Lessons From An Ex-Congressional Lawyer

Almost two decades ago, I learned several lessons as a Congressional lawyer, some more useful than others.  Here is a 59-second summary of the better lessons.

Let’s go over a few more lessons that might be useful, should you or your client be summoned to appear before a House or Senate Committee.

The Lessons of Congressional Peculiarities

A document request or interview demand from Congressional investigatory staff could be a one-time, narrowly-focused inquiry or part of a complex investigatory broadside – involving simultaneous civil, criminal and congressional investigations into a company (or its employees) or even an entire industry.  Examples in recent times include antitrust, food-and-drug, environmental, financial and corporate-governance investigations, as well as executive-branch oversight hearings such as Benghazi.  Counsel should be aware of their evidentiary impact.  In particular, he or she must move aggressively to limit the adverse impact of discovery produced in one forum on other proceedings.  Given the scope of Congressional investigatory power, however, this task can be difficult.[1]

Where the only two competing interests are simultaneous civil and criminal proceedings, of course, it is not uncommon for defendants to seek a stay of the civil proceedings – often with the express or implied agreement of the government – until resolution of the criminal action.

Where the third competing investigatory interest is Congress, however, the picture becomes less clear.  Although not without limits, legitimate Congressional investigatory authority reaches any matter on which Congress can legislate.  For separation-of-powers reasons, courts are reluctant to address claims of Congressional investigatory overreaching, at least absent a clear due process problem.  Thus, counsel will not be able to enjoin a Congressional subpoena, for example, or impose upon the committee a protective order for his or her documents.[2]   Counsel’s greater chance of success lies in persuading committee counsel or staff that the scope of document requests or subpoenas can be narrowed such that the client’s interest is protected while still allowing the committee to carry out its function.  Counsel should also seek alternative discovery mechanisms, such as allowing committee staff to review documents first, without actually taking possession of them.

 

Congress and Privileges

Although the Congress respects constitutional privileges (e.g., the Fifth Amendment privilege against self-incrimination), it does not officially recognize common-law protections such as the attorney-client privilege or the work-product doctrine.  Rather, many committees will often take the position that recognition of such privileges is discretionary with the committee.  As a practical matter, however, committee counsel and staff will often accept a well-grounded privilege claim.  See generally Note, The Attorney-Client Privilege in Congressional Investigations, 88 Col. L. Rev. 145 (1988).  Companies that are the target of major parallel investigations will often waive common-law privilege, either to show good faith and cooperation, or as part of a settlement with the government.

Very '90s.

Very ’90s.

Unlike a criminal defendant, a witness before a Congressional committee cannot refuse to testify altogether, but  must rather invoke the privilege in response to specific questions.

 

Alien Environment

For most civil or criminal litigators, a Congressional investigation is an alien environment.  Although there are House rulesHouse committee rules, Senate rules and Senate committee rules, there are no reassuring guideposts, no analogs to the Federal Rules of Evidence or of Criminal or Civil Procedure.  From a litigator’s perspective, rule number one is that there are few rules.  The issue is one of control: unlike the civil litigation context, the congressional forum is one in which you are likely to be buffeted by forces that are largely beyond your control.

Done before lunch.

Done before lunch.

The fact that there appear to be no rules in a congressional investigation underscores perhaps the primary fact that counsel should bear in mind: the committee’s investigation takes place in a political environment, not a litigation environment.  Although the investigatory process appears legalistic, it always unfolds in a political environment in which the actors have political goals that may or may not have anything to do with your client.

The political environment will demand several things of counsel, some of them inconsistent.

 

The Personal and the Political

Congressional investigations are not monolithic.  They are often highly personalized between Members; between the majority and minority parties; between staffs; and between committees with potentially overlapping jurisdictions.  Counsel should therefore remember that he or she is dealing with individual people rather than the institution of “Congress.”

