Federal Court Examines Privilege and Work Product Protection for Internal Corporate Investigation

April 4, 2012

Many corporations and their lawyers assume that both the attorney-client privilege and the work product doctrine will protect communications and documents created during an internal corporate investigation, as long as a lawyer directs and supervises the investigation. However, courts usually reject blanket privilege and work product claims, and undertake a more detailed analysis.

In Woodmen of the World Life Insurance Society v. U.S. Bank National Ass’n, No. 8:09CV407, 2012 U.S. Dist. LEXIS 12462 (D. Neb. Feb. 2, 2012), the Boston law firm of Goodwin Procter and accounting firm Deloitte undertook an investigation into a bank employee’s possible misrepresentations about mortgage-backed securities. Despite the bank’s and Goodwin Procter’s arguments to the contrary, the court found that the attorney-client privilege did not protect documents created during the investigation, because the bank had “fail[ed] to make a sufficient showing that the investigation was committed to Goodwin Procter . . . for legal advice” rather than to aid in business decisions. Id. at *20. The court also rejected the bank’s work product claim. Among other things, the court noted that the bank followed Goodwin Procter’s and Deloitte’s recommendations by reimbursing investors identified as being harmed by the possible misrepresentation, thus “presumably decreasing the likelihood of litigation.” Id. at *28. Significantly, the court rejected conclusory statements in what it labeled as a “self-serving” declaration the bank filed in support of its privilege and work product claims. Id. at *27.

The court’s rejection of the bank’s privilege and work product claims highlights some courts’ skepticism about global privilege and work product protection for internal corporate investigations.