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In June, a U.S. Appeals Court vacated a lower court decision that gutted the attorney-client privilege in the context of internal investigations partly performed by non-lawyers and when initiated for any reason other than solely to obtain legal advice (previous GCN coverage). But the legitimacy of privilege protections for internal investigations continues to face challenges. Background In October, the privilege protections for internal investigations came under renewed attack when an individual defendant in a criminal Foreign Corrupt Practices Act case – Joseph Sigelman – sought to compel an outside law firm to produce records related to an investigation it conducted on behalf of the defendant’s former employer. The investigation uncovered evidence that Sigelman had paid bribes to a Colombian official in exchange for a contract. The outside law firm subsequently produced all nonprivileged documents to the Department of Justice, which formed the basis of the criminal case against Sigelman. According to the DOJ, all of these documents have been shared with Sigelman. Subpoena Sigelman’s subpoena sought to compel the outside law firm to provide “any and all documents referring to, related to, or collected during” the internal investigation, and any and all documents related to communications between the outside law firm and the DOJ. The outside law firm filed a motion to quash the subpoena, arguing that it was impermissibly overbroad, unnecessarily burdened a non-party to the case, and was aimed at obtaining privileged work product such as interview summaries. Sigelman countered that the documents sought were precisely defined, and were relevant because they might contain information that would exonerate him. Moreover, Sigelman argued that any applicable privileges were waived when the outside law firm disclosed the results of its investigation to the DOJ at the company’s request. The crux of Sigelman’s argument is that the outside law firm must have discussed its findings from witness interviews, which would therefore constitute ‘detailed oral recitations’ of the interview summaries. The outside law firm countered that there was no evidence to support this conclusion. District Court Grants Motion to Quash On October 20, the District Court Judge granted the outside law firm’s motion to quash the subpoena. Nevertheless, the reasoning in the judge’s order was limited to the arguments that the subpoena was impermissibly overbroad and that it was the DOJ’s obligation to provide documents to the Sigelman, not that of the outside law firm. Thus, the judge’s order avoided the topic of privilege, which had generated the most debate between the outside law firm and Sigelman in their briefs. Can Privilege Survive? It is unclear how the judge would have ruled on the privilege waiver argument. If Sigelman had requested specific interview memoranda, which are not in DOJ’s possession, the decision would inevitably have come down to the privilege issue. Companies and law firms making disclosures to the government will likely face increasing challenges to the notion that privileged work products generated in relation to such disclosures are privileged. A District Court judge could agree that the nature of the disclosures made in government meetings constitute ‘detailed oral recitations’ of the main sources of evidence in such investigations: witness interviews. Indeed, the very mental impressions that make an interview memorandum privileged – e.g., witness credibility – are those which could very well be shared with DOJ. Judges – who have expressed increasing skepticism about internal investigations and negotiated corporate settlements – may wish to interpret the law of privilege in ways that limit protections afforded to internal investigations that are disclosed to the government. Companies and law firms seeking to avoid a finding of privilege waiver will most likely further limit the nature and substance of information to DOJ and other U.S. authorities, and shift the evidence-collection burden onto DOJ to avoid the impression that the DOJ relied on the outside law firm’s investigation. Indeed, in the Sigelman case, the outside law firm noted that the DOJ had conducted its own witness interviews, and thus would not have required detailed recitations of the outside law firm’s interviews. Although such steps may help protect privilege in many cases, the clear trend is towards an erosion of privilege protections for internal investigations.


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