Counsel may be proud of his or her “Rambo” litigation style, a style that unfortunately is often successful in a world of uniformly applied rules, broadly-construed discovery standards and tolerant judges.  In the Congressional forum, however, committee counsel and staff usually possess near-plenary authority that they exercise with considerable discretion.  Even when they do not make the rules, they apply them, and they will be rarely overruled by their Chairmen solely on the complaint of a private party.

Looking for the flamethrower?

Looking for the flamethrower?

Thus, counsel should be firm, and be aggressive where necessary, but be polite to committee counsel and staff, both majority and minority.  Brendan Sullivan’s virulent, scorched-earth defense of Oliver North during the televised Iran/Contra hearings is the exception that proves the rule: in addition to the fact that Colonel North as a client offered his lawyers advantages and disadvantages peculiar only to Colonel North, Sullivan made a considered tactical decision that high-profile aggression was the appropriate tack in that particular public theater.  You may reach the same conclusion, but do not do so reflexively.

 

Learn the Context of the Investigation

As soon as you or your client is contacted, attempt to gain as much information as possible about the investigation in general and your client in particular.  The first and most obvious source should be your client and your client’s documents.  In addition, unlike grand jury investigations, Congressional investigations do not remain secret for extended periods.  In additional to national media, Washington specialists such as National JournalRoll Call and The Hill can provide useful background on personal and political dynamics.

 

Be Proactive at the Outset

Be proactive with committee counsel and staff.  Although you may determine later for strategic reasons that it is wiser to lay low (or be recalcitrant), a sound initial approach is to act promptly and to attempt to understand the individuals and issues involved.  Ask lots of questions.  What is the subject of the investigation?  How long has it been going on?  How long might it last?  Are any other committees or subcommittees looking at the same issue?  Is the Executive Branch (the Department of Justice or the regulatory agencies) looking at the same issue?  Is the committee headed towards hearings?  Has a date been set?  Is the investigation a bipartisan inquiry?  Minority only?  Majority and minority, but working separately?

Delete.

Delete.

Such information is valuable in determining if you are facing a full-blown, formal committee investigation or a preliminary (and perhaps unsanctioned) probe by a curious, bored or ideologically-driven staffer.  If the latter, you have an opportunity to slow down or stop the inquiry before it gathers steam.  You may be able to accomplish this goal by direct persuasion, simply convincing the staffer that there is “no there there.”  The political opposition on the committee may have an interest in stopping the investigation, or bending it to their own ends, and it will usually be in your client’s interest to consult with staff or counsel for the other party.  Thus, make every effort to find out the names of the committee lawyers or staffers in charge of the investigation (both majority and minority).  For the same reason, if the executive branch appears to be involved, identify the relevant lawyers from the Department of Justice or the regulatory agencies.

 

Why My Client?

You must then attempt to determine your client’s role in the investigation — or, more precisely, the committee’s perception of your client’s role.  Why is your client involved?  How did his or her name come up?  If the request is for an interview or deposition, ascertain the subject areas to the extent staff is willing to describe them.  What are the ground rules, if any?  Is there a House or Senate resolution concerning the investigation?  You should request a copy of such a resolution, if any, as well as a copy of the committee’s rules.  A committee cannot exercise authority it does not have.  Although committee authority is often broad, resolutions and rules define authority and offer counsel opportunities to exploit.  A careful examination of these materials will yield a better understanding of the procedural and substantive protections available to your client, and thus will help you make strategic decisions (for example, whether you should participate voluntarily or only by subpoena; whether the staff deposition to which your client is being asked to submit is formally authorized; whether or not the committee intends to grant witnesses immunity).[3]

 

Hearings

And the Congressional livin' is easy.

And the Congressional livin’ is easy.

We are in the summer months.  We have written before about  summer hearings:

As a former oversight-and-investigations lawyer for a House committee, I can testify: summer is the high season for O&I hearings.  Nothing is going on legislatively, O&I hearings don’t require lobbyists or constituents, it is hot as hell but most House and Senate hearing rooms have good air-conditioning these days and, if you get some hearings under your belt in June and July, you’ll have plenty as a Member to talk about in your district or state.

