The American College of Trial Lawyers is “an invitation only fellowship of exceptional trial lawyers of diverse backgrounds.” In August 2020, its Federal Criminal Procedure Committee released “2020 Update: Recommended Practices for Companies and their Counsel in Conducting Internal Investigations” (the Update).

The Update recommends companies “consider an internal investigation when significant corporate malfeasance has been alleged or when an independent auditor gives notice that it suspects the possibility of illegal corporate activity.”

Independent Oversight

When possible, company management, including the general counsel’s office, should not be, nor perceived to be, in charge of or exerting material influence over the investigation. For publicly held companies, independent board members, such as those often found on the audit committee, should oversee the investigation.  Generally, independent outside counsel that does not have a substantial prior relationship to the company should conduct the investigation.

The Update indicates the independent overseers should be asked to make a recommendation to management (or the full board of directors for publicly held companies) if the privilege that attaches to the work of the outside counsel should be waived and the information shared with government or other third parties.

Clear Requirements for Cooperation and Consequences for Noncooperation

In general, employees should be told they must cooperate with the investigation, which will include making hard copy documents and electronically stored information (ESI) available to the investigators, complying with any directive to preserve ESI and other documents, and submitting to interviews.  Employees should also know the consequences of failing to cooperate, especially if management (or the full board of directors for publicly held companies) has determined failure to cooperate could result in dismissal.

Typical Environmental Audits Will Not Trigger Independent Investigations

Environmental audits, such as those done under the Texas Environmental, Health, and Safety Audit Privilege Act, often find “the possibility of illegal corporate activity.”  However, except in extraordinary circumstances, the violations found are corrected within a relatively short amount of time.  In these cases, no further internal investigation is warranted.

To see the Update—recommended-practices-for-conducting-internal-investigations.pdf?sfvrsn=2473e169_2