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A Brief Guide to Common Pitfalls and Ethical Issues for Outside Counsel In Internal Investigations

John Walsh, Sarah Judkins, Heidi Ruckriegle, Today's Environmental Agencies: Regulatory Enforcement, Citizen Suits, and the Natural Resources Industries (Dec 2018)

I. Introduction Internal investigations, whether conducted by in-house counsel or outside counsel, have become a comparatively frequent event in the business operations of natural resources companies in the United States and abroad. This paper describes some of the most common pitfalls and ethical issues that outside counsel will face in internal investigations. Although we focus on issues from the perspective of outside counsel, the considerations described here are highly relevant to investigations by in-house counsel, and to the often-challenging work of in-house counsel in managing the work of an outside counsel-led internal investigation. The purpose of this paper is not to delve into these key issues in exhaustive depth - most could be the subject of an entire, stand-alone paper in themselves - but to provide a framework document to assist counsel in assessing the work they face in internal investigations, to spot crucial issues, and to identify areas for further research. Our experience has been that every internal investigation raises its own unique twists on these foundational considerations, and its own challenges and legal complexities. II. Who is the Client? Focusing on the identity of the actual client from the outset of an internal investigation is a critical step and has practical consequences for many of the issues confronted by outside counsel and discussed in this paper. The identity of the client will determine who directs the scope and goals of the investigation and representation, with whom work product and strategy decisions should be shared, and to whom ethical obligations, including the duties of loyalty and confidentiality, are owed. Common client identities in an internal investigation include: (1) company management; (2) the company's Board of Directors ("Board"); or (3) an audit committee or other special board committee. A corporation's management may initiate an internal investigation on behalf of the company. However, if the focus of the investigation centers on the conduct of senior officers or directors, a management-supervised investigation usually is not appropriate or realistic because of the need for investigatory independence.