Because most people are familiar with Congressional investigations only through television, they assume that if they are caught up in an investigation they will be summoned to testify before a committee like John Dean or Oliver North, with cameras clicking amid vigorous partisan drama.  Although your client may indeed be called to testify in a public hearing — and you should prepare as though your client will be called — it is more likely that constraints of time, the demands of the media, and political pressure and compromise having little to do with your client will result in your client never being called.  If your client testifies, remember that in many instances the committee members’ “questions” are not actually designed to elicit information from the witness.  Rather, questioning is often more like speech-making designed to maximize camera time on the questioner or to score political points against the opposition.

This practice is particularly prevalent in the House, where Members must usually follow the “five-minute” rule, which limits an individual Member’s questioning to that period of time.  Your client should expect frequent interruptions; indeed, it is a somewhat rare occasion under the five-minute rule when a witness is actually able to complete an answer.  There is no judge present to whom the witness can appeal, nor should you expect the chairman to step in.  In the face of such grandstanding, a witness’s only remedies are his or her opening statement, and potential softball questions from friendly Members.

Whether or not your client’s interests are best served by testifying, you should consider what steps you need to take (1) if he is called and (2) if he is not called.  For example, many committees require several hundred copies of a witness’s prepared or opening statement, and they must be delivered usually 24 hours in advance of the witness’s appearance.  What do you want to put into the opening statement?  What are other witnesses saying in their opening statements?  If your client is not called, is the opening statement something you can provide to the press as a release?  Do you have a media package ready, whether or not your client testifies?  Have you confirmed with staff where you can sit during the hearing?[4]   These are all questions you should consider carefully well in advance of the hearing day.

 

Clean Up and Post-Mortem

Whether or not your client is involved in high drama, do not forget the details at the end.  Your client should review and correct testimony where permissible.  If you have reached any sort of confidentiality agreements with counsel and staff (e.g., redacting personal information out of documents or deposition transcripts prior to their publication), you should confirm your understandings in writing.  You must also look ahead.  Will there be additional investigations, perhaps by other committees or in the other legislative chamber?  Has this investigation had an effect on any civil or criminal proceedings against your client?  Have you been made aware of new sources of documentary or testimonial discovery that can help or hurt your client?  Careful planning and professional flexibility at the end of the congressional investigatory process are just as important as they are at the beginning, and will serve your client well.

 



[1]Congressional investigatory power is “as penetrating and far-reaching as the potential to enact and appropriate under the Constitution.”  Barenblatt v. United States, 360 U.S. 109, 11 (1959).  Congress can enforce its investigatory will through, among other means, the contempt power.  The congressional contempt provision, 2 U.S.C. Section § 192, provides that

 

[e]very person who having been summoned as a witness by the authority of either House of Congress . . . to produce papers upon any matter under inquiry before either House . . . willfully makes default . . . shall be deemed guilty of a misdemeanor, punishable by a fine of not more than $1,000 and imprisonment in a common jail for not less than one month nor more than twelve months.

 

Under this provision, “willfulness” refers to intentional conduct, United States v. Bryan, 339 U.S. 323 (1950), not bad faith or moral turpitude.  Braden v. United States, 365 U.S. 431, 437 (1961).  Neither mistake of law nor advice of counsel excuses a violation of the statute.  See Sinclair v. United States, 279 U.S. 263, 299 (1929) (advice of counsel); Watkins v. United States, 354 U.S. 178, 208 (1957) (mistake of law).

For an exhaustive bibliography of Congressional investigations, look here.

    [2]A witness who believes that a subpoena is defective (for example, that it was issued beyond the committee’s authority, or that it violates the witness’s constitutional rights) has limited avenues of recourse.  Essentially, the witness must refuse to comply; be cited for contempt; and raise the objection as a defense in the contempt proceeding.  See Eastland v. United States Servicemen’s Fund, 421 U.S. 491, 503-07 (1975) (the Speech or Debate Clause raises “an absolute bar to judicial interference” with a Congressional subpoena).

