By Patrick Connelly, originally published in Buffalo Law Journal, Buffalo Business First on Mar 15, 2019, 8:25am EDT.
Listening is Key in Internal Investigations
SPECIAL REPORT: Corporate Law & Litigation
Early in her career while working in the district attorney’s office in Brooklyn, Andrea Schillaci carried around a card with the Miranda warning she was required to recite before asking a suspect any questions.
Now when she interviews a witness in an internal investigation on behalf of a client, she outlines a different set of guidelines.
Schillaci, member at Hurwitz & Fine PC, lays out legal positions the witness needs to know. She informs the person she’s an attorney for the company and cannot legally advise the person.
“We need to be very clear at the outset what we’re doing and why we’re doing it,” she said. “We give advice to the company, not individuals. People often get confused on that but it’s very important to be clear.”
Amy Habib Rittling, partner at Lippes Mathias Wexler Friedman LLP, agreed.
“You really want to separate out the business advice and the legal advice,” she said.
Attorney-client privilege is a difficult but important aspect to an investigation, said Laura Schwalbe, senior associate at Harter Secrest & Emery LLP.
Rittling agreed there, as well.
“There’s a little bit of an education that has to occur around what is (covered) and what is not,” Rittling said.
Outside counsel, Schwalbe said, is typically best situated to conduct investigations on behalf of a company.
“(They’re) usually trained in conducting internal investigations, so they’ll be able to handle warnings that you should give the employee, know what questions to ask, what documents to look for and how to structure things,” Schwalbe said.
“It’s also optically a good practice,” she continued. “When you have people inside the company conducting the investigation, they may have their own interest in limiting the line of inquiry (and may not be) asking tough questions of employees who seem like they might be obfuscating or not quite telling the truth.”
Examining what is known at the start is imperative, the attorneys said.
“The first question is: What do we know so far? We talk to the people who have the initial information and create a plan,” Schillaci said. “That always begins with documents.”
Rittling said it’s important to identify the reasons and goals for the investigation.
“This can help with privilege and confidentiality if there is evidence … from the outset that the investigation is being conducted in anticipation of litigation and for the provision of legal advice, for example,” she said.
She usually begins by reviewing a complaint or any paperwork that outlines the problem. She frames a plan and collects the documents she needs to review.
“The planning is really the key” Schillaci said. “You want to start (by talking) with the people who have some information and work your way up to the people whom you believe have a lot of information. You’re gathering your base to test people to see if what they are telling you seems credible, if it seems complete and if it makes sense.”
In an employee investigation, Rittling reviews documents and interviews the person who made a complaint or grievance. She then lines up witnesses who are germane to the complaint and finally interviews the alleged perpetrator.
As outside counsel, it’s important to get a baseline understanding of what laws are at issue, Schwalbe said.
“Internal investigations in the construction (industry) context will be different than in a medical, hospital or nursing home context,” she said. “But the foundations of how the internal investigations should go forward are pretty consistent.”
The attorneys said they determine their point of contact at a company.
“If it’s the corporation, is it the board of directors, is it an audit committee, who are you going to be reporting to? That’s critical,” Schillaci said.
“Oftentimes your liaison is the board,” Rittling said. “You don’t want an employee who is subordinate to an employee who may be the subject of the investigation.”
Establish the principal contact, advised Alan Bozer, partner at Phillips Lytle LLP.
“The first thing we ask is give us one person who will be responsible,” he said.
Throughout, attorneys must be flexible to shifting gears, noted Rittling.
“Things change,” she said. “You need to keep that in mind and remain fluid when you need to and have your investigation plan be realigned.”
Schwalbe has seen investigations in recent years brought by whistleblowers in a company who may have witnessed improper action.
Many, she said, fall under the False Claims Act.
“If you are found to have violated the False Claims Act, you have defrauded the government, effectually. You are subject to large penalties,” Schwalbe said.
“A lot of internal investigations spring up from internal complaints,” she said. “An employee who has observed something wrong will still usually raise it internally to see if it can get fixed, but oftentimes they’ll either simultaneously or if they feel like not enough has been done, they’ll go to the government and file a False Claims Act case there.
“Then things will spiral quickly out of the company’s control,” Schwalbe said.
Investigation protocol can be different in these types of investigations, according to Schillaci.
Other investigations tend to be claims of sexual harassment or mismanagement or something botched with a government contract, the attorneys said.
Companies that are clients often ask why they need outside counsel when they have human resources or risk management departments, Schwalbe said. Other questions focus on costs and predictions on what the results may show, Schillaci said.
“Clients always want to know, ‘What’s it going to cost me?’ and ‘What’s going to happen at the end?’ Unfortunately, those are often questions that we can’t answer at the front end,” she said.
“Witnesses often want to know if they need to cooperate, if they need counsel and what’s going to happen with the information. We can’t give legal advice to witnesses because we don’t represent them, so those questions often lead to referring them back to management,” Schillaci said.
In-house counsel is served better having outside counsel with experience assist when an investigation involves the government on a criminal matter, Bozer said.
“It’s worthwhile for them to deal with the government through us because we are used to dealing with the government,” he said. “From a company standpoint, no person at the company should be dealing with a government agent directly.”
When someone is subpoenaed, Bozer asks the agent if the person is the target or a witness.
“We get involved with our clients who are not targets in assisting them in presenting evidence and information to the U.S. Attorney’s Office,” Bozer said. “We are very careful in our advice to the employee. … That can create a world of trouble with obstruction of justice.”
Investigations can turn emotional, Schillaci said.
“Some people look at it like being called into the principal’s office because it can be intimidating,” she said.
Through their experiences, each of the attorneys said they’ve refined practices.
“I think the most important thing is listening,” Schillaci said. “As lawyers, we are so used to asking questions, but you have to listen to what people are saying. … Keeping an open mind is very important and you don’t want to go in with a preconceived notion of anything because then you might miss half of what you’re looking for.”
Bozer said sensitivity matters, especially if the company is nervous about an investigation.
“Our clients hopefully have not had many such contacts (with the government) in the past,” he said.
It’s crucial to be cognizant that it may lead to litigation and to rely on facts, not opinions, Rittling said.
“There are going to be serious problems that you uncover and it can be a real challenge to get a client to understand … they shouldn’t just walk away from it,” Schwalbe said.
Investigations are a great tool for attorneys and companies, she said.
“Getting ahead of problems by having careful, thorough internal investigations can help alleviate problems in the future and get things lined up and straight from the beginning,” Schwalbe said.