In the last issue of the Torys Quarterly, we discussed the importance of conducting timely and thorough internal investigations into allegations of ethical misconduct.
While investigations are critical to fostering an ethical workplace, there is often a tension between the benefits of conducting an investigation and risk management. Investigations can surface sensitive information, the disclosure of which could give rise to legal exposure or public relations concerns.
Enter privilege. Properly claiming (and maintaining) privilege over all or part of an investigation can protect against legal requirements to produce investigation findings in the course of litigation. But it is important to understand how privilege can be used in the context of internal investigations and what its limitations are.
Typically, there are two main categories of privilege that can apply to an internal investigation:
Privilege may attach to all or part of an investigation, depending on the circumstances. Privilege will generally attach to: (a) legal advice sought or given with respect to the investigation; (b) lawyers’ notes taken during an investigation; and (c) communications or documents (whether or not they involve legal counsel) which are prepared for the dominant purpose of litigation—where litigation is ongoing or reasonably anticipated.
However, the facts learned in an investigation are never privileged. Further, privilege will rarely apply to blanket an entire investigation file. Where the privilege claim over an investigation is challenged, courts will typically engage in a document-by-document analysis of the privilege claim.
There are no hard and fast rules with respect to claims of privilege over the investigation report. An investigation report may be privileged (in whole or in part) depending on the circumstances of its creation, including whether the report was drafted by or at the direction of counsel, whether the report contains any legal advice and whether the report was drafted for the purpose of responding to or commencing litigation.
Companies considering claiming privilege over documents created in the course of an internal investigation should take the following steps:
1. Identify at the outset of an investigation whether privilege will be claimed over all or part of an investigation. This will help guide the investigative protocols that are adopted, including who is involved in or conducting the investigation.
2. Ensure that legal counsel is directing (if not conducting) the internal investigation. It can be helpful to involve external counsel, particularly where internal legal counsel serves in both a legal and non-legal capacity.
3. Use “privileged and confidential” or similar language on documents generated in connection with an internal investigation. This language can be a helpful indication, including to investigation team members, that privilege is being claimed and that the document should be kept strictly confidential. However, the use of this language is not determinative of the existence of a privilege claim. The use of “privileged and confidential” does not import the protection of privilege to a document that is not otherwise properly subject to a privilege claim. Likewise, failing to label a document “privileged and confidential” is not fatal to a privilege claim.
4. If a company wishes to claim privilege over interview notes, legal counsel should ideally take notes of the interview(s). Lawyers’ notes are generally afforded privilege protection. It can be more difficult to maintain privilege over notes taken by non-lawyers.
5. Ensure confidentiality is strictly maintained by the investigation team. This should include identifying an “inner circle” of individuals who will have access to information about the investigation and ensuring that appropriate safeguards are in place to maintain confidentiality. Confidentiality is critical to a claim of solicitor-client privilege.