Internal Investigations: Practical and Ethical Concerns Facing In-House Counsel

Transcription

1 Internal Investigations: Practical and Ethical Concerns Facing In-House Counsel Presented by: Colin Folawn and Brian Keeley December 10, 2014

2 Caveats Not intended to create an attorney-client relationship or state the standard of care Keep hypotheticals hypothetical Seek counsel for a particular issue

3 Objections Discuss ethical implications involved in internal investigations Provide tips for preserving attorney-client privilege and client confidentiality Identify common problems and provide suggestions to reduce risk

4 Preliminary considerations

5 In-house counsel defined Licensed attorney (in some U.S. venue) Employed by a single company To provide legal advice solely for that company (and possibly its affiliates)

6 Which ethics rules control & when? Representing a client Not representing a client Serving as in-house counsel Other jurisdictions rules can apply See RPC 8.5

7 What is an investigation? Inquiry, analysis, or fact gathering To inform a decision about How to respond to a question or concern Regarding company action

8 Common Types of Investigations Employment Whistleblower Administrative Litigation

9 Investigation triggers Lawsuit Complaint Workplace accident Anomaly revealed by an audit Failure in a process Data breach or other technology failure Loss of property/data

10 Who should investigate? Non-lawyer constituent/employee? In-house counsel? External non-lawyer investigator? Outside counsel?

11 What should I considering in deciding who will investigate?

12 Request for Investigation VP meets with Lawyer and Other Lawyer VP says, we have a complaint that I need one of you to investigate; here are the facts. Other Lawyer says, sorry, but I can t; I just gave two weeks notice

13 Request for Investigation (cont d) Lawyer says, I m on it Other Lawyer interviews for a job Interviewer asks, were you ever asked to conduct investigations at your former job? Other Lawyer describes the facts

14 Request for Investigation (cont d) Was the request protected by the attorneyclient privilege? Is it still protected after the interview? Was the request confidential? Is it still? Who was Lawyer s client? Was that clear?

15 Which is most broad? A. Attorney-client privilege B. RPC 1.6 confidentiality C. Work product protection (attorney and non-attorney)

16 Client confidentiality is the most broad.

17 Attorney-client privilege

18 Attorney-client privilege (generally) Confidential communication Between attorney and client (or representatives) For the purpose of obtaining or providing legal advice

19 Privilege as a matter of state law Different states laws might be invoked to determine or evaluate privilege In which states does the company act? Where might a lawsuit arise?

20 Local privilege statutes Washington: RCW (2) Oregon: ORS

21 The primary purpose test Adding a lawyer to create privilege? Vioxx Products Liability Litigation, 501 F. Supp. 2d 789 (E.D. La. 2007) When and how should counsel be involved?

22 Client confidentiality (RPC 1.6) A lawyer shall not reveal information relating to the representation of a client Unless The client gives informed consent, The disclosure is impliedly authorized in order to carry out the representation, or An exception under RPC 1.6(b) applies

23 Protected information (ORPC 1.0(f)) Information protected by the attorney-client privilege under applicable law, and Other information gained in a current or former professional relationship that The client has requested be held inviolate or The disclosure of which would be embarrassing or would be likely to be detrimental to the client

24 Protected information (Washington) Wash. RPC 1.6 cmt. 19: Information relating to the representation includes, but is not necessarily limited to, confidences and secrets. Confidence means information protected by the attorney-client privilege under applicable law

25 Protected info (Wash.) (cont d) Wash. RPC 1.6 cmt. 19: Secret means other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client

26 Protected info (Wash.) (cont d) Wash. RPC 1.6 cmt. 3: The confidentiality rule, for example, applies not only to matters communicated in confidence by the client but also to all information relating to the representation, whatever its source.

