Conducting an Internal Investigation – the risks and rewards

read time: 3 mins

One of the most serious situations that in house counsel will face is where they suspect a criminal offence or regulatory breach has been committed within their business. This can include a wide range of potential issues including health and safety failings, breaches of environmental law, fraud and financial crime, and more.

In many cases an internal investigation will need to be conducted. These investigations are difficult – they will deal with sensitive issues, worried employees and their findings will often have a real impact on the business in the future. If they are conducted well however, they can provide valuable protection to a business, its senior managers and employees.

Each investigation is different, but key principles to bear in mind are as follows:

  1. Protect the investigation from disclosure

Following the case of SFO v ENRC, it is clear that investigators will need strong and specific evidence to maintain a claim of legal privilege. Procedurally, this means getting the investigation started on the right foundation, and clearly stating your reasons and evidence for why privilege applies before the investigation starts. External legal support is often crucial in ensuring that any investigation benefits from legal professional privilege, and can therefore be kept confidential. We have previously written on the importance of legal professional privilege.

  1. Obtain specialist advice

You should consider obtaining external advice and support in relation to any investigation where there is a threat of future legal proceedings. One particular area to consider specialist advice is where the business may have external reporting obligations, to ensure that these are managed and met.

  1. Management and structure

An investigation team should be formed as a first step. An investigation leader should be appointed (which will often be in house counsel), and you should consider what resources will be needed in terms of time, staffing and funding. It is important to ensure that the investigation team is not too widely spread, as this can hinder the effectiveness and confidentiality of the investigation. 

  1. Define your scope

The scope and objective of the investigation should be carefully considered and agreed at the beginning. Investigation can be derailed or may fail to answer the important questions if their aim is unclear.

  1. Set the rules

A clear protocol should be set up for the gathering, recording and storage of evidence. This includes both existing documents, documents created during the investigation, and witness statements taken from employees or third parties. This evidence is likely to be crucial in defending future legal proceedings, and evidence that is accidently destroyed or compromised can severely weaken a case.

  1. Prepare for external communication

The investigation team may need to deal with third party requests for information. These requests can come from the media, victims of the alleged crime and other stakeholders. Sharing any information will need to be carefully managed to ensure that your investigation is no prejudice, and that you comply with your wider legal obligations regarding the sharing of data.

As with many issues for in-house counsel, prior preparation is invaluable. If you don’t currently have a specific internal investigation method, you should consider drafting an internal checklist or proposed method statement in writing. If you have a written protocol already, it is worth regularly revisiting (and after each investigation) to review what worked well and what could be improved.

If you would like further information on internal investigations and preparing for serious incidents, please contact Ashfords’ Business Risk and Regulation team on 0117 321 8014.

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