Read the press about Judge James Gwin’s decision in United States ex rel. Barko v. Halliburton Co., No. 1:05-cv-1276 (D.D.C. Mar. 6, 2014), and you might see it as the beginning of the end for the attorney-client privilege in internal investigations. While the ultimate implications of the decision remain to be seen, that’s not how we see it.
The attorney-client privilege and the work product doctrine are alive and well, as is their application to internal investigations. The FAR clause implementing the requirement for a Code of Business Ethics and Conduct preserves the contractor’s right to conduct an internal investigation subject to the protections of the attorney-client privilege and the work product doctrine. See FAR 52.203-13. The Justice Department’s Principles of Federal Prosecution of Business Organizations explicitly states that a company is not required to waive privilege in order to get credit for cooperating with a government investigation. “[W]aiving the attorney-client and work product protections has never been a prerequisite under the Department’s prosecution guidelines for a corporation to be viewed as cooperative.”
For federal contractors, publicly-traded companies, and others in highly-regulated industries, the real question presented by Barko is more granular: How can my company avoid the same result?
Barko is limited to its facts
The facts underlying the Barko decision are set forth in two opinions—the March 6 opinion granting relator Harry Barko’s motion to compel discovery; and the March 11 opinion denying KBR’s motion to certify the case for appeal. Additional background details can be found in the relator’s motion to compel, KBR’s opposition brief, and the relator’s reply brief.
A summary of the Barko decision appears in a post by Cori Turner and Kelly Schulz on Healthcare Law Insights. Here we focus on the facts that make Barko unique and strategies for avoiding the same result in future internal investigations.
These are some of the key facts driving Judge Gwin’s decision in Barko—
- The routine nature of the investigation. According to deposition testimony, there were more than 1,000 separate internal investigations regarding the contract at issue in Barko.
- Failure to communicate to employees that their interviews were for the purpose of providing legal advice to company. The court emphasized that the confidentiality agreement signed by the employees did not mention that the review was to seek legal advice.
- Investigators, not attorneys, conducted the investigation.
- The length of time between the completion of the investigation and the discovery dispute. “Little suggests that the attorney-client privilege and the work product doctrine will be impacted by the disclosure of eight year old investigator interview notes and reports.” March 11 decision, at 10.
- Lack of evidence that attorneys provided meaningful oversight of the investigation.
- Legal advice was not offered or requested in the documents sought to be withheld. “At the end of the investigation, the investigator drafted a final memorandum and submitted it to the General Counsel’s office. But the memorandum does not request legal advice, and it does not identify possible legal issues for further review.” March 11 decision, at 4.
- The investigation reports contradicted KBR’s motion for summary judgment. “In its motion for summary judgment, KBR makes factual representations directly opposite its own [] reports.” March 11 decision, at 2.
- KBR put the contents of the investigation at issue. According to Judge Gwin, KBR may have waived any privilege or work-product protection “when KBR put the contents of the [] investigation at issue.” March 11 decision, at 6.
A roadmap for preserving privilege in future investigations
Despite the attention it has garnered over the past several weeks, Barko is not the first case to hold that an internal investigation was discoverable because it was conducted for a business purpose rather than for the purpose of obtaining legal advice. The decision in United States v. ISS Marine Servs., Inc., 905 F. Supp. 2d 121 (D.D.C. 2012), applies a “but for” test to determine the application of the attorney-client privilege. Under this test, a communication is privileged only if it would not have been made “but for” the purpose of obtaining legal advice. The Barko decision follows ISS Marine.
Until the issue is addressed more clearly in the appellate courts, companies seeking to preserve their attorney-client privilege and work product protections can use the decisions in Barko and ISS Marine as a roadmap for internal investigations. Here are the key elements that can be drawn from the decisions:
- Adopt an appropriate policy and follow it. Make sure the policy is tailored to the company’s needs and resources. Do not create a policy that is too onerous to follow.
- Do not put enforcement on auto-pilot. Every internal investigation must overcome the judiciary’s perception that investigations are done for business not legal purposes.
- Ensure that an attorney or other professional from the legal department acts as a “gatekeeper.” This individual would be responsible for determining which allegations are investigated and by whom. This decision should be made on a case-by-case basis.
- Non-attorneys assisting with the investigation should be given written instructions making clear that they are working for the company’s legal department or outside counsel. The privilege may be in jeopardy if the purpose of the investigation is not gathering facts needed to provide the company with legal advice.
- Attorneys must oversee the investigation and document the oversight. “It is only when counsel’s strategic and legal expertise is applied and counsel’s involvement becomes more direct and meaningful, i.e., when counsel prioritizes the investigative steps, selects specific witnesses, conducts particular interviews, or reviews particular documents, that a company’s genuine anticipation of litigation manifests itself.” ISS Marine Servs., 905 F. Supp. 2d at 138 n.9.
- Provide an appropriate Upjohn warning. All current or former employees who are interviewed should receive a formal warning explaining that the conversation is for the purpose of providing legal advice to the company and protected by the company’s attorney-client privilege.
- Mark documents appropriately. Label documents that are intended to be covered by the attorney-client privilege or the work product doctrine. Applying a privilege label to all documents sent to or received by counsel defeats the purpose of the label.
- Address the investigation report to the company’s attorneys. The report of an investigation should be addressed to the company’s in-house legal department, which should document its review of the report and any advice offered to the company as a result of the investigation.
- If possible, the threat of litigation should be documented. The scope of the work product doctrine depends in part on precisely when a company is determined to have acted in anticipation of litigation. Clear documentation on this point will help prevent a later conclusion that the investigation was not connected to the threat of litigation.
UPDATE: Our discussion of the D.C. Circuit’s decision reversing Judge Gwin’s decision in Barko is available here: How the D.C. Circuit’s decision reaffirms the attorney-client privilege in internal investigations (July 10, 2014)
Our discussion of Judge Gwin’s decisions on remand concluding that KBR waived its attorney-client privilege and limiting its work product protections is available here: Barko v. Halliburton: The next (and final?) chapter (Jan. 4, 2015)