    [3]In the Whitewater investigation during the 104th Congress, for example, the Senate Special Committee to Investigate Whitewater and Related Matters operated pursuant to a relatively comprehensive Senate resolution that authorized funding for the investigation, including staff; set out the subject matter of the inquiry; and described discovery authorities and procedures.  The House Banking Committee operated pursuant to no special resolution but rather relied on its delegated oversight authority.

    [4]Many committees do not allow lawyers to sit at the witness table or even to speak during the hearing, except to counsel the witness as to his or her constitutional rights.  See, e.g., 108th Congress, Rules of the House of Representatives (January 7, 2002), Rule XI 2(k)(3) (“Witnesses at hearings may be accompanied by their own counsel for the purpose of advising them concerning their constitutional rights.”)  This protocol places a high premium on thorough witness preparation prior to the hearing.


When Your Lawyer Dimes You In A Wireless World: Undercover Techniques and White-Collar Investigations

AM, FM or SiriusXM?

AM, FM or SiriusXM?

It has become commonplace to note the ascendancy in white-collar investigations of techniques previously reserved for investigations of organized crime and violent, life-and-death offenses.

Three recent articles bring the issue around again.

The New York Times notes that More Federal Agencies Are Using Undercover Operations:

The federal government has significantly expanded undercover operations in recent years, with officers from at least 40 agencies posing as business people, welfare recipients, political protesters and even doctors or ministers to ferret out wrongdoing, records and interviews show. . . .

Undercover work, inherently invasive and sometimes dangerous, was once largely the domain of the F.B.I. and a few other law enforcement agencies at the federal level. But outside public view, changes in policies and tactics over the last decade have resulted in undercover teams run by agencies in virtually every corner of the federal government, according to officials, former agents and documents. . . .

Some agency officials say such operations give them a powerful new tool to gather evidence in ways that standard law enforcement methods do not offer, leading to more prosecutions. But the broadened scope of undercover work, which can target specific individuals or categories of possible suspects, also raises concerns about civil liberties abuses and entrapment of unwitting targets. It has also resulted in hidden problems, with money gone missing, investigations compromised and agents sometimes left largely on their own for months.

The Wall Street Journal recently explained how a cooperating witness who was also general counsel of a company wore a video camera while talking with the CEO: DOJ Returns to Bare-Knuckle Tactics in Bribery Case.  In particular,

U.S. Justice Department officials have said that despite the setbacks, the use of aggressive law enforcement tactics would continue. Last September, Marshall L. Miller, the deputy chief of the Justice Department’s criminal division, said wiretaps, body wires and physical surveillance “have become a staple in our white collar investigations.  I can promise you we will continue to use them.”

Finally, Compliance Week points out that co-employees can be wired up: ‘Extraordinary’ Cooperation Allows SAC Capital Defendant to Avoid Prison  .

Among other things, Freeman assisted prosecutors by recording conversations with Longueuil. This led to some extraordinary evidence for prosecutors such as a now-famous recorded statement by Longueuil about how he disposed of an incriminating “log” of insider information that was on a USB flash drive. Longueuil said he took

two pairs of pliers, and then you rip it open. Pulled the external drives apart. … Put ’em into four separate little baggies, and then at 2 a.m. … 2 a.m. on a Friday night, I put this stuff inside my black North Face … jacket, … and leave the apartment and I go on like a 20 block walk around the city … and try to find a, a garbage truck … and threw the sh*t in the back of like random garbage trucks, different garbage trucks … four different garbage trucks.

 

The good old days.

The good old days.

As a point of personal privilege, I may be excused for cheering the vigor with which federal law-enforcement treats a Joseph A. Bank-wearing white-collar employee as though she or he were an ISIS-trained Bonnie or Clyde.  Such an approach generates more work for me and my fellow white-collar defense lawyers.  There is much to be said for that prospect.

As a policy matter, however, what is the significance of the use of traditional organize crime techniques against business people?  And what is the significance of this phenomenon for those people and the businesses they try to advance?

