running an internal corporate...

Running an Internal Corporate Investigation November 18 2015

Dentons CPD Bootcamp 2015 1

Running an Internal Corporate

Investigation Andy Pushalik, Partner Adam S. Goodman, Partner

November 18, 2015

1

• The Triggering Event

• Planning the Investigation

• Key Issues

• Documents and Interviews

• The Investigation Report and Next Steps

• Common Mistakes and How to Avoid Them

• Questions

November 18, 2015 2

Agenda



• Please complete feedback forms

• Claiming CPD credits

• Dentons’ website

• Questions?

• Microphones in the room for in-person attendees

• Remote attendees submit your questions using the “add a question” link on

website

3

Housekeeping

November 18, 2015

When to Conduct an

Investigation

4 November 18, 2015



The Triggering Event

5 November 18, 2015

• Many different issues can trigger an investigation

• Fraud

• Product recalls

• Civil litigation

• Health and safety

• Employee misconduct

• Privacy breaches

• Customer/Employee Complaint

• Whistleblower

• Competition law issues cartel allegations

• triggered by execution of a search warrant (dawn raid)

• internal whistleblower, or

• an internal compliance audit

6

The Triggering Event

November 18, 2015



• Do not always wait for the formal complaint

• Complaint does not have to be in writing

• Tip of the Iceberg

• Investigation may reduce or eliminate liability associated with a bigger problem

• What to do about off-duty conduct?

7

Assessing the Initial Complaint

November 18, 2015

• Competition Bureau’s Immunity and Leniency Programs

• Provide significant benefits to whistleblowers who cooperate with investigation

• First-in applicant receives Immunity

• Second-in applicant & following receive Leniency

• Recommended reduction in sentence in exchange for a guilty plea and significant evidentiary

cooperation

• Reduction decreases depending on the applicant’s position in the Leniency queue

• Time is very much of the essence

8

Assessing the Initial Complaint – Competition Law

Considerations

November 18, 2015



• Where senior management is put on notice about alleged misconduct,

this may trigger a proactive obligation on the company to investigate in

certain circumstances

• Harassment

• Workplace violence

• Whistleblower

• Obligations to shareholders

9

Duty to Investigate

November 18, 2015

Planning the Investigation

10 November 18, 2015



• Determine the objectives of the investigation

• Legal obligations

• Illegal conduct?

• Collecting necessary information

• Remedial measures

11

Objectives of the investigation

November 18, 2015

• Once you have reached the planning stage, you are really at Stage 2

• Stage 1 was the Triggering Event at least a sense of what is going on by the

planning phase

• “Pre-investigation” phase informs what you do during the investigation

• Before you start doing anything, use preliminary information to

understand the issue at highest level

• Magnitude of risk

• In competition law context, is this cartel conduct or something less serious?

• Pervasiveness of the conduct

• Geographic scope of potential effects

• Timeframe

• Who is involved

12

Planning

November 18, 2015



13

Who is the investigator?

Internal External

Human resources

In-house counsel

Security / Loss Prevention

External Counsel

External Qualified

Investigator

November 18, 2015

• Factors to consider:

• The nature and severity of the allegations

• The identity of the person against whom the allegations are made

• Whether any particular expertise is required

• Workplace dynamics – is an external investigator seen as more impartial

• Whether the parties have lawyers

• Possibility of litigation or enforcement activity

• Cost

14


November 18, 2015



• Privilege is the key consideration

15


November 18, 2015

• Media strategy

• Designate one person as the company’s spokesperson

16

Who is the company’s spokesperson?

November 18, 2015



• Review applicable policies, rules, codes of conduct and, if unionized, the

collective agreement

• Know the facts

• Who should be interviewed? What order?

• Confidentiality

• Document Retention

• IT Precautions

• Hard Drive / Emails

• Timelines

• Temporary Changes at the workplace – suspensions, remote access

17

Planning the Investigation – The Checklist

November 18, 2015

Documents and Interviews




• Purpose at the initial (trigger) stage is to determine facts as much as possible

• Some cases will be fully told in the documents

• Some cases are less document-heavy

• Develop a chronology & list of custodians and witnesses from documents

• Revise your document collection plan based on initial documents

• Any other custodians?

