Publications
Managing Internal and Government Investigations
When confronted with a government investigation at her institution, university counsel may set upon a course of action – or fail to take action – in good faith and with no improper intent. Nevertheless, counsel may soon find her own conduct in responding to the investigation under scrutiny by a prosecutor or regulator suspicious of obstruction of justice. This article addresses several steps counsel should take – and some she should not – in order to zealously represent her client during a government inquiry without becoming a subject of the investigation herself or making matters worse for her client.
As a baseline, counsel should ensure that her institution does not continue to engage in questionable conduct once she learns of a serious allegation by virtue of a government investigation or other source. Here, counsel’s failure to take certain steps could create additional problems for the university in the future.
Moreover, universities operate frequently in regulated areas, like financial services, health care and government contracts and grants. Accordingly, these regulatory frameworks often contain affirmative legal obligations to disclose to the government certain types of misconduct, sometimes within narrowly proscribed time periods. Failure to do so in a timely fashion increases the potential exposure for the university. What was an investigation of a particular employee for past conduct, for example, can be amplified into an investigation of management, including counsel, for present conduct.
In addition to considering affirmative duties to disclose to the government, counsel may undertake some form of internal investigation to learn, on her own, about the conduct under investigation. In doing so, several pitfalls await university counsel inexperienced in government and internal investigations.
A university’s own employees are likely the best source of information for an internal investigation. And what better way to determine what happened than to assemble the relevant personnel into a room together to discuss what happened? From the government’s perspective, however, an assembly of witnesses could be viewed as an attempt to tailor testimony and to discourage individuals from recalling unhelpful or differing views of the facts. The attendees at such a meeting, including counsel, may then be subject to an investigation of subornation of perjury or witness tampering. Even the attorney-client privilege may not protect university counsel in this setting; to discover the communications, government attorneys may assert the crime-fraud exception to the university’s attorney-client privilege.
Rather than conduct interviews en masse, counsel should undertake individual interviews with pertinent personnel. Counsel should tell the employee that counsel represents the university, not the employee, and that while the interview is privileged, the privilege belongs to the university, not to the employee. Counsel should add that the university may choose subsequently to assert the privilege and block access to the interview from the government, or it may decide that it is best served by waiving the privilege and permitting access to the interview. Failure to clearly establish the ground rules for the interview may limit the university’s options and force it to take a future position that is not in its best interests.
Additionally, a proper internal investigation should preserve important evidence that the university will rely on at a later date. For example, maintaining the integrity of individual employees’ recollections may be significant when the government later questions them.
Early in an investigation, counsel may learn that government agents are also attempting to interview the university’s employees, and employees may ask counsel what they should do. While counsel may be tempted to tell employees not to speak with government agents at least until the employees have secured their own or the university’s counsel, any such instruction may be viewed as an attempt to obstruct the government’s investigation. Instead, counsel should make clear that an employee’s decision whether to speak to the government is entirely the employee’s own choice. Counsel may appropriately inform the employee that he is under no obligation to speak to the agents and that if he consents to an interview, he may insist that counsel is present.
The handling of documentary and other evidence is another potentially hazardous issue in a university’s response to a government investigation. No later than upon receipt of a subpoena, university counsel should immediately suspend the university’s document destruction policy as to pertinent information. Similarly, counsel should make appropriate efforts to ensure that responsive information in the university is retained. A prosecutor is likely to view with skepticism any claim that responsive material was destroyed inadvertently following the receipt of a subpoena.
When, however, in advance of a subpoena should an organization suspend the regular destruction of documents? Knowledge that a subpoena is on its way, of course, essentially equates to possession of the subpoena. What if a lawsuit or investigation is merely a possibility? What if another university similarly situated has been sued or investigated?
These are complicated questions that the recently passed Sarbanes-Oxley Act only made more complicated. While the vast majority of the Sarbanes-Oxley Act applies only to public companies, certain provisions affect the federal criminal code and thereby affect universities as well. In addition to increasing the maximum penalties for obstruction of justice (to 20 years imprisonment), Sarbanes-Oxley amended 18 U.S.C. ยง 1512 (c). That section makes guilty of an offense anyone who “corruptly … alters, destroys, mutilates or conceals a record, document, or other object, or attempts to do so, with the intent to impair the object’s integrity or availability for use in an official proceeding.” In addition, the Act added section 1519, which makes it a crime to alter, destroy, conceal or falsify any record “with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction” of any federal agency.
