The Ethical Mine Field: Corporate Internal Investigations and Individual Assertions of the Attorney-Client Privilege

Abstract

When conducting an internal investigation into potential wrongdoing within a corporation on behalf of a corporate client, a corporate lawyer has an ethical duty to warn the employee interviewee that the lawyer represents the corporation, rather than the interviewee, and that the corporation may eventually waive the attorney-client privilege, which would allow for the disclosure of the employee's communications with the attorney. However, attorneys often give "watered-down" warnings in an effort to extract full information from employees and zealously represent their clients, the employer corporations.

As the result of these "watered-down" warnings, many individual employees have disclosed information to corporate attorneys, believing that they were communicating within a personal attorney-client relationship. The Circuits are split on whether an individual employee who had a reasonable belief that he was communicating with his counsel can assert the attorney-client privilege to block the disclosure of his communications when the corporation waives the privilege.

This article examines the differing judicial approaches within the framework of the major theoretical justifications for the attorney-client privilege, utilitarian justifications, and individual rights-based justifications. In doing so, the article exposes the weaknesses of the approach that errs in favor of the corporation and disclosure, and argues that the only approach justifiable by utilitarianism or rights-based justifications is the approach that errs in the favor of the individual and confidentiality.

Keywords: Internal investigations, attorney-client privilege, privilege waiver, confidentiality

JEL Classification: K22