Protecting Internal Investigations from Disclosure: Suggested Best Practices

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A recent case out of the D.C. Circuit highlights some best practices that can boost the odds that the attorney-client and work product protections will shield internal investigation records. Although not precedential outside the D.C. Circuit, United States ex rel. Barko v. Halliburton is an important victory for the protection of attorney-client communications in internal investigations.  In addition, the District Court below offers helpful advice on how to bolster protection of your internal investigations materials and information.

The Basics

A company can avail itself of two primary protections for communications and documents created during an internal investigation:

  • the attorney-client privilege over communications primarily designed to gather facts that a lawyer may need to provide the company with legal advice
  • the work product doctrine over documents if the company anticipated, or was in the midst of, litigation at the time they were prepared and their primary purpose was related to the litigation

The attorney-client privilege provides absolute protection for communications outside the context of anticipated or actual litigation. Unfortunately, the privilege is difficult to create and easy to lose. Some examples of information not covered by the privilege are:

  • uncommunicated thoughts, such as notes to the file, unless they memorialize or serve as the basis for attorney-client communication
  • underlying facts uncovered in an investigation even they are referenced in a privileged communication
  • pre-existing documents that are forwarded to legal counsel
  • final versions of documents created with the intention that they be made public
  • communications made for the purpose of furthering a criminal or fraudulent act
  • communications to an attorney who is not acting in a legal capacity

The work product doctrine can protect documents relating to an investigation if the company was involved in or anticipated litigation at the time such documents were prepared and the primary purpose of the documents was related to the litigation. The work product doctrine is broader than the attorney-client privilege because the client or client representative can create work product and such work product can be shared with friendly third parties without waiving the protection. However, it is important to note that the protection can be overcome if the opposing party cannot obtain the information without undue hardship.

Simply having a lawyer involved in an internal investigation does not guarantee the availability of the attorney-client or work product protections if that lawyer is not acting in a legal role or not being solicited for legal advice. Also, disclosure of privileged communications to anyone outside the company (for example, the government and external auditors) will generally waive the attorney-client privilege. Such disclosure of work product usually does not waive the work product doctrine unless it is made to adversaries directly or through a third party.

The Barko Case

The plaintiff in United States ex rel. Barko v. Halliburton alleged that Halliburton Company and Kellogg Brown & Root (“KBR”) violated the False Claims Act by passing excessive or fraudulent contract costs on to the U.S. government. Earlier this year, the plaintiff moved to compel the defendants to produce documents related to KBR’s internal investigations of alleged violations of its Code of Business Conduct. KBR refused to turn over the records, claiming protection under the attorney-client privilege and work product doctrine.

District Court Judge James S. Gwin applied a “but for” test in determining whether the attorney-client privilege applied: the party invoking the privilege must show that the communication “would not have been made ‘but for’ the fact that” it was seeking legal advice. Judge Gwin found that the privilege did not apply because the internal investigation was a routine one that would have been undertaken regardless of whether the company was seeking legal advice. In addition, Judge Gwin found that the work product doctrine did not apply for the same reason – the company conducted the investigation as part of its ordinary course of business, and not “because of the prospect of litigation.”

Finding that the “but for” test is not appropriate for analyzing the attorney-client privilege, the D.C. Circuit disagreed and overturned the District Court finding, holding that, so long as obtaining legal advice was one of the significant purposes of the investigation, the privilege applies, even if “the investigation was mandated by regulation rather than simply an exercise of company discretion.”

Take-Aways

Although the D.C. Circuit held these steps are not required in order to utilize the attorney-client privilege and work product protections,  companies can still glean some important lessons from Judge Gwin’s opinion to afford greater protection from disclosures of internal investigations, especially if they may litigate outside the D.C. Circuit:

  • bring the in-house attorney into the fold as early as possible and consider engaging outside counsel early in or prior to an investigation to omit any confusion over whether an in-house attorney is acting in a legal or business role
  • provide Upjohn warnings to employees who are interviewed in an investigation and make clear that the investigation is being undertaken to provide legal advice to the company, rather than business advice
  • train those involved in the investigation to be wary of what they document in writing and to assume that everything may eventually be made public
  • be thoughtful about what is exchanged via email, since email correspondence can be easily misinterpreted and forwarded to others
  • clearly delineate who the “client” is to better establish the attorney’s duties of loyalty and confidentiality
  • do not overuse notations such as “Protected by Attorney-Client Privilege” and “Attorney Work Product” because that may dilute claims of privilege or work product protection

A properly conducted internal investigation is an important compliance function, but steps should be taken to ensure that those efforts are not used against the company later.  By following the guidance of Judge Gwin’s opinion, a company can add an additional layer of protection to help guard against a court-ordered disclosure of internal investigation materials.

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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