most internal investigations. Companies that fail to avoid the pitfalls surrounding those issues risk losing a key benefit of conducting internal investigations. Thus, anyone undertaking an internal investigation must be crystal clear about the relationship between counsel conducting the investigation and any witness who provides information during the investigation.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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