Internal Corporate Investigations

by McNeil, Barry F.; Brian, Brad D.

• ISBN13: 9781590319154
• ISBN10: 159031915X
• Edition: 3rd
• Format: Paperback
• Copyright: 2007-11-30
• Publisher: American Bar Association

Summary

In the wake of highly publicized corporate shake-ups, internal investigations have gained national prominence and established themselves as an important tool of management. This newly updated and expanded resource guides you through the intricate steps of conducting an effective and efficient internal investigation. Each chapter covers one aspect of conducting an investigation, clearly describing and advising you on the methods and skills involved, while providing you with practical tips on anticipating, recognizing, and avoiding the traps you are certain to encounter.

Table of Contents

About the Editors	p. xiii
About the Contributors	p. xv
Overview: Initiating an Internal Investigation and Assembling the Investigative Team	p. 1
Introduction	p. 2
The Sarbanes-Oxley Act of 2002 and Its Aftermath	p. 3
The McNulty Memo of 2007: Cooperation, Waiver and Indemnification	p. 5
Different Types of Internal Investigations	p. 6
The Initial Meeting	p. 7
The Starting Point: Identifying the Client and Deciding Whether to Conduct an Investigation	p. 7
Defining the Scope of Internal Investigation	p. 9
Applying the Attorney-Client Privilege and Work-Product Doctrine	p. 10
Assembling the Investigative Team	p. 11
Agreeing to Lines of Reporting and Supervision	p. 12
Anticipating What Can Go Wrong	p. 13
Preliminary Steps to Prepare for Government Investigations	p. 14
Conclusion	p. 16
Implications of the Attorney-Client Privilege and Work-Product Doctrine	p. 17
Introduction	p. 18
Attorney-Client Privilege	p. 19
Definition of the Attorney-Client Privilege	p. 19
Elements of Attorney-Client Privilege	p. 21
Practical Problems of Employee Interviews	p. 36
Work Product Protection	p. 44
Work-Product Doctrine Defined	p. 44
Factual Versus Opinion Work Product	p. 46
Elements of the Work-Product Doctrine	p. 47
Overcoming the Qualified Immunity	p. 56
Protection of a Lawyer's Mental Impressions	p. 57
Overcoming the Attorney-Client Privilege and Work-Product Doctrine	p. 60
Waiver	p. 60
The Crime/Fraud Exception	p. 78
Shareholder Litigation	p. 82
Effect of the Sarbanes-Oxley Act and Recent Securities Exchange Commission and Department of Justice Policies on the Attorney-Client Privilege	p. 86
The Witness Interview Process	p. 93
Introduction	p. 94
Preparing for Witness Interviews	p. 95
Initial Concerns	p. 95
Key Principles	p. 98
Before the Interview	p. 100
Conducting the Interview	p. 102
Mechanics	p. 102
Warnings to Witnesses and the Attorney-Client Privilege	p. 103
Conducting the Interview	p. 107
Making a Record of the Interview	p. 108
Special Issues	p. 111
Sarbanes-Oxley and the Responsibilities of Counsel	p. 111
Obstruction of Justice	p. 112
Other Typical Problems That Arise during Witness Interviews	p. 114
Conclusion	p. 116
Perjury and Obstruction of Justice	p. 117
Introduction	p. 117
Perjury and Subornation of Perjury	p. 118
Perjury Under [section] 1621: Essential Elements	p. 119
Burden of Proof and the Two Witness Rule	p. 121
True Answers and Ambiguous Questions	p. 122
Perjury Under [section] 1623: Differences	p. 124
Subornation of Perjury	p. 126
Obstruction of Justice	p. 130
False Statements	p. 131
Witness Tampering	p. 135
Document Destruction	p. 140
Gathering and Organizing Relevant Documents: An Essential Task in Any Investigation	p. 147
Introduction	p. 148
Organization and Planning	p. 150
Initial Dialogue with Management	p. 150
Document Retention and Preservation	p. 152
The Investigating Team	p. 152
Initial On-Site Inspection	p. 153
Document Gathering	p. 153
Ensuring Comprehensiveness	p. 153
Ensuring Integrity and Control	p. 154
Electronic Document Gathering	p. 155