There are doubtless multiple significant – and, as yet, unknowable – aspects to this practice. The most obvious aspect, however, is the continued erosion of the distinction between violent and nonviolent crime for purposes of investigation, indictment and sentencing.  When a prosecutor – or any lawyer – uses the same tool in Case A and Case B, by definition he or she sees those two cases to be substantively and procedurally analogous. (Otherwise, it would be a waste of time to use the same two in both cases).

In light of the power that a federal prosecutor wields, the erosion of that distinction can lead to an overbroad reading of the criminal statutes and related regulations.  Many of those statutes are already broad, indecipherable and protean by virtue of the fact that Congress drafted them.

What crime shall we define this evening?

What crime shall we define this evening?

In that regard, political bloodlust that can arise on certain topics. Child pornography is one.  Crime-in-the-suites is another.  Political bloodlust is an important aspect of our consideration of the application of organized crime investigatory techniques to business offenses.  Being “tough on crime” is rarely a political loser; being tough on sound-bites and abstractions such as “Wall Street,” “bankers” or “polluters” is equally attractive to federal legislators.

In addition, the erosion of the distinction is cheered on by the most sophisticated members of the plaintiffs’ bar as well as by single-issue activists who otherwise would have little or nothing to do with the criminal law.

So what? If a tool can investigate and prevent one type of crime, why not apply it to another type of crime? Why should a white-collar defendant get a pass from the rough-and-tumble techniques used on Banjo the Meth Dealer?  In any event, one might argue, there are safeguards already in place with regard to these techniques, without regard to the subjects of the investigation.

In other words, why is Sharman so wrapped around the axle on this question?

Unwrapping myself from the axle, I identify at least four separate problems here.

First, erosion of the distinction between street crime and “suite crime” skews the selection of cases to prosecute. In particular, questions of intent with regard to street crime, while certainly present, rarely pose the same kinds of nuances and knotty problems that the question of intent presents in white-collar cases.

Second, as illustrated by the Wall Street Journal article, erosion of the distinction implicates the attorney-client privilege:

Within the Treasury Department, undercover agents at the I.R.S., for example, appear to have far more latitude than do those at many other agencies. I.R.S. rules say that, with prior approval, “an undercover employee or cooperating private individual may pose as an attorney, physician, clergyman or member of the news media.”

An I.R.S. spokesman acknowledged that undercover investigators are allowed to pose in such roles with approval from senior officials. But the agency said in a statement that senior officials “are not aware of any investigations where special agents have ever posed as attorneys, physicians, members of the clergy or members of the press specifically to gain information from a privileged relationship.”

The agency declined to say whether I.R.S. undercover agents have posed in these roles in an effort to get information that was not considered “privileged,” meaning the type of confidential information someone shares with a lawyer or doctor.

Giving advice.

Giving advice.

Banjo the Meth Dealer may have “counselors,” but they are likely to be chosen because they are armed, inked and loyal, rather than for their legal advice.  (Of those three qualities, I claim one but decline to identify it).  When a company’s general counsel videos his CEO; when IRS agents can permissibly pose as attorneys; or when HHS OIG agents as physicians, we have entered a world that is deeply threatening to perhaps the oldest privilege in Anglo-American law.

Third, the proliferation of undercover agents and secret monitoring can result in a bitter comedy of errors. The Journal, again:

Across the federal government, undercover work has become common enough that undercover agents sometimes find themselves investigating a supposed criminal who turns out to be someone from a different agency, law enforcement officials said. In a few situations, agents have even drawn their weapons on each other before realizing that both worked for the federal government.

One is put in mind of the fine mob movie The Departed with Jack Nicholson and Leonard DiCaprio, in which Nicholson’s character (somewhat reminiscent of Whitey Bulger) has a gang in which almost everyone is working for a state or federal agency:

Fourth, sound discretion and public perceptions of justice are skewed when federal investigatory entities get at least a portion of their funding from successful undercover activity and other secret operations.  This system, even with some checks and balances, is not an incentive but, rather, an outright bounty.

Not your lawyer, hopefully.

