A company typically launches an internal investigation in response to a potential crisis. The situation requires the General Counsel to make rapid-fire decisions.
An efficient internal investigation – whether in response to a data breach, a whistleblower complaint, subpoena, or some other source – requires careful planning. At a minimum, the legal, H.R., or compliance teams must determine the goals and scope of the inquiry, how to minimize business disruption and costs, when to involve outside counsel, and whether to make the results public.
The decisions GCs make at the very start can significantly impact the speed, success, and cost of an investigation.
Defining the Scope of an Investigation
Internal investigations of any size or complexity are a balancing act between efficiency and thoroughness. One of the most important decisions is defining the scope – how much information needs to be collected and reviewed, by whom, and within what timeline. And this call needs to be made from the get go.
The scope depends on the purpose of the inquiry. This often includes the gathering of facts and evidence, determining the extent of potential liability, and correcting any misconduct.
The decisions GCs make at the very start can significantly impact the speed, success, and cost of an investigation.
Once the goal is clear, it’s important to quickly frame the time period in question, potential custodians of records, and witnesses. Also, the sooner key stakeholders and subject matter experts can be involved – preferably during the scoping phase – the better. Their insight can help save time and money down the road.
As King & Spalding attorneys Brandt Leibe, Grant Nichols, Karl Heisler and Dixie Johnson point out, internal investigations can careen out of control and lead to unnecessary legal spend. “Focus the inquiry on the root cause and contributing factors,” they recommend. “Do not, however, ignore noncompliance concerns that could increase the company’s exposure and that fall within ‘plain view’ simply because they fall outside the agreed-upon scope.”
Decisions made at this stage will focus the investigators every step of the way and help avoid mission creep, potential oversights, and unnecessary costs.
Determining Who Should Conduct an Investigation
Who is best positioned to conduct an investigation depends on the nature and gravity of the allegations and the strength of the evidence indicating that misconduct happened.
Goodwin attorneys Jennifer L. Chunias and Roberto M. Braceras point out that to keep costs and business disruption to a minimum, a company may task internal auditors, human resources, or compliance personnel with running an investigation.
However, in-house or outside lawyers are often more experienced with running internal investigations. Depending on the circumstances, and based on the results of an investigation, in-house lawyers may also need to work with regulatory agencies or law enforcement and would be in a stronger position if they have first-hand experience with the process and resulting findings.
The same applies to internal reporting to the board or a special investigating committee of the findings and any recommended next steps.
Deciding Whether to Retain Outside Counsel for an Investigation
The seriousness of the allegations should determine whether to handle an investigation entirely internally, hire outside counsel, or a mix of the two.
A framework provided by Goodwin emphasizes three factors that may tip the balance toward involving outside counsel:
The seniority and prominence of the individuals likely involved in the investigation
The potential financial exposure to the company
The likelihood of law enforcement activity
The public, media, and government are more likely to view an outside law firm as more independent and objective. On the other hand, if the law firm doesn’t have deep knowledge of the company and its processes, the investigation report at the end may lack context informed by inside information or expertise, resulting in time and money poorly spent.
Many investigatory matters are small or routine enough for in-house counsel to handle internally. Company lawyers are more familiar with their business, procedures, and personnel. They can also better control internal costs than they can law firm expenses. In many cases, the most efficient approach may be hybrid, where the team manages an investigation internally, moving quickly to ascertain key facts and scope of potential issues at the outset, and handing it over to outside counsel only if fact finding causes an escalation.
Ensuring Data Is Collected and Preserved Efficiently
Because so much evidence in the digital era is electronic, running internal investigations today is more complex – and often more fruitful – than ever. Relevant documents, communications, and other information can lurk in a variety of devices and platforms, and come in multiple formats, such as email, chat, or text messages. For instance, today harassment may take place via text message on a mobile phone.
One of the most important steps at the start of an investigation is to preserve and collect the data that is potentially relevant for the time period, topics, and witnesses connected to the investigation.
The IT department often assists with data gathering. For efficiency, providing IT a date range can help reduce the cost of processing and reviewing unnecessary volumes of data by allowing IT to deliver the most relevant data subset.
Advances in AI and machine learning enable teams to get to the heart of a matter faster and with more confidence.
Having technology in place in advance can help an investigation team more quickly identify potential custodians or witnesses connected to the investigation and the devices, platforms, and other tools they use in the workplace that may contain relevant evidence – and issue effective legal holds.
Cloud connectors, for instance, enable investigations teams to quickly access a variety of data directly from disparate and complex sources, such as Zoom, Slack, and M365. Connectors automate once manual uploads that in the past required help from IT.