Document Processing	p. 156
Overview	p. 156
Numbering	p. 157
Copies	p. 157
Review	p. 158
Indexing and Coding	p. 159
Computer Imaging of Documents	p. 160
Inadvertent Waiver of Privilege	p. 161
Preparation of Internal Summaries, Chronologies, Binders	p. 162
Hot Document Chronology	p. 162
Summaries	p. 164
Production of Documents to Government or Civil Litigants	p. 164
Advocacy Considerations	p. 164
Personal versus Business Records	p. 166
Production Abuses	p. 167
Destruction of Documents	p. 167
Confidentiality Agreements	p. 168
Conclusion	p. 169
Appendix A	p. 170
Appendix B	p. 172
Appendix C	p. 173
Appendix D	p. 174
The Hydra Effect: Parallel Proceedings Accompanying Internal Investigations	p. 175
Introduction	p. 176
Recurring Issues in Parallel Proceedings	p. 178
Obtaining Civil Stays to Prevent Criminal Prejudice	p. 178
The Fifth Amendment and Adverse Civil Inferences	p. 185
Criminal and Civil Penalties: Double Jeopardy?	p. 188
Collateral Estoppel: The Consequences of "Losing"	p. 193
Responding to Employee Misconduct	p. 197
Ex Parte Contacts by Government Lawyers	p. 200
Providing Legal Representation for Employees	p. 210
Joint Defense Agreements: Benefits, Limits, and Risks	p. 215
Keeping the Government-Disclosure Genie in the Bottle	p. 224
The Perils of Parallelism for Government Contractors	p. 231
The Gestalt of Parallel-Proceedings Resolution	p. 234
Conclusion	p. 240
Disclosure of Results of Internal Investigations to the Government or Other Third Parties	p. 241
Introduction	p. 242
Required Disclosure	p. 243
Common-Law Rule	p. 243
Statutory Disclosure Requirements	p. 245
Problems Arising from Counsel's Knowledge of Criminal Conduct	p. 248
Voluntary Disclosure	p. 250
The Benefits	p. 250
The Risks	p. 254
The Mechanics of Disclosure	p. 259
Conclusion	p. 259
The Special Litigation Committee Investigation: No Undertaking for the Faint of Heart	p. 261
The Setting	p. 262
The Theoretical Foundation for a Special Litigation Committee	p. 263
Derivative Plaintiff's Counsel	p. 265
The Total Context	p. 265
Selection of Counsel	p. 266
The Independence of the Committee	p. 267
The Dilemma Inherent in the Committee's Work	p. 269
It is the Committee's Investigation	p. 270
Committee Interviews	p. 271
Minutes of Committee Meetings	p. 271
Relationship with Other Inside and Outside Counsel	p. 272
Appearance of Counsel for Derivative Plaintiff	p. 273
Protecting the Privilege	p. 274
The Investigation	p. 277
Conclusion	p. 279
Appendix A	p. 280
Appendix B	p. 281
Appendix C	p. 282
Unique Problems Associated with Internal Investigations in Environmental Cases	p. 283
Introduction	p. 284
Reactive Investigations	p. 285
Search Warrants	p. 285
Agency Demands to Review and Photocopy Documents	p. 288
Notices of Violations	p. 289
Conducting a Reactive Internal Investigation	p. 289
Voluntary Environmental Internal Investigations	p. 291
Reasons for Environmental Compliance Audits	p. 291
Importance of Periodic Audits by Outside Consultants	p. 292
Problems Posed by Audits	p. 293
Electronic Records	p. 294
Audit Privilege Law	p. 294
Conclusion	p. 295
Appendix A	p. 296
Report of the Investigation	p. 301
Introduction	p. 302
Discoverability of the Internal Investigative Report	p. 304
Attorney-Client Privilege	p. 305
Work-Product Doctrine: A More Certain Refuge	p. 308
Expanding the Privilege of Self-Criticism	p. 310
Protecting the Report: Shareholder Actions and Disclosure to Government Agencies	p. 312
Shareholder Actions	p. 312
Disclosure to Government Agencies	p. 315
Libel	p. 319
Written Reports May Invite Libel Claims	p. 319
Example of Libel Claims against Counsel	p. 321
Opinion and Qualified Interest Privileges	p. 322
Strategies for Minimizing Liability for Defamation	p. 329
Conclusion	p. 331
Summary	p. 331
Minimizing Risks	p. 331
Internal Investigations for Government Contractors	p. 335