Not your lawyer, hopefully.

You can always follow our advice about preserving the attorney-client privilege.   Barring a political and technological sea-change, however, there is no reason American companies should expect that the government’s hunger to use mob-oriented techniques in the business context will abate any time soon.


Of Snitches and Privileges

500 Pearl Street and white-collar crime

500 Pearl Street and white-collar crime

White-collar writer Walt Pavlo of @Forbes and 500 Pearl Street quotes us this morning in his insightful @Forbes article about the attorney-client privilege.  In particular:

Federal prosecutors want to know who knew what, and when [about the GM ignition-switch problem].  However, GM’s lawyers and former lawyers are bound, like all lawyers, to uphold the attorney-client privilege.  A privilege clients enjoy with their lawyer to openly discuss matters with the assurance that their comments will not be disclosed to others.  While the media, Congress and the general public may want an individual(s) held accountable, that information should not come from GM’s lawyers who have been intrusted with confidential information.

Every defense attorney knows more than any judge, jury or prosecutor will ever know about their client.  That is a cornerstone of how our adversarial justice system works.  We have a right to an attorney and we disclose everything to that attorney trusting that we will be treated fairly by justice.  Can you imagine a trial where an attorney testifies against her own client?  Neither can I.  Corporate lawyers charged with compliance have a client also, the company.

“The purpose of the attorney-client privilege is to find out the truth, to openly discuss truth, to encourage the client to openly discuss the truth with his or or her lawyer,” according to white-collar defense attorney Jack Sharman of Lightfoot, Franklin, White LLC.   “At the back end of our justice system, at trial,” he continued, “there’s no doubt that the privilege restricts the availability of some information, some of which is important, but the privilege encourages candor at the front end.”

Having covered a few white-collar trials I can tell you that legal motions by both prosecution and defense lawyers to suppress trial evidence are as common as moths around a porch light.  In those cases,  getting to the truth at trial is a bit tougher since the incentive is to win, not necessarily to discover the truth.  So what good is truth at the front end?

“Your duty as a lawyer is to the client only, whether that is a company or an individual.” Sharman, who also has more of his own views on the GM fallout, said.  “When a lawyer tells the client that the information they are disclosing is protected, then that provides an environment, an incentive, for the person to speak the truth.”  While that “truth” may not be disclosed, it may be acted upon.  “If an employee tells a company lawyer that they have seen something inappropriate or unlawful, that does not prevent the lawyer from speaking up within the organization,”  Sharman said.  Perhaps this did or did not happen in the GM case but the internal report by Anton Valukas found no intentional cover-up at the company and the release of that information disclosed more truth about the case than had been previously disclosed.   So truth has its place and the privilege of confidentiality promotes speaking up rather than hindering it.

Read the full Forbes article here: The Role Of Lawyers In Compliance Should Not Include Snitching.


Privilege, Corporate Silence and Saul Goodman

"This attorney-client privilege issue gives me a headache."

“This whole attorney-client privilege issue gives me a headache.”

We are past Labor Day, and just as well.  Marked by the GM internal-investigation report’s criticism of some of the company’s internal lawyers, the summer was not kind to internal lawyers generally and to the attorney-client privilege particularly.  Consider, for example, the FCPA Blog‘s note on how life is tough for internal counsel.

Even more notably, there is apparently a federal criminal investigation of GM that includes the conduct of the lawyers:

Prosecutors could try to charge current and former GM lawyers and others with mail and wire fraud, the same charges Toyota faced, said a former official who worked on the Toyota case. But, they would need to have clear proof that the employees knew the cars were faulty and then deliberately withheld that, the former official said.

The investigation could be hindered by attorney-client privilege, according to legal experts, but that privilege can be waived by GM or pierced by a “crime-fraud” exception that allows disclosure of information intended to commit or cover up a crime or fraud.