• Develop and/or revise your witness interview schedule based on documents

• Keep updating your investigation plan

19

Reviewing the Documents

November 18, 2015

• Goals of employee interviews

• Establish the full story

• Documents may only tell a partial story

• Discover new facts

• Prepare for the next phase

• Participating in Immunity and Leniency Program, filing a Statement of Defence, etc.

20

Interviews

November 18, 2015



• Instructions to witness

• Summary of process

• Confidentiality

• No retaliation

• Purpose of meeting is to gather information and to confirm employee’s version

of events

• Two company representatives present

• Right to representation – union vs. non-unionized

21

Interview Structure

November 18, 2015

• Structured to preserve privilege

• Other than the employee, limit participation to lawyers

• Company wants to use information for Immunity/Leniency purposes

22

Interviews in the Competition Law Context

November 18, 2015



• Who?

• The complainant

• Alleged wrong-doer

• Witnesses

• Start with custodians and their documents

• Document review phase should result in a draft chronology and a cast of

characters

• Also determine the order of interviews depending on timing, may not be

possible to have optimal interview schedule

• Remain flexible

• New facts uncovered during the interviews may require interviews that had not

been contemplated

• Keep updating Plan to account for the employees who need to be interviewed

23

Interviews – Determining Interviewees

November 18, 2015

• Set a friendly tone

• Before questioning delivery of the Upjohn warning

• Private Miranda warning

• Explain that you are counsel for the company only; not the employee’s lawyer

• Communications during the interview are privileged

• Privilege belongs to the company, not the employee

• Employee cannot discuss this with anyone else

• Ensure the employee agrees to ground rules record agreement in interview notes

• Also – important that employee does not discuss his/her evidence with

others

• Not only to protect privilege but to ensure that the employee does not confuse

his/her memory

24

Interviews – Beginning the Interview

November 18, 2015



• Start simple and build trust

• Roles and responsibilities who reports to who?

• Work experience

• Major projects the employee worked on

• May want to lead a bit at the outset

• Probe knowledge of applicable company policies

• Knowledge of compliance policy

• Any information in the industry about the issue of concern

• Litigation

• Any previous or current investigations?

25

Interviews – First Questions

November 18, 2015

• Know what questions you need to ask

• Ask open-ended questions

• “What does this mean?”

• “What happened at the meeting?”

• “What do you know about this person?”

• “How do you explain this?

• Listen to the answers and ask follow-up questions

• Ask for documents

• Ask for names of other witnesses

26

Interviews – Best Practices

November 18, 2015



• Think about implications for the employees

• Company needs to ensure continuing cooperation

• Competition law context, for example

• Do they need their own lawyer? If so, when? Who pays?

• Liability?

• If misconduct internal immunity or adverse implications?

• May or may not be consistent with corporate policies

• Indemnity for some aspects may not be possible

27

Interviews – Best Practices

November 18, 2015

• How notes are kept is key to preserving privilege

• Verbatim transcription not recommended

• The more notes look like recordings of what the witness said, the higher the

risk that privilege will not apply

• Facts are not necessarily privileged

• Litigation privilege

• Prepared by counsel in anticipation of litigation and to provide legal advice

• Record things like witness demeanor, facial expressions linked to how you think

they would perform in court as opposed to simply a factual “transcript”

• If a key piece of information is disclosed, everyone should write it down

28

Interviews – Notes

November 18, 2015



• Notes should not be widely circulated

• Notes should contain more than a verbatim transcript

• Notes should be labeled

• Privileged – Solicitor-Client Work Product; Prepared in Anticipation of Litigation;

Contains Impressions of Counsel regarding Witness Demeanor

29

Protecting Privilege

November 18, 2015

The Investigation Report and/or Next Steps




• Review information from interviews and documents collected – is there a

need for any follow-up meetings?