27 More reading on confidentiality Jamila A. Johnson, Pillow Talk: The Obligations of RPC 1.6, available at Newsletters-Brochures/~/media/Files/News_Events/Publications /Bar%20News/2012%20Full%20Issues/201211NovemberBar News.ashx#page=13of64 (November 2012) Doug Ende, Clarifying All the Talk About Pillow Talk, at (November 19, 2012)

28 What if the witnesses are outside the state?

29 Multijurisdictional practice A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction, or assist another in doing so. RPC 5.5(a)

30 What about in-house counsel? A lawyer admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services in this jurisdiction that: (1) are provided to the lawyer s employer or its organizational affiliates and are (i) provided on a temporary basis and (ii) not services for which the forum requires pro hac vice admission; or (2) are services that the lawyer is authorized to provide by federal law or other law of this jurisdiction. RPC 5.5(d)

31 Excerpts of important comments Other than as authorized by law or this Rule, a lawyer who is not admitted to practice generally in this jurisdiction violates paragraph (b) if the lawyer establishes an office or other systematic and continuous presence in this jurisdiction for the practice of law. RPC 5.5 cmt. 4 Presence may be systematic and continuous even if the lawyer is not physically present here. Such a lawyer must not hold out to the public or otherwise represent that the lawyer is admitted to practice law in this jurisdiction. RPC 5.5 cmt 4

32 More caveats and comments RPC 5.5 (d)(1) does not authorize the provision of personal legal services to the employer s officers or employees. See RPC 5.5 cmt. 16 In Washington, paragraph (d)(1) applies to lawyers who are providing the services on a temporary basis only. If an employed lawyer establishes an office or other systematic presence in this jurisdiction for the purpose of rendering legal services to the employer, the lawyer must seek general admission through APR 3 or house counsel admission under APR 8(f). RPC 5.5 cmt. 17

33 Organizational confidentiality RPC 1.13 cmt. 2: When one of the constituents of an organizational client communicates with the organization s lawyer in that person s organizational capacity, the communication is protected by Rule 1.6.

34 Org. client confidentiality (cont d) RPC 1.13 cmt. 2: if an organizational client requests its lawyer to investigate allegations of wrongdoing, interviews made in the course of that investigation between the lawyer and the client s employees or other constituents are covered by Rule 1.6. This does not mean that the organization s constituents are the lawyer s clients

35 Org. client confidentiality (cont d) RPC 1.13 cmt. 2: The lawyer may not disclose to such constituents information relating to the representation except for disclosures explicitly or impliedly authorized by the organizational client in order to carry out the representation or as otherwise permitted by Rule 1.6.

36 Identify the client The existence of an attorney-client relationship turns largely on the client s subjective belief that it exists In re McGlothlen, 99 Wn.2d 515, 522, 663 P.2d 1330 (1983) Subjective belief does not control unless it is reasonably formed based on the circumstances, including the attorney s words or actions Bohn v. Cody, 119 Wn.2d 357, 363, 832 P.2d 71 (1992)

37 Reducing risk at project inception Clearly identify the client Disclaim representing non-clients (constituents) Identify the work with specificity What will you do What will you not do

38 Roadmap: Investigation steps Triggering event Initial interview with the source / complainant Planning the remainder of the investigation Interviewing witnesses and the target (if any) Reviewing documents or other information Analyzing all information Report and recommendations

39 A Simple Investigation Employee complains to Lawyer, not HR Discrimination and retaliation based on national origin, religion, and age Employee claims that a supervisor made derogatory comments based on these characteristics

40 A Simple Investigation (cont d) Employee also claims that the supervisor unjustifiably gave negative feedback HR Pro is asked to investigate and report to Lawyer because Supervisor faced similar complaints before

41 Initial interview with complainant Purposes of the initial interview: Identify the issues to be investigated Often a legitimate complaint will be combined with many other ancillary complaints that need no investigation Gather as much information as possible Identifying possible witnesses, documents, sources of information

42 Tips for initial interviews Disclaim representation and clarify roles Who, what, where, when, why, how Use an unbiased, non-judgmental tone Encourage candor Do not provide legal advice Confidentiality: Ask for it Confidentiality: Don t promise it

43 Documenting interviews Take good notes Consider Obtaining written witness statements Writing a summary memo to the witness Writing a summary memo for future analysis

