CONSIDERATIONS FOR BOARDS TO PROTECT PRIVILEGE WHEN OVERSEEING INVESTIGATIONS

When an organisation is faced with public scrutiny, reputational damage or potential litigation, its board of directors may consider engaging counsel to conduct an internal investigation. Internal investigations often can be a critical tool to help boards learn facts, assess legal risks and determine go-forward strategies.

However, board members should exercise caution when overseeing an internal investigation to avoid the inadvertent waiver of privilege. This article outlines such considerations under common principles of privilege under US law. As this article will show, US-based boards should understand the applicable state’s law before starting a corporate investigation, so as to avoid any pitfalls or waivers.

In the US, legal representations generally implicate two distinct but related privileges: the attorney-client privilege and the work product privilege. The attorney-client privilege protects confidential communications between an attorney and client, made for the purpose of obtaining or providing legal advice. Confidentiality is central to maintaining the attorney-client privilege. Thus, voluntary disclosure of a privileged communication to a third party waives privilege over that communication and could result in broad waiver of the privilege as to all other communications regarding the same subject matter.

By contrast, the work product privilege protects materials prepared by, or at the direction of, an attorney, in anticipation of litigation. Typically, voluntary disclosure of work product results in privilege waiver only if the disclosure is made to an adversary, and the risk of subject-matter waiver is low.

The purpose and structure of an internal investigation, as well as public-facing communications regarding its progress or results, could affect whether investigation-related communications and work product are protected by privilege. Boards seeking to protect privilege – or at least to preserve that option – should carefully consider the purpose and scope of investigation engagement, identity and authority of the client, and whether and how to disclose the results of the investigation to third parties.

Apr-Jun 2022 issue

Skadden, Arps, Slate, Meagher & Flom LLP