Conducting Effective Internal Investigations

When a company becomes aware of employee misconduct or potential business wrongdoing, an effective internal investigation is essential to maintain the company's productivity and minimize its potential liability. It is critical for the company to respond promptly and effectively to issues before they become larger and more costly problems. By promptly investigating potential misconduct or legal violations, a company can mitigate risk, develop effective corrective actions, enforce company policies, and minimize liability.

Credibility is a key element of an effective internal investigation. Who leads and conducts the investigation will, more than any factor, influence its credibility. That decision must be considered carefully based on the specific facts and circumstances. The investigators must be independent and thorough, and their findings must be objective and fair based on the facts. While human resources professionals often make excellent investigators, companies should strongly consider using in-house or outside counsel to conduct investigations to best (1) gather the relevant facts, (2) address potential conflicts of interest, (3) identify and assess the legal implications and options for corrective actions, and (4) preserve, to the extent possible, attorney-client and work product privilege for oral and written communications.

To conduct an effective investigation, the company should take the following steps:

1. Determine who will direct and manage the investigation and consider engaging counsel to maximize the extent to which the investigation can be kept confidential.
2. Describe the problem and prepare a written investigation plan
3. Develop and implement any preliminary remedial or corrective action.
4. Determine how the investigation's findings will be recorded and reported.
5. Gather and preserve relevant information through source identification, document and digital review, and witness interviews.
6. Analyze the facts and legal issues.
7. Prepare an investigation report with findings and determinations.
8. Implement any appropriate final remedial or corrective action.

If thoughtfully planned from their outset, internal investigations enable a company to identify and remediate potential misconduct or wrongdoing, maintain a productive business operation, prevent recurrence, mitigate risk, and minimize liability.

If you have any questions, please feel free to contact Donald J. Moran at dmoran@pedersenhoupt.com or (312) 261-2149.

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