Internal Investigations Can Lead to a Waiver of the Attorney-Client Privilege

more+
less-

As I have discussed in other blog posts, communications with in-house counsel that are not for the purpose of obtaining legal advice are not privileged. But what happens when outside counsel is hired to investigate a claim of harassment in the workplace and a second outside counsel is hired to provide legal advice?  Anyone who thinks that the subsequent communications involving those outside counsel will automatically be privileged had better read the recent decision by Magistrate Judge Kenneth P. Neiman (District of Massachusetts) in Koss v. Palmer Water Department.

In Koss, the plaintiff worked for the town of Palmer and claimed to have been the victim of sexual harassment by a co-worker from 2008 through 2012. After Koss reported to the town that she was being harassed, the town hired its long-time outside counsel, Henry Rigali (“Rigali”), to investigate and report on the matter. Some time thereafter, Koss was terminated, and she sued the town and two individuals for retaliation in addition to the underlying harassment.

As part of its defense, the town asserted that it exercised reasonable care to prevent/correct any alleged harassment and that Koss had failed to avail herself of opportunities to avoid the harm she allegedly suffered. Because Rigali’s investigation was part and parcel of that defense, his investigative notes, etc. were not going to be privileged. Accordingly, the town also hired another law firm, Royal, LLP, to act as its primary outside employment counsel.  While none of Royal’s attorneys directly participated in the internal investigation that Rigali undertook, Koss took the position that any communications related to the investigation involving Royal were not privileged. As the decision in Koss points out:

If an attorney has been consulted about an investigation but did not himself or herself conduct the interviews, make disciplinary decision, or otherwise participate in the investigation itself, the contents of the attorney’s advice to the client about the investigative process and the decisions made by the employer remain privileged. [Emphasis in original.]

In Koss, however, the Court found that Royal’s attorneys’ “advice was not confined to [the] Defendants” and that, while Royal’s attorneys did not conduct the investigation, they “not only directed and collaborated with Mr. Rigali, but exercised significant control and influence over him throughout the investigative process.” As a result, Magistrate Judge Neiman ruled that any communications between Royal’s attorneys and Rigali, or Royal’s attorneys and the Defendants with Rigali present while the investigation was ongoing, were not privileged. Rather, the privilege only could protect communications between Royal’s attorneys and the Defendants if (i) Rigali was not present; or (ii) they occurred after Rigali’s investigation had been completed (even if Rigali was present). As for the latter exception, however, the Court noted that it could be difficult to tell when that investigation had been completed because there were communications after Rigali had issued a formal report that appeared to indicate that the investigation was ongoing.

In light of Koss, and the related cases discussed therein, in-house counsel should be mindful that communications with people involved in workplace investigations, even if they are outside counsel, may not be protected from discovery. Accordingly, caution needs to be exercised, not just in terms of who undertakes an investigation, but also with respect to who communicates with the investigator and who directs the course of the investigation.