The need to conduct an internal investigation can arise in any number of different situations and can impact on any firm or corporate, big or small. Those situations may involve employment issues (particularly involving alleged workplace misconduct), regulatory compliance and enforcement issues, or product issues (including alleged mis-selling). The prospect can be daunting and, depending on the nature of the issues and the factual circumstances, the consequences of getting it wrong can be significant. This briefing sets out some of the key considerations when conducting an internal investigation.
The Campbells team has deep experience of managing contentious risks, including helping clients conduct internal investigations and navigating the legal issues which arise. Our experience in managing a broad range of investigations allows us to provide practical guidance to clients, from developing a framework for the investigation and supporting the client as it conducts the investigation, through to handling the investigation itself and conducting document review work and witness interviews.
Please do not hesitate to contact any of the team should you wish to discuss any of the matters covered in this update further.
Get the framework right – and as early as possible
The need to conduct an internal investigation can arise in any number of different situations. The common denominator is usually that something has gone wrong or is alleged to have gone wrong, and there is a need, often with some urgency, to clarify the facts and decide how to respond.
Notwithstanding the time pressures, it is important to ensure that the investigation is structured in the right way, allowing a thorough and fair investigation of the issues to clarify the facts and allow the business to make decisions on the appropriate course of action. There will be a number of considerations which will impact on how the investigation is structured and conducted as we consider in this note.
Who is to conduct and oversee the investigation?
It will be important to ensure that whoever is conducting and overseeing the investigation is independent of the subject matter and able to ensure that the investigation is conducted in a fair and objective manner. Consider:
- Whether the investigation will be conducted in-house – and if so, will this be led by the business or by a functional team such as compliance, internal audit or the legal team? Or will it be necessary to bring in outside help?
- It will be relevant to consider the expertise required to conduct the investigation as well as the resourcing required to allow this to be conducted and completed as quickly as possible in the relevant timeframe.
- Bringing in external resource such as a law firm to help conduct the investigation will help ensure the independence and objectivity of the investigation. External assistance in managing voluminous document review work and conducting interviews may also be helpful. That will come at a cost of course – but to the extent that legal advice will be required in due course once the outcome of the investigation is known, involving a law firm earlier in the process may be beneficial.
- A further important factor will be the desire to conduct the investigation within a legally privileged framework, which we consider further below.
- Who will oversee the investigation? Will this be a senior business executive, a sub-committee of the board or the board itself? Again, it will be important to ensure that the relevant decision makers are independent and objective.
- The investigation should be structured to ensure the confidentiality of the investigation is maintained.
Setting the framework
It will be important to outline the framework for the investigation so the scope is clear from the outset. This will ensure that the investigation is directed to addressing all of the key matters that arise and to ensure that the investigatory process and the gathering of evidence is appropriate and sufficiently wide to achieve this. It will also be important to record who will be responsible for conducting and overseeing the investigation and the intended outputs, including the format in which the findings will be recorded and the intended recipients.
For investigations involving regulatory issues, it may be necessary to brief the regulator on the investigation and to share the proposed framework.
Privilege
A key consideration in any internal investigation is structuring this to ensure that the work product created is protected by legal professional privilege. While it may be necessary to share the outcome of the investigation and the related work product with third parties, for example a regulator, it will be important to structure the investigation in a way which allows privilege to be claimed over the documents created during the investigation. This is particularly important where there is a prospect of follow on litigation arising from the subject matter of the investigation, as we consider below.
For this reason, it will be necessary to involve in house or external legal counsel at the very outset to advise on how the investigation should be structured to achieve this aim and often it will be appropriate for counsel to be actively involved in the conduct of the investigation.
Document retention, collection and review
Steps should be taken at the very outset of an investigation to ensure that all relevant documentation which may be relevant to the matters under investigation is preserved. This will also be important to the extent that there is a reasonable prospect of follow-on litigation arising from the subject matter of the investigation.
Accordingly, it will be important to ensure that (i) all business as usual document destruction policies are suspended in respect of material relevant to the subject matter, and (ii) document holds are issued to the relevant custodians and the affected parts of the business.
All relevant material which will require review within the investigation will also need to be collected.
The scope of these holds and the material collected should encompass electronic and hard copy files, as well as data held on business-issued devices (and it may be necessary to image devices to preserve their contents). The strategy in taking any steps which will involve communicating the fact that an investigation is ongoing to custodians and potential witnesses will also require careful consideration.
In cases where large volumes of data need to be collected and reviewed, it will normally be necessary to engage a third party e-Discovery provider to manage the collection and preservation of the data, as well as assisting with the hosting of that data for review purposes.
Having collected in the relevant documents, the material will need to be reviewed to identify the probative evidence which pertains to the matters under investigation. The structure of the review process will vary depending on the volume of material involved and the time available to conduct the required review work. A process for sifting through and identifying the probative evidence will need to be devised to allow all relevant material to be identified as soon as possible and before witness interviews are conducted.
Conducting witness interviews
Witness interviews are often the key part of an investigation and will usually follow the conclusion of the document review. They require careful planning. Key considerations will include:
- Who will conduct the interview? It may be helpful to have external counsel conduct the interviews.
- Interviewee representation. Consider whether it is appropriate to allow the interviewee to bring along their own counsel.
- Other participants. It will be important to take a detailed note of the interview and therefore it will often be preferable to have a notetaker attend rather than the interviewer doing so.
- Upjohn warnings. It will be appropriate that the person conducting the interview makes it clear that they represent the company and not the interviewee.
- Interview outputs. Consider the format of the interview note to be prepared and whether this will be covered by legal professional privilege.
The investigation report
It will usually be appropriate to record the investigation conducted and its findings, but consideration should be given to the format (which will depend on the audience as well as other factors, such as the time and cost involved). Whatever format the report takes, this should be prepared in a way to ensure that it is covered by legal professional privilege.
Other considerations
- Regulatory issues: if there is a regulatory element to the investigation, consider the firm’s reporting obligations and if required how the regulator will be informed of the investigation, the findings and the steps required to address these.
- Multi-jurisdictional investigations: investigations spanning more than one jurisdiction present particular issues which require careful consideration, including the location of relevant documents and witnesses, the application of data protection legislation, differing rules on legal professional privilege across the relevant jurisdictions, the potential location of any anticipated follow-on litigation, and for regulatory matters the potential interest of more than one regulator.
- Follow-on litigation: if there is the potential for legal claims to be brought following the conduct of the investigation, it is possible that the materials produced during the investigation may be subject to disclosure obligations in those proceedings. Accordingly, it will be important to recognise that risk and for steps to be taken to ensure that the conduct of the investigation and the materials to be produced are covered by legal professional privilege if possible.