The notion of privilege has taken a beating in recent weeks, as shown in a New York Times “Dealbook” article (Keeping Corporate Lawyers Silent Can Shelter Wrongdoing) by Steven Davidoff Solomon, a professor of law at the University of California, Berkeley:

[U]nless a whistle-blower steps forward, the [attorney-client privilege] principle remains strong. Despite the widespread involvement of its legal staff, General Motors successfully invoked the privilege to help keep silent on the ignition scandal it eventually faced. Even the Justice Department changed its guidelines in 2008 to remove a provision that penalized companies for invoking the privilege.

The result is that companies have a great incentive to shift anything hinting at legal trouble to their in-house counsel to ensure that it is protected from disclosure. The in-house legal department thus becomes the “cover-up and damage control” arm of the company.

. . . .

Is it time to cut back privilege or even end it to prevent companies from hiding corporate crimes?

And, here’s further commentary from Lucian E. Dervan at the White Collar Crime Prof blog, focusing on the Delaware Supreme Court opinion in Wal-Mart Stores, Inc. v. Indiana Electrical Workers Pension Trust Fund IBEW,Del. Supr., No. 614, 2013 (July 23, 2014): Privilege, Corporate Wrongdoing, and the Wal-Mart FCPA Investigation.

It’s enough to make a law-abiding internal lawyer (and even the supporting-cast outside counsel) feel like Walter White’s lawyer, Saul Goodman, in Breaking Bad:

What’s to be done?

Here are my thoughts in 140 seconds:

We have written on GM and the privilege before: How To Avoid Being GM’ed: The Wrongs and Rights of Clients and Lawyers.  In particular:

It is by no means inconceivable that bills will be introduced seeking to impose, in GM-like situations, a Sarbanes-Oxley style “reporting” requirement on internal lawyers (or outside counsel, or both), coupled with a “private attorney general” concept and whistleblower bounties.  As in the SOX, internal-investigation world, if the matter is sufficiently serious, you may need two law firms: one firm that does an investigation and prepares a report that we all know will end up in the hands of the Government, and one firm that provides advice to the company (or the board, or a committee of the board) and over whose work we hope to maintain privilege.  We have addressed internal investigations and related problems before.

Indeed, it is instructive to compare the anti-privilege sentiment in its most pitchfork version with the recent decision of the D.C. Circuit in the KBR matter, which was a resounding reaffirmation of privilege in the internal-investigation context.  As we pointed out in It’s Okay To Smell A Rat: Internal Investigations, Attorney-Client Privilege and the KBR Decision:

It is noteworthy that the D.C. Circuit clarifies the rule such that it applies in all contexts: civil, criminal and administrative.  The attorney-client privilege is, to some degree, in derogation of the search for the truth, at least in the first instance.  Yet, lawyers learn things from clients that the lawyers then do not have to reveal because we believe that, on balance, “truth” is ultimately best served in an adversarial system by a tool that encourages clients to tell their lawyers the truth.

This is an often overlooked point.  Frequently, clients do not tell lawyers the whole truth, at least the first time a discussion arises. This is particularly the case in criminal representations, but it is not uncommon in the civil arena.  Sometimes, this reticence arises from a client’s knowledge of his, her or its wrongdoing, and a concomitant desire to hide or destroy evidence.

More often, however, that initial reticence arises from much more innocuous sources: embarrassment, shame, misunderstanding, fear of losing a job or worry about how superiors or colleagues might react.  In those contexts, it is the privilege itself that is most solicitous of the truth, and allows the truth to eventually out.

In fact, if you do smell a rat, sometimes there is all the greater need to speak in confidence:

The attorney-client privilege has engendered debate ever since its first articulation, and that debate is healthy.  We should not let the urgency of news items, however, obscure the broader good that the privilege can serve.  There are many things that, in our adversarial system, the Government does not get to know about my clients.  We could change the system to a more inquisitorial structure, but such a move goes against a host of cultural and constitutional mindsets that, however imperfectly, have preserved individual liberties, property rights and the rule of law for a long time.  There are few professional prospects more pleasant for a prosecutor or a regulator than an opportunity to strip you of the ability to speak in confidence to your lawyer.

As well-stated by Saul Goodman: