1) The document discusses conducting internal investigations within companies. It covers topics such as when internal investigations are triggered, how to conduct them, and whether an independent committee is needed to oversee the investigation. 2) Preserving and collecting relevant documents, data, and emails is an important initial step of any internal investigation. Companies must act quickly to preserve electronic and physical records. 3) The scope of the investigation should be clearly defined in writing, but may need to be expanded as more information is uncovered. Keeping the investigation narrowly focused can help ensure it is effective.

1. Conducting Internal
Investigations
Presented by: March 2011
Michael Volkov
Partner, Mayer Brown LLP
Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States;
Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which
Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

2. The Increasing Use of Internal Investigations
 Systematic and significant cases
– Sarbanes-Oxley enforcement
– Foreign Corrupt Practices Act
– SEC Option Backdating and Insider Trading
 Effective technique for handling “routine” issues where
potential liability exists
– Discrimination complaints
– Theft and embezzlement
– Other employee misconduct
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3. Corporate Criminal Liability
A corporation can be held criminally liable for
wrongful actions of any employee IF
1. The act occurs within the scope of employment,
AND
2. The act was done for the benefit of the corporation
(at least in part)
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4. When?
What To Do?
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5. 1. The Internal Investigation
2. An Independent Committee
Overview
3. The Documents, Data and
Email
4. The Interviews
5. Privilege
6. Waiver of Privilege
7. Disclosures
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6. 1. The Internal Investigation
The Internal 2. An Independent Committee
Investigation
3. The Documents, Data and
Email
4. The Interviews
5. Privilege
6. Waiver of Privilege
7. Disclosures
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7. The Internal Investigation
The Internal Investigation: A Strategic Option
 Effective way for management to gather facts needed for
important decisions.
 Provides credibility to fact-finding process.
 Need for independence will depend on the situation.
 Design of investigation depends on purpose and importance of
inquiry.
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8. The Internal Investigation
Triggers of Internal Investigation
 Hot-Line Call, anonymous
letter, e-mail
 Information from employee
(often during disciplinary
proceeding or exit interview)
 Discovery of inaccurate
financial statements or
irregularity
 News stories of government
probes of other companies
(e.g., options backdating)
 Whistleblower lawsuit
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9. The Internal Investigation
Conducting an Internal Investigation
Before conducting any factual investigation, consider:
 Who should oversee the investigation?
 Who should conduct the investigation?
 What should employees be told before
and after they are interviewed?
 What should be written down and how?
(Will it be discoverable?)
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10. The Internal Investigation
Conducting an Internal Investigation
 An internal investigation should never
become the strategy nor the goal itself.
 A company should never authorize the
“blind” investigation without answering:
– What is the purpose?
– Who is the potential audience?
– What does the company know about the
facts? Worst-case? Best case?
– What does the company expect to learn?
– What are remedial options, if needed?
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11. The Internal Investigation
Dynamic Supervision and Direction of Investigation
 Continuing re-evaluation of
investigation and strategies.
 As information is learned
through informal reporting
process, outcomes,
alternatives and remediation
options should be reviewed.
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12. 1. The Internal Investigation
An
2. An Independent Committee
Independent
Committee 3. The Documents, Data and
Email
4. The Interviews
5. Privilege
6. Waiver of Privilege
7. Disclosures
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13. An Independent Committee
Do You Need an Independent Investigation?
 Allegations raise significant potential liability and reflect
serious misconduct;
 High level management and/or board members may be liable
or have exposure;
 Independent investigation is needed to respond to
prosecutors, regulators and/or shareholders;
 Whistleblower complaint raises serious issue(s) which require
strategic response;
 Media and/or public attention may have a serious negative
impact on the company.
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14. An Independent Committee
Do You Need an Independent Committee?
 Should the Board, a Board Committee, an Independent
Board Committee, or Senior Management oversee and
direct the investigation?
 Are the allegations of misconduct serious?
 Are board members or senior
managers allegedly involved?
 Will the company need to
conduct a credible inquiry
to respond to prosecutors,
regulators and/or the public?
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15. An Independent Committee
The Independent Committee
 Independent Board Members or an Independent Committee
responsible for supervising investigation and reporting back to
Board
 Special Outside Counsel hired to conduct investigation
 Depending on certain circumstances
(“objectivity” is preserved),
existing counsel can be
retained to conduct inquiry
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16. An Independent Committee
The Independent Committee: Investigations Issues
 Existing counsel should be considered to conduct investigation
because of knowledge of company?
 How to handle relationship between outside counsel, existing
counsel and in-house counsel?
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17. An Independent Committee
In-
In-House Investigations: The More Common Model
 Most internal investigations
do not require independent
committee, or even Board
supervision.
 In-House counsel and existing
outside counsel can handle a
number of investigations.
 General Counsel can supervise
and direct many internal
investigations.
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18. An Independent Committee
Scope of Inquiry
 Keeping it “real” by keeping it narrow.
 Authorization and scope should be defined in writing by
Board.
