Internal Investigations- Proper Steps

July 14, 2014

These days, it appears there are more and more scandals or crisis resulting in companies having their names in the press far too often.  Many times it caused by a company’s failure to properly investigate claims internally before it is too late.  If a company investigates claims of corporate wrong doing thoroughly enough it can often resolve any issue before it escalates and morphs into a major crisis.

What  Legal Risk Management processes are in place in your organization  to handle internal investigations, if any? What should a company’s Legal Office or Compliance Office do when confronted by a claim of wrong doing or unethical conduct?  What procedures should be used when handling an internal claim?  A company or organization needs to come up with a basic plan or road map that sets forth a proper process or procedure and that satisfies compliance  and legal processes.  I suggest the following:

  1. Plan the Investigation as follows:

a. Assess the purpose of the investigation by determining:

i)     What legal questions will be addressed at the end of the investigation?

ii)    What are the potential uses of the findings and the work product of the investigation?

b.Categorize the investigation in terms of, among other applicable issues: business issues (e.g. the purpose of the investigation is to guide management decisions) and legal analysis issues.

c. Consider Legal implications such as formulating a response to civil, criminal, regulatory or other enforcement action.

d.Schedule an initial organizational meeting intended to:

i)      Review basics of the investigative procedure.

ii)    Discuss scope of the investigation.

iii)  Determine what issues are raised by the report.

iv)   Determine what laws, policies, guidelines, or practices apply to the issues raised by the report and in the organizational meeting.

v)     Conduct preliminary legal research of issues.

vi)   Brief the Compliance Officer or Compliance Oversight Committee (if your company has one) with respect to interviews and the document gathering process.

vii)  Obtain copies of all relevant files (including electronic files, voice-mail, email) and other documents relevant to the issues raised, including:

1)     a written description of relevant documents broken down into well-defined categories;

2)    speak with employees about the request;

3)    prepare a search checklist and an index;

4)    create numbers for files and/or an on-site index;

5)    consider documents stored on an electronic medium; and

6)    determine document processing requirements and capabilities including: numbering, copying, reviewing for privilege, indexing, creating a database, safeguard key documents and electronic data, if electronic data has been erased, determine how it can it be restored and store physical evidence properly to avoid deterioration.

viii)         Decide who should be interviewed (note that all individuals with any knowledge that is or may be relevant to the investigation should be interviewed).

ix)   Decide the order of the interviews.

x)    Outline the questions to be asked/include reminders about confidentiality and anti-retaliation at the outset of each interview.

xi)   If Legal is involved, it should take steps to preserve the attorney-client privilege and the attorney work product privilege.

  1. e.  Consider the issue of the company paying for an employee counsel fees in connection with an interview and/or the investigation.
  1.  Evaluate each issue raised in the report:

i)      Is it a request for help, an allegation of wrongdoing, or both?

ii)    Is there a simple resolution for the issue?

iii)  What resources are needed to investigate the issue thoroughly?

g.If the report was not made anonymously, have an intake meeting with the person raising the issue.

Only with a well thought out investigation process can an internal investigation successfully handle legal and compliance issues that are raised as a result of an investigation.  Only when all issues are properly identified can management allocate the proper resources to handle the issues.  Only then, can a company successfully mitigate an internal crisis or claim of wrong doing prior to it becoming the focus of the media. A Risk Manager, In House Counsel or Compliance Officer needs to be prepared to handle a claim of wrong doing brought by an employee promptly and efficiently.  An internal investigation process can significantly aid in the proper investigation of a claim.



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