Attorney-Client Privilege&

Internal Investigations

Kathleen Clark

Brian D. Miller

ABA Public Contract Law Section – State & Local Procurement

November 21, 2014

Why do we care?• We want companies doing business with the

federal, state, and local government to be responsible.

• A responsible company has a compliance program.

• Internal reviews and investigations are part of compliance.

• Companies may not conduct thorough reviews and investigations if A-C privilege is jeopardized.

Does A-C privilege

cover a company’s

internal investigation?

primary purpose

test

compliancev

legal advice

HHS IG guidance:separate

compliance &

legal functions

Perspective

US ex rel Barko v KBR2014 US Dist LEXIS 36490

(D. D.C. 2014)

Perspectiveinternal

investigation

not

privileged

Perspective

In re KBR756 F.3d 754

(D.C. Cir. 2014)

mandamus

Perspectiveno

rigid distinction between

legal & business purpose

Perspective

asignificant

purpose

Perspective

KBR’s

confidentiality

agreement

Perspective“I am prohibited from discussing ... the subject

matter discussed during the interview,

without specific advance authorization of KBR General Counsel. ...

Perspective… unauthorized

disclosure of information may be grounds for disciplinary action

up to and including termination”

Perspective17 CFR § 240.21F-17(a)

SEC Dodd-Frank

whistleblower regulation

PerspectiveNo person may take any action to impede someone

from communicating directly with Commission staff

about a possible securities law violation,

including … threatening to enforce a

confidentiality agreement …

• According to a recent article in the Financial Times, there is a widespread concern in the banking industry over the effect of regulation on business performance.

• Douglas Flint, HSBC’s chairman, noted that there was “an observable and growing danger of disproportionate risk aversion creeping into decision-making in our business as individuals, facing uncertainty as to what may be criticized with hindsight and perceiving a zero tolerance of error, seek to protect themselves and the firm from future censure.” Adding that HSBC is experiencing “fatigue within critical functions” as a result of regulatory demands.

• Additionally, and according to the article, JP Morgan is “encouraging” staff to ask for approval for business opportunities and to “identify ‘creeping’ bureaucracy.”

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Compliance vs. Getting it Done

18

Compliance vs. Getting it Done

19

Compliance vs. Getting it Done

20

Compliance vs. Getting it Done

Attorney-Client Privilege&

Internal Investigations

Brian D. Miller

Kathleen Clark

ABA Public Contract Law Section – State & Local Procurement

November 21, 2014