44 Results of Initial Interview Complainant gives a long, detailed story about months of derogatory comments, sometimes with other people around Complainant identifies others with knowledge

45 Results of Initial Interview (cont d) Complainant describes two coaching memos about his interactions with customers, which happened with other people around Complainant wants supervisor fired

46 Post-interview planning Clarify or update Scope of the investigation Purpose of the investigation Identify Additional witness interviews Documents and other sources of information

47 Planning the investigation Purpose and scope: Specific complaints that complainant raised Interviews: Supervisor ( target ) Witnesses to each event Documents: Coaching forms Personnel file Supervisor s notes or file

48 Interviewing witnesses Plan each interview beforehand Consider the order of interviews Begin each interview with a general explanation for the purpose of the interview, but without sharing specific allegations

49 Interviewing witnesses Do not promise confidentiality Ask for their confidentiality Remind them that they will not be retaliated against for providing information Maintain an even, unbiased, non-judgmental tone

50 How should an in-house lawyer explain his or her role in an investigation?

51 Are interviews and facts protected by privilege or confidentiality?

52 What privilege, confidentiality, or privacy issues pertain to Lawyer s document review?

53 Interviews and Documents Supervisor denies making derogatory comments Most witnesses deny hearing derogatory comments, but one witness disagrees Most witnesses to customer interaction provided denied hearing anything amiss

54 Interviews and Documents (cont d) One witness thinks complainant s interaction with customers was subpar Supervisor has only the coaching forms, and discarded his own notes

55 Analysis and recommendations Once all information is gathered, analyze it Try to determine what happened If stories conflict, weigh witness credibility Make a recommendation on an issue only if you have been asked to do so

56 Analysis and Report HR Pro prepares written memo Summarizing the complaint and interview Summarizing witness interviews Identifying inconsistencies in statements Assessing witnesses credibility

57 Analysis and Report (cont d) The memo also Explains conclusions regarding derogatory comments and negative coaching Recommends offering complainant a transfer Recommends no discipline for supervisor, but recommends training for supervisor on people skills and coaching

58 Is HR Pro s report to Lawyer privileged or confidential?

59 Is Lawyer a Witness? Lawyer provides analysis and recommendation to VP Litigation commences Lawyer receives subpoena

60 Responding to subpoenas and related tips

61 More hypothetical scenarios

62 The Assignment Lawyer Bob works as in-house counsel for CashMoneyCallz.com Bob meets with CEO, who says I ve heard a wild rumor that some employees are making false statements on sales calls I want you to get to the bottom of it

63 The Assignment (cont d) As to some employees, Bob must: Search their offices after 5:00 p.m., Review their messages, Interview them, and Tap into and monitor their sales calls Some of the employees are out of state Bob says: Sounds like fun. I m on it!

64 Any problems?

65 Obtaining evidence: RPC 4.4(a) In representing a client, a lawyer shall not Use methods of obtaining evidence that violate the legal rights of such a person

66 Obtaining evidence (cont d) What if the evidence was stolen and provided to Lawyer? RPC 4.4(b) See Ore. Formal Op

67 Other potential problems Who is the client? Are there any conflicts of interest? RPC 1.7 What is the scope of representation? RPC 1.2

68 Conflicts of Interest [A] lawyer shall not represent a client if the representation involves a concurrent conflict of interest RPC 1.7(a) Concurrent conflicts: The representation of one client will be directly adverse to another client; or There is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer. RPC 1.7(b)

69 The Employee Interviews Bob meets with Employee and says: CEO told me to meet with you Don t worry; anything that you tell me will remain confidential Attorney-client privilege protects our communications

70 The Employee Interviews (cont d) Bob then asks a series of questions about business practices Employee admits making false statements in telephone sales solicitations Employee asks, could I get in legal trouble for this?