Congress attempted, through these amendments, to remove requirements under prior court decisions that limited obstruction to defendants who knew of or reasonably expected an official court proceeding (e.g., a trial or grand jury investigation) and to government functions leading to official proceedings-criminal or regulatory investigations and inquiries. Do these new provisions mean, for example, that a university attorney should not approve the destruction of a sexist joke transmitted by e-mail by employees? A federal agency (the EEOC), after all, can investigate employment discrimination, and destroying such an e-mail certainly would render it unavailable “for use in an official proceeding” regardless of whether such a proceeding is reasonably anticipated. Likewise, destroying the e-mail could be construed as intending to impede the EEOC’s administration of sexual harassment claims. It appears unlikely that such intent could exist if the lawyer has no knowledge that a federal agency will exercise its jurisdiction or initiate an investigation. Thus, regular document destruction (after proper retention requirements are met) should continue until the decision maker reasonably anticipates litigation or review by a federal agency. Nonetheless, the Sarbanes-Oxley amendments dramatically increase the difficulty in deciding when document destruction should be suspended.
In gathering documentary and other information either in response to or in advance of a likely government request, counsel should preserve the origin and quality of the information. Often in white collar cases, documents and computer-stored information are important not only for their content but also for how and where they were stored and located. It is not sufficient for counsel to maintain one copy of the document that was provided by one employee, with no record of which other employees also provided counsel with copies of the same document. Moreover, counsel should not write on or otherwise alter the original material; notations, hard copy, or computer file information and other seemingly insignificant details may prove important.
In sum, corporate counsel involved in responding to a government investigation must consider how the government will react to counsel’s proposed conduct if the government were to learn of it. While a university may reasonably decide to undertake lawful measures even if the government would not heartily approve, it should do so knowing that it may be expanding the scope of the investigation and may frustrate satisfactory resolution of the matter.
At the end of the investigation, the university will want to be able to marshal as many reasons as possible why the government should not proceed against the university. Or, if the government does proceed, the university should be able to tell prosecutors why it should treat the university leniently. The university’s conduct in responding to the government investigation may, in the end, prove to be one of the most damaging or helpful factors in the underlying investigation.
If the matter under investigation is high profile, counsel will be confronted with still additional issues. One of a university’s most important audiences at such times will often be the public, including the student body, parents, alumni and the larger community. However, the public release of the findings of any privileged investigation is risky because it potentially jeopardizes the university’s attorney-client and work product privileges. Private plaintiffs, interested prosecutors and government regulators will often be watching closely for a chink in an organization’s privilege armor to assert a claim of waiver and gain access to the underlying factual materials at the heart of an internal investigation.
Understandably, organizations hope to protect the core results of their internal investigations (e.g., notes and summaries of interviews with employees and memoranda identifying and analyzing critical documents and other evidence), while simultaneously making public use of the results to defend themselves. There is thus an inherent tension between some degree of disclosure to the public about the investigation’s findings and protecting against an unwanted disclosure due to waiver.
A line of cases in this area is instructive in how to lessen the risk of waiving privilege where an organization reveals parts of privileged communications when disseminating information to the public. As the cases suggest, there are ways for institutions to report publicly on the results of an internal investigation without necessarily causing a waiver of the attorney-client or work product privileges.
First, at the outset, counsel should consider what will be disclosed or released to the public and whether there is or likely will be a need to publicly report on the investigation. Counsel should consider memorializing its intention to preserve interview notes and memoranda, while contemplating publication or release of a summary report or statement that does not quote from or paraphrase those materials.
Second, in drafting a summary for public consumption, counsel should make statements based on publicly available or non-privileged information. Counsel must take great care in its use of interviews conducted under privilege pursuant to Upjohn Co. v. United States , 449 U.S. 383 (1981). Accordingly, counsel should maximize its use of facts that can be derived from non-privileged sources, including documents.
Third, counsel should limit their use of reports or summaries of internal investigations. Limited statements about the existence of an internal investigation, which are issued to reassure investors and the public, are common. But having released such a statement, if an organization then makes repeated substantive and affirmative use of its report or summaries, especially in the litigation context, courts will be quick to find waiver based on the unfairness of allowing the client to use the results of its investigation as both a sword and a shield.
Preserving the attorney client and work product privileges is a crucial aspect of internal investigations. Recent events and case law dictate that corporations and their counsel should anticipate and address the issue of waiver as to third parties before making public use of the report or findings of an internal investigation.
David B. Fein is the partner in charge of Wiggin & Dana’s White-Collar Defense, Investigations and Corporate Compliance Practice Group . He is also a Visiting Lecturer in Law at the Yale Law School, where he teaches a class on Federal Criminal Investigations. Previously, Mr. Fein served as Associate Counsel to President Clinton. Before working at the White House, Mr. Fein was a federal prosecutor in the United States Attorney’s Office for the Southern District of New York, where he held senior and supervisory positions.