31

The Investigation Report

November 18, 2015

• Written report should be prepared at the conclusion of the investigation

(even if it is only a short memo)

• Part One – Objective Summary of Allegations and Evidence

• Part Two – Conclusions of Fact and Reasons

• Apply appropriate standard of proof, which is based on the “balance of

probabilities”

• Document any findings of credibility and the reasons for them

• Make sure conclusions are supported by the evidence that was received during

the investigation

• Part Three – Recommended Course of Action

32


November 18, 2015



• Once outcome of investigation has been determined, meet with each of

the complainant and respondent to advise them of the outcome of the

investigation – findings and conclusions only

• Remind parties about confidentiality and caution against reprisal

• Advise complainant of any recommended actions that will be taken to

prevent recurrence (and be sure to implement them)

• Employer has no obligation to advise complainant what disciplinary

action will be imposed, if any

• Absent litigation, no requirement to provide investigation report to either

party

33


November 18, 2015

• If outcome of investigation is to impose discipline or to dismiss employee,

any letter summarizing discipline or dismissal should:

• Set out summary or high level reasons

• Be 100% accurate and based on the facts gathered during the investigation

• Not overstate, or inaccurately state, any of the evidence gathered during the

investigation

34


November 18, 2015



• Keep all documents related to investigation

• Mark investigation documents as confidential

• Do not circulate investigation documents widely

35


November 18, 2015

• Use the work to determine whether

• The conduct amounts to a potential contravention

• Whether or not to engage the Immunity or Leniency Programs

• If Immunity or Leniency are Sought

• Use the investigation work to prepare your proffer

• 30 days from placing the marker to proffer evidence

• Counsel lay out evidence in an oral, theoretical format

36

Next Steps in Competition Law Context

November 18, 2015



Common Mistakes and How to

Avoid Them


• An employer must give the alleged wrong-doer a full and fair opportunity

to respond to all of the allegations made against him or her

• Do not pre-judge the outcome of the investigation

• Ensure that investigator is truly impartial and unbiased

38

Common Mistake #1 – Failing to provide procedural

fairness

November 18, 2015



• Confidentiality may be limited by law or practicality

• Identity of complainant may need to be disclosed to alleged-wrongdoer

39

Common Mistake #2 – Promising Complete

Confidentiality

November 18, 2015

• Review the evidence and come to a conclusion

• Substantiated vs. Unsubstantiated

40

Common Mistake #3 – Failing to reach a conclusion

November 18, 2015



• Consider what reputational or risk management issues may exist

• Employer has no positive legal obligation to report potentially criminal

conduct to police, but consider possible public relations issues or

requirements of insurers

• If you decide to go to police before you have completed your internal

investigation, then seek direction from police before proceeding so that

you do not interfere in any way with criminal investigation

• Any decision to seek civil or criminal remedies must be made

independently of any decision to terminate employment

• Review your insurance polices for “employee fraud” coverage – be

aware of any limitations on the policy and any reporting deadlines to

preserve insurance coverage

41

Common Mistake #4 – Failing to properly co-ordinate

with other workplace stakeholders or third parties

November 18, 2015

• Ensure that investigation complies with any relevant policy

• Give parties the opportunity to be heard

• Consider all relevant evidence

• Remain neutral and objective - keep an open mind until all interviews

have been completed

• Remember the duty to provide procedural fairness

• After reviewing and considering all of the evidence, prepare a well-

reasoned conclusion and report

• Respect confidentiality of the process, but do not guarantee it

• Good self-check: “What would a judge think if he or she scrutinized

everything that I did?”

42

Core Principles of a Good Workplace Investigation

November 18, 2015



Questions


Thank you

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© 2015 Dentons. Dentons is a global legal practice providing client services worldwide through its member firms and affiliates. This document is not designed to provide legal or other advice and you should not take, or refrain from taking, action based on its content. We are providing information to you on the basis you agree to keep it confidential. If you give us confidential information but do not instruct or retain us, we may act for another client on any matter to which that confidential information may be relevant. Please see dentons.com for Legal Notices.

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