 For in-house investigation, scope of investigation needs to be
defined.
 Scope can always be expanded.
 Model for inquiry can be changed.
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19. 1. The Internal Investigation
The
Documents, 2. An Independent Committee
Data and
Email 3. The Documents, Data and
Email
4. The Interviews
5. Privilege
6. Waiver of Privilege
7. Disclosures
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20. The Documents, Data and Email
Initial Steps
 It’s the documents stupid – act quickly to “hold” documents,
gather and review.
 Conduct initial interviews if needed to confirm location and
existence of documents needed.
 Technology experts and possibly regular counsel can assist.
 Define employee cooperation: preserve and provide documents
(home or office); and available for interviews.
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21. The Documents, Data and Email
Important Steps
Designating Someone Who “Owns” This Issue
Within Your Team
 Savvy about litigation and IT perils and speak the language of both
groups.
 Detailed knowledge about the company’s IT environment
– knowing where data is stored, by whom, and how.
 An appreciation for the capability, timing, and
cost associated with matter-specific e-discovery.
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22. The Documents, Data and Email
Preservation: Documents, Data and Email
What Can Go Wrong?
Plenty -- if you are not prepared!
 Employees do not comply with the preservation directive.
 Company does not send preservation notice to third parties
who possess responsive materials over which the company
has control or legal right.
 Company does not comply with e-discovery protocols
developed to preserve relevant information.
Failure to preserve pertinent materials may lead to spoliation
claims and even obstruction charges.
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23. The Documents, Data and Email
Document Review
 Critical to review as quickly as possible
 Prior to witness interviews
 Develop picture of what
happened and why
 Identify important actors in
the events under investigation
 Document control and indexing
is critical so that you have all,
available information when
interviewing witnesses
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24. The Documents, Data and Email
Pitfalls for Document Collection and Review
 Data privacy laws and regulations
outside the United States may
prevent or hinder collection,
dissemination and review of
relevant documents.
 Documents which are brought
within the United States may then
become subject to subpoena by
United States authorities.
 Document collection and review
may have to take place in foreign
locations in order to avoid running
afoul of these restrictions.
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25. 1. The Internal Investigation
The 2. An Independent Committee
Interviews
3. The Documents, Data and
Email
4. The Interviews
5. Privilege
6. Waiver of Privilege
7. Disclosures
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26. The Interviews
Conducting Witness Interviews
 In general, start with lower-level employees and work way up
to more important witnesses.
 Be careful of witness’ sharing information about investigation.
 Simultaneous interviews can be used but are overrated.
 Element of surprise interviews rarely work in corporate
context.
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27. The Interviews
Conducting Witness Interviews
 Tread cautiously: Think of overall plan
and potential issues before interview.
 Review key documents first
(when possible).
 Have someone "witness" the interview.
 Request person to maintain
confidentiality.
 Don't forget Upjohn warnings.

28. The Interviews
Upjohn Decision
U.S. Supreme Court held that
communications made by employees to
company counsel at the direction of
superiors to secure legal advice from
counsel were protected by the attorney-
client privilege.
The Court set forth guidelines, as opposed
to a bright-line test, for determining when
the privilege applies in this situation.
Upjohn Decision (449 U.S. 383 (1981))
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29. The Interviews
Upjohn Decision: Warnings
 Purpose of interview is to assist counsel in providing legal
advice to company.
 Counsel represents company, not individual employees.
 Discussions between employee and counsel are privileged
communications and privilege belongs to the company, not
the employee.
 Company has the right to keep the communications
confidential and privileged, but it also has the right to waive
the privilege and disclose to third parties.
 Employee should not discuss the interview with anyone,
including fellow employees.
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30. The Interviews
Conducting an Interview: Part I
 Heavy-handed techniques never
work.
 Witnesses are worried about
criminal liability, losing their jobs
and their lives as they know it.
 No witness ever tells you
everything.
 Personal rapport is critical.
 You are doing a job, you are going
to be respectful, but you need
answers to questions.
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31. The Interviews
Conducting an Interview: Part II
 Let the witness tell you his/her
story as to a part or all of the story.
 It is critical to get their story on
the record.
 Use documents where appropriate
to fill out the story – let the
witness talk.
 Do not confront witness with
contradictions but use facts you
know, and documents to question
in order to show witness you know
he is not telling whole story.
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32. The Interviews
Conducting an Interview: Part III
 Memorialize the entire
interview.
 Have someone with you to take
notes and memorialize.
 Be prepared to answer question
from employee asking if they
need an attorney.
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33. 1. The Internal Investigation
2. An Independent Committee
Privilege
3. The Documents, Data and
Email
4. The Interviews
5. Privilege
6. Waiver of Privilege
7. Disclosures
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34. Privilege
Protecting the Privilege
 It is critical to protect privilege during investigation.
 Decision to waive privilege for disclosure to government or
regulators can only be made as part of overall strategy.
 Along the way, operational decisions
cannot undermine ultimate need to
preserve and protect the privilege.