Who are Government Contractors?	p. 336
Suppliers to the Federal Government	p. 337
Health Care	p. 338
Other Government Contractors	p. 338
Beginning of the Investigation	p. 339
Subpoenas	p. 340
Internal Discovery	p. 342
The Qui Tam Telephone Call	p. 342
Responding to a Fraud Investigation Basic Principles for Government Contractors	p. 344
Unique Features of Fraud Investigations Faced by Government Contractors	p. 344
Conclusion	p. 350
No Security: Internal Investigations into Violations of the Securities Laws	p. 353
Overview of Securities Violations	p. 354
Duties-and Pressure-to Uncover, Investigate, and Report Violations	p. 360
Publicly Traded Companies	p. 360
Brokers and Dealers	p. 381
Conducting Internal Investigations and Dealing with Related Issues in the Conduct of Parallel Proceedings	p. 384
Ensuring an Independent Investigation	p. 386
The (Largely) Insoluble Problem of Using the Investigation to Assist in Dealing with the Government without Waiving the Privilege	p. 389
Fifth Amendment Assertions: The Difficult Choices Faced by Individuals in Internal Investigations, and the Potential Impact of Those Choices on the Company	p. 406
Stays of Parallel Civil and SEC Proceedings	p. 413
Auditors' Involvement in Internal Investigations	p. 417
Concluding Lessons	p. 420
Internal Investigations in Health Care: Unique Enforcement Environment and the Dilemma of Disclosure	p. 423
Introduction	p. 424
Health Care Enforcement Environment	p. 424
Civil and Administrative Enforcement	p. 425
Criminal Enforcement	p. 425
Corporate Compliance Programs	p. 427
Federal Sentencing Guidelines	p. 427
The OIG Model Plans	p. 428
Corporate Integrity Agreements	p. 430
Self-Reporting: Mandatory of Voluntary	p. 431
Relevant Statutes	p. 432
Corporate Integrity Agreements and the OIG Model Plans	p. 433
The OIG's Provider Self-Disclosure Protocol	p. 434
Risks and Benefits of Voluntary Disclosure	p. 436
Conclusion	p. 439
An Overview of Internal Investigations from the In-House Perspective	p. 441
Introduction	p. 441
When Should an Internal Investigation Be Undertaken?	p. 449
Who Should Conduct the Investigation?	p. 450
Initiating the Investigation	p. 452
Structuring the Investigation	p. 453
Assembling the Investigative Team	p. 453
The Investigative Plan	p. 453
Reporting the Results of the Investigation	p. 463
Conclusion	p. 464
Internal Investigations in Antitrust Matters	p. 467
Overview of Applicable Laws and Enforcement Landscape	p. 467
Federal Enforcement	p. 467
State Enforcement	p. 468
Foreign Enforcement	p. 468
Unique Considerations in Antitrust Internal Investigations	p. 469
Identifying Your Client	p. 469
Investigative Steps	p. 470
Privilege Waiver Issues	p. 471
Reporting Process	p. 471
Relations with Counsel for Other Investigated Parties	p. 472
Criminal Investigations-What Every Practitioner and Client Must Know	p. 472
Increasingly High Stakes	p. 473
Investigative Tools	p. 475
Amnesty Under the Corporate Leniency Policy	p. 478
Value of Cooperation When Amnesty Is Not Available	p. 485
Assessing Whether Individual Employees Need Separate Counsel	p. 486
Making a Proffer and Preparing for Interviews and Testimony	p. 487
Related Litigation	p. 488
Types of Civil Actions	p. 488
Parallel Litigation Concerns	p. 489
Benefits in Private Litigation from Amnesty Participation	p. 490
Conclusion	p. 490
SOX It to Me: Internal Investigations in a Sarbanes-Oxley World	p. 491
Introduction	p. 492
Background of the Act	p. 493
The Act's Implications for Internal Corporate Investigations	p. 496
Provisions of the Act Contributing to the Increase of Investigations	p. 496
Preliminary Considerations at the Commencement of the Investigation	p. 499
Dealing with the Company's Outside Auditors	p. 505
Disclosure to the Market	p. 509
Remedial Steps	p. 510
Conclusion	p. 511
Index	p. 513
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