71 How should Bob respond? Should Bob have done anything differently?

72 Inadvertent representation risks Multiple, possibly conflicting duties Conflicts of interest (RPC 1.7, RPC 1.13) Unclear (and broad) scope of representation

73 Other concerns Dealing with unrepresented persons RPC 4.3 Clarifying the lawyer s role RPC 1.13(f) RPC 1.13 cmts. 10, 11

74 Dual representation (RPC 1.13(g)) A lawyer may also represent constituents, including a principal officer or major shareholder But if consent is required under RPC 1.7, consent must come from one other than the person to be represented

75 Lawyer investigations (generally) Engagement letters can make a difference Sandra T.E. v. S. Berwyn Sch. Dist. 100, 600 F.3d 612, 618 (7th Cir. 2009) Predominantly legal, not business North Am. Mort. Invs. v. First Wis. Nat l Bank, 69 F.R.D. 9 (E.D. Wis. 1975)

76 Lawyer investigations (cont d) Acting as a conduit of information In re Grand Jury Proceedings, 616 F.3d 1172 (10th Cir. 2010) The burden will be on the party who resists discovery

77 Notifying the Insurer CEO receives a demand letter from Customer, who threatens to file a lawsuit for unfair or deceptive business practices CEO instructs Bob to place the company s insurance carrier on notice of the potential claim

78 Notifying the Insurer (cont d) Bob forwards demand to Insurer, along with a cover letter describing the claim Insurer acknowledges receipt and requests that Bob investigate the claim Bob says that the investigation is already underway

79 Notifying the Insurer (cont d) The Insurer requests copies of all of Bob s documents and Bob s analysis as it is developed Bob forwards all notes and materials to Insurer

80 Notifying the Insurer (cont d) Customer files lawsuit Customer subpoenas documents from the company, to include Bob s investigative materials

81 Insurers and privilege John J. Manier, The Attorney-Client Privilege and Its Availability to Insured Persons, 36 UCLA L. Rev. 977 (1989) Heidebrink v. Moriwaki, 104 Wn.2d 392, 706 P.2d 212 (1985)

82 Insurers and privilege (cont d) Know your jurisdiction Understand the tripartite relationship Know the identity of your client or clients Evaluate foundation for confidentiality

83 A Change of Course Administrator stops by Bob s office, saying somewhat nervously: I ve heard that you re looking into the lies that our telemarketers make I know that CEO is in on it I bugged his office Administrator gives the tape to Bob

84 A Change of Course (cont d) Administrator asks: What do we do now? I know I can trust you. You won t tell CEO that I was the one who gave you the tape, right? Bob says: You can trust me. My investigation won t leave the company.

85 A Change of Course (cont d) Bob listens to the tape, which implicates CEO in the fraudulent practice Bob confronts CEO and asks for an explanation CEO says that the tape is obviously phony

86 A Change of Course (cont d) Bob says that it sounds quite authentic CEO grows angry, saying: If you tell anyone that I m somehow involved in this, I will have no choice but to let you go I have no confidence in a lawyer I can t trust to keep matters confidential

87 What should Lawyer do?

88 Reporting up the chain (RPC 1.13) Actual knowledge of Intention to act Engagement in act Refusal to act

89 Reporting up the chain (cont d) In a matter that is A violation of a legal obligation to the organization A violation of law which reasonably might be imputed to the organization And is likely to result in substantial injury to the organization

90 Reporting up the chain (cont d) [T]hen the lawyer shall proceed as is reasonably necessary in the best interest of the organization. Unless reasonably believed unnecessary, the lawyer shall refer the matter to higher authority in the organization

91 Reporting up the chain (cont d) May also reveal certain information in very limited circumstances, but not with investigative matters or defense matters RPC 1.13(c), (d) If the lawyer withdraws or is fired because of RPC 1.13(b) or (c) action, then lawyer shall proceed as reasonably believed necessary to assure that the organization s highest authority is informed of the discharge

92 Other resources WSBA Ethics Line: OSB General Counsel: Edna Selan Epstein, The Attorney-Client Privilege and the Work-Product Doctrine (5 th ed. ABA 2007)

93 Discussion

94 Adjournment