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35. Privilege
Privilege: Considerations
Privilege varies by jurisdiction:
 What law governs? Federal law
and/or law in a particular state?
 In certain states, only an attorney’s
communications with the “control
group” are privileged.
 Control group is limited to senior
management and employees that
advise senior management
on final decisions.
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36. Privilege
Privilege: Communications with Former Employees
 Communications that were
privileged during employment likely
retain that privileged status even
after employee leaves company.
 Courts are divided as to whether
communications with a former
employee that occurred post-
employment are privileged.
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37. Privilege
Work Product Doctrine
 Materials prepared “in anticipation of litigation” enjoy a
qualified protection against disclosure. Fed. Rules Civil
Procedure 26(b)(3).
 Work product, to the extent it is mental impressions,
conclusions, opinions and theories, usually is protected.
 Other work product, however, must be disclosed if a party
has a substantial need and cannot obtain the information
without substantial hardship.
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38. Privilege
International Law: Privilege
 Caution: Privilege laws in foreign
countries may be quite different
from those in the United States.
 It is not always clear which
country’s privilege laws will be
applied (choice of law issue).
 Employee communications with
in-house lawyers will not be
treated as privileged in certain
countries.
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39. 1. The Internal Investigation
Waiver of 2. An Independent Committee
Privilege
3. The Documents, Data and
Email
4. The Interviews
5. Privilege
6. Waiver of Privilege
7. Disclosures
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40. Waiver of Privilege
Waiver: General Rule
 The general rule is that once the client waives the attorney-
client privilege, it is waived as to all third parties.
 Unlike the attorney-client privilege, the protection of the work
product doctrine is not automatically waived by disclosure to
any third persons.
 Courts will find waiver of work product doctrine only if:
– the disclosure is made to an adversary, or
– the disclosure substantially increases the opportunity for
potential adversaries to obtain the information.
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41. Waiver of Privilege
Waiver: Scenarios
Assuming your communications are privileged, will you waive
the privilege if you share information with:
Representatives of a parent or wholly-owned subsidiary?
Auditors?
Insurance carriers?
Media consultants?
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42. Waiver of Privilege
Common Interest Doctrine
The Common Interest Doctrine
 Communications made in the
cause of a common legal interest
 Designed to further a
common legal interest
 Made with a reasonable
expectation of confidentiality
 No waiver
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43. Waiver of Privilege
Joint Defense Agreements
The Joint Defense Privilege
 Communications made in
the cause of a common
legal interest
 Designed to further a
common legal interest
 A pending or anticipated
litigation
 Made with a reasonable
expectation of confidentiality
 No waiver
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44. Disclosures
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45. Disclosures
Disclosure: To Parents and Wholly-owned Subs
Wholly-
 Most courts recognize that both attorney-client privilege and
work-product protection extend to parents and wholly-owned
subsidiaries since they are assumed to have a “community of
interest”.
 As the percentage of ownership/control decreases, it becomes
less likely that courts will extend the privilege.
 If the entity is not majority-owned/controlled, there may need
to be a specific shared common legal (not just business)
interest -- and communication must be in furtherance of that
common interest.
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46. Disclosures
Disclosure: To Insurance Carrier
Communications with an insurance carrier may not result in
waiver depending upon the circumstances.
Does company have a common interest
with the insurance carrier?
 Is the carrier on board with the defense and agreeing to
provide coverage?
 Or is the insurer taking an adverse position (denying coverage)
or adopting a “wait and see” position? If so, the company
probably does not have a common interest with the carrier
and courts would find that disclosure to carrier waives the
privilege.
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47. Disclosures
Disclosure: To Auditors
Will disclosure of attorney-client communications to
the company’s auditors waive the privilege?
YES
Will disclosure of work product to auditors
waive the protection?
DEPENDS
Turns on whether the outside auditor is an
adversary or is likely to reveal the company’s
information to an adversary.
Courts are divided.
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48. Disclosures
Disclosure: To Media Consultants
In re Grand Jury Subpoenas,
265 F.Supp.2d 321, 331 (S.D.N.Y. 2003)
Holding: “(1) confidential communications (2) between lawyers
and public relations consultants (3) hired by the lawyers to assist
them in dealing with the media in cases such as this (4) that are
made for the purpose of giving or receiving advice (5) directed at
handling the client's legal problems are protected by the
attorney-client privilege.”
 Consultant must be hired by lawyer.
 Privilege not lost if client speaks directly to consultant if “the
communications were directed at giving or obtaining legal advice.”
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49. Disclosures
Reporting Results
 Periodic oral reports can be made to Independent Committee,
Board, or senior management.
 No written reports should be created since results may
change.
 Ultimately, a written report may be prepared reporting on the
findings of the investigation but such a document may be
discoverable by the government and private parties.
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50. Disclosures
Consultations with Government and Regulators
 When investigation is needed to
respond to government, regular
consultation is critical.
 Get government “buy-in” to
conduct, credibility and findings
of investigation.
 Prevent questions from
government as to how and why
certain steps were taken.
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