To Disclose or Not to Disclose

Companies discovering possible unlawful activity frequently hire outside counsel to perform an internal investigation. The attorneys and their agents, such as accountants, interview key personnel and review business records. Investigators typically generate interview memoranda, chronologies, legal analyses, and summary reports. These investigative documents are shielded from disclosure to third parties by the attorney-client privilege and work product doctrines. See e.g., Better Government Bureau v. McGraw, 106 F.3d 582 (4th Cir. 1997). But see In re Grand Jury Subpoena Dated May 9, 2001, 179 F. Supp. 2d 270 (S.D.N.Y. 2001) (business advice and lobbying not protected).

Counsel must be able to guide companies not only through the process of conducting an internal investigation, but also the decision of what to do when that investigation reveals potentially criminal conduct. The most difficult question to answer will typically be: Should the corporation turn the materials over to the regulating government agency? This tough question is arising more often as prosecutors increasingly seek waivers of the corporate attorney-client privilege as a component of any negotiated settlement.