In tandem with tightening the regulatory framework and their nuances, the corporate environment is becoming more and more constrained. Businesses are facing a number of regulatory and compliance issues now compared to even a decade ago. Whether it is a complaint about polluting activities or a complaint about sexual harassment at the workplace or a leakage of confidential information, it calls for an internal investigation. In fact, internal investigations are launched so that outside involvement can be minimized and confidentiality can be maintained. Businesses need to tread cautiously. Despite the fact that they need a fair investigation, they need to carry out the same in such a way that it does not bring down employee motivation and company performance.

At the same time, it needs to ensure that all compliance regimes have been adhered to. Internal investigations are a tough job. This is why you need to do it in an appropriate manner.

Let us discuss some internal investigation best practices:

In House Counsel for Civil Liability

While facing the reality of an internal investigation, the first question that the owner or the management may ask is whether to hire an independent counsel or not. This is often a subtle decision with an innate threat of legal ramifications in case of undesirable outcomes. Internal Investigations Best Practices dictate that investigations be handed over to the in-house counsel if the allegation is not substantial and involves only civil liability. Cases involving allegations of misconduct against non-executive staff fall in this category. It augurs well to put off hiring an independent investigator until it is absolutely necessary. This is simply because once you hire an independent counsel, the process gets complicated. You need to take care of so much of confidentiality, client-attorney privileges and their waivers et al.

Hiring Outside Counsel for Criminal Liability

If a senior executive of the company is engaged in any wrongdoing or there is an allegation against him, Internal Investigations Best Practices dictate that the investigation be handed over to an independent counsel. He or she must report to an independent committee at the level of the board. This is done lest the senior executives or management personnel should be able to influence the investigation process. Since such misconduct may involve criminal liability, it augurs well for the business to handover the case to an independent counsel, lest the business should go through legal haggling later on.

Maintaining Attorney-Client Privilege and Work Product Protection

Internal Investigations Best Practices dictate that investigations need to tread cautiously regarding waivers. While Attorney-Client Privilege inherently protects the independent counsel’s legal advice to the investigation committee of the board, the Work Product Protection doctrine protects the documents created during the investigation.

Protection Against Waiver

The need for waivers from Attorney-Client Privilege and Work Product Protection may arise during an investigation, due to a breach in the confidentiality framework. To protect against this, you need to:

• Warn all witnesses against divulging any discussions during interviews.
• Include legends in communications and documents indicating that those are secured by Work Product Protection or Attorney-Client Privilege.
• Avoid disclosing documents and information to individuals outside Work Product Protection and Attorney-Client Privilege.

It is important to conduct an investigation without hurting anyone’s dignity. This is why businesses need to follow some Internal Investigations Best Practices, as outlined here and elsewhere. These will help them conduct investigations in the best possible way to avoid complaints and other pitfalls.