Inside or Out? The Pros and Cons of Keeping Internal Investigations Internal

Keeping internal investigations internal is a topic Legal Software Vendors often discuss with clients (and potential clients), usually with the notion that cost and risk can be reduced by doing so. And this isn’t wrong. In fact, there are many benefits to be gained by corporate legal teams when it comes to leveraging technology for internal investigations. But does that mean all internal matters should be kept internal?

A recent article in Forbes discusses considerations for keeping internal investigations internal, and it does a great job laying out pros and cons for corporate legal teams when it comes to handling investigations. Here are a few of the highlights:

Lynn Neils, former in-house lawyer at Johnson & Johnson and current partner at the Baker Botts law firm, laid out these three benefits for keeping internal investigations internal:

  • Less Expensive: “The cost of outside counsel and forensic services, for example, can be very high.”
  • Likely be faster: “In-house resources understand the business and do not need to get up to speed on people and issues.”
  • Often less intrusive: “They are people that company employees already know and will be more sensitive to the business interruptions.”

But when it comes to a “Corporate Crisis,” Neils advises ”Corporations or other entities should in most instances hire outside experts— particularly outside counsel—to lead the investigation.”

One of the main reasons for handing things off to outside counsel is to keep the investigation impartial. Retired Judge Robert Holzberg, who leads the investigations practice at the Pullman & Comley law firm, said, “retaining outside experts or counsel…instills confidence in the public and the corporation’s stakeholders that the investigation is indeed thorough, impartial, and free of any taint of influence by the company’s officers or directors.” He continued, “While it is likely the case that an investigation by the corporation’s HR or legal department will be less expensive it is also the case, repeatedly demonstrated by ample historical experience, that the report will be attacked as biased with a predetermined outcome.”

Dara Tarkowski, managing partner of Actuate Law, suggests five ways using outside resources during an investigation benefit companies:

  • Scope: “Scoping your investigation properly is critical to establish defensibility and to ensure a company gets to the bottom of whatever is going on.”
  • Protection: “Engaging outside counsel protects [a company’s] communications, analysis and findings from discovery…[through] the benefits of attorney-client privilege and work product protections.”
  • Credibility: “The use of outside and disinterested experts can demonstrate the credibility of an investigation and the objectivity of the results.”
  • Risks: “More often than not, companies get into even more trouble when internal staff operate without the proper direction of counsel, [because they] are typically not trained for investigatory work and innocent missteps can do far more harm.
  • Communications: “You must communicate with your board of directors and/or relevant committees in a timely and proper manner [which] supports the defensibility and credibility of your investigation.”

So, what does this mean for technology vendors?

I think the main takeaway is to understand that your clients aren’t in an either/or scenario when it comes to internal investigations. Like most situations in the legal world, “it depends” is often the answer. The more vendors communicate this by discussing how their products can help solve the very real and multiple problems of a legal team, instead of repeating the handful of bullet points on a product slick, the more effective the relationship will be. At the same time, software vendors should be able to speak to how their products can benefit both a corporation’s in-house legal team, as well as their outside counsel and other 3rd party service providers which are inevitable during a corporate crisis.

So, what do you think? Are there any other pros and cons you’d add to the list for keeping internal investigations internal vs. passing them to outside counsel?  Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by my employer, my partners or my clients. eDiscovery Today is made available solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Today should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.

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