Is an investigation necessary?

• The first question to consider is whether an investigation is necessary.
• This will depend on:
  • the seriousness and credibility of the allegation(s) raised;
  • the potential reputational risk; and
  • the potential for regulatory scrutiny and/or follow-on litigation.

A key potential benefit of an investigation can be demonstrating to external and internal stakeholders – whether they be shareholders, employees or a regulator – that the matter has been taken, and dealt with, seriously and appropriately.

Who should investigate?

• The second question to consider is who should conduct the investigation, and whether this should be a team internal to the business or someone external (e.g. a lawyer, accountant or consultant).
• This decision can have a significant impact on both:
  • the relevant expertise of the investigation team;
  • the perceived credibility of the investigation; and
  • whether privilege will attach to materials generated in the course of it.
• If the decision is taken for the investigation to be run by an internal team, consider the need for supporting external legal advice.
• For in-house legal teams in England and Wales, the Solicitors Regulation Authority has issued guidance on when it will be appropriate for them to conduct internal investigations for their employers.
  

What needs to be investigated?

• You will need to determine the scope of the investigation (i.e. what questions need to be answered).  The scope can have a significant impact on the ultimate effectiveness of an investigation.
• You will also need to determine what the final output should be – is this a report which purely determines the relevant facts, or will it also give advice and recommendations?  Who will any report ultimately be provided to?

What is the privilege position?

• Depending on the circumstances, and who is holding the pen, there is potential for documents created in the course of an investigation to be protected by legal privilege.
• Consider carefully from the outset whether it would be beneficial for the investigation to be structured in a way which enables this – it may be particularly beneficial if there is a prospect of follow-on litigation.  
• However, cloaking an investigation in privilege can impact its credibility – so there may also be circumstances where an open investigation is preferable, or where a decision is taken that privilege should be waived to some extent.

Who needs to know?

• A communications strategy will be critical – consider from the start what needs to communicated about the investigation, to whom, and when.
• Relevant stakeholders may include employees, regulators, insurers and, if the matter is in or may enter the public domain, the wider public.
• Remember also that the company could receive a subject access request, and plan ahead for how to deal with these. 

How will you preserve evidence?

• As with any other contentious matter, consider the need to preserve relevant evidence, including electronic data, hard copy data and physical devices.
• This may require the sending of document hold notices and/or the suspension of routine document destruction policies.
• Keep records of steps taken.
• Advice may be needed in relation to data protection and confidentiality.

What else do you need to think about?

• Other considerations may include:
  • employment-related matters, such as suspensions or disciplinaries, and the need to provide support to those involved;
  • for listed companies, the possibility of inside information; and
  • the need for interactions with other jurisdictions, where the position can be different in many respects, including in relation to privilege, data retrieval and regulator interactions.