Advances in AI and machine learning technology have also led to the development of tools that enable teams to get to the heart of a matter faster and with more confidence.
Communication visualization tools – which provide a graphical representation of all communication in a matter – fuel the investigator’s ability to detect patterns of communication, topics of conversation, and zero in on key themes and players at the start of an investigation, before spending hours of time on human review.
Clustering technology allows users to move from 25 million documents to one key document in a few clicks thanks to the power of unsupervised machine learning.
These and other tools save investigations teams time and money by helping to identify the most meaningful data quickly – and with accuracy.
Concluding the Investigation: Written vs. Oral Reporting
An investigation typically wraps up with a report summarizing the findings, liability risks, and recommended corrective action, if wrongdoing was discovered. The report lays out the key findings for senior management or the company board.
Reports can be written or oral, depending on the nature and complexity of the findings. Comprehensive documentation may be needed, for instance, if the results require regulatory reporting. Other situations may only call for an oral report and no disclosures.
A formal written report is significantly more time consuming and expensive to prepare, but it underscores thoroughness of the investigation. Balancing that benefit is the risk that company lawyers may have to disclose the written report to the authorities.
When deciding what form the report should take, Goodwin suggests asking which option better fits the objectives set out in the beginning of the investigation: “If a written report will not further the goals, it may be better to avoid it.”
Controlling Investigation Costs and Reducing Risk With Technology
Investigations tend to unfold on shorter timelines and with smaller budgets than litigation. The ability to get to the bottom of a matter quickly is crucial. When handling an investigation internally, investing in the right technology saves time and, by extension, reduces costs.
As Catherine Choe, Director of Legal Operations at Everlaw notes, "If you need speed and accuracy in an investigation, you're arguably cheating yourself if you don't use a single, purpose-built solution."
Today’s digital-first workplace – where collaboration and communication increasingly takes place on tools such as Zoom, Slack, Microsoft Teams, or Trello – generates vast volumes of data. These emerging data types are typically hard for teams to review because of their volume and complexity. Modern tools can support investigations teams across a wide spectrum of data types beyond email to include audio visual files, chat, and text messages.
Document review is one of the most common ways of understanding key facts during an internal investigation (in addition to witness interviews). It’s also one of the most expensive steps. Deciding whether the review will be done by in-house counsel, external partners or law firms, or contract attorneys is critical for cost control, as billing rates vary.
The savings from reducing human hours (and their hourly rates) spent poring over irrelevant materials can be substantial.
Modern technology can significantly expedite the work of attorneys – whether in-house or third parties. Modern tools have evolved to quickly and accurately cull large data sets to just those that are relevant to the matter. The savings from reducing human hours (and their hourly rates) spent poring over irrelevant materials can be substantial.
Nearly half (49%) of GCs, CLOs, and other legal professionals said that they already use discovery software and workflows for internal investigations, according to findings in The State of Corporate Litigation Today published by Everlaw with the Association of Corporate Counsel.
Discovery software streamlines everything from legal holds to data collection and processing, to analysis, review, and reporting. Tech tools also enable investigations teams to handle the data collection and processing on their own instead of relying on IT, which helps avoid delays, and gets teams closer to a confident recommendation for next steps.
Hitting Quality and Speed, With Self Assurance
A growing variety of events can trigger an internal investigation in today’s global, fast moving, and digitally enabled business environment.
Investigations teams backed by the right technology make better informed strategic decisions at every step of the way.
With a thoughtful game plan prepared before a misconduct claim, complaint, or inquiry comes in, GCs and their in-house teams can reduce disruption to their business while promoting compliance. Determining the objectives, scope, and individuals who need to be involved before launching an investigation keeps the process on track and avoids expensive and unnecessary tangents.
Modern discovery technology gives teams a head start at critical junctures. Gaining an early sense of the seriousness of a situation ensures teams don’t go overboard in over collecting and sorting through data that has no bearing on the case at hand.
From near instant data collection, to the ability to cull down to just the most relevant facts and surface hidden insights with a few clicks, to faster more targeted review, investigations teams backed by the right technology make better informed strategic decisions at every step of the way, reducing both risk and costs.
And they do so with the confidence that they – or their outside counsel – didn’t need to turn over every rock to achieve an investigation that is thorough, defensible, and within budget.
If you need speed and accuracy in an investigation, you're arguably cheating yourself if you don't use a single, purpose-built solution.
Learn more about how modern discovery technology helps teams work more efficiently by centralizing, streamlining, and standardizing their internal investigations, litigation, and other legal processes in “Finding Key Evidence in Big Data.”