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internal-investigationsOur portal editor, Jonathan Fisher QC, discusses the recent US decision in United States ex rel. Barko v. Halliburton Company on the application of legal professional privilege to internal corporate investigations, and its potential implication for the conduct of future investigations.


In United States ex rel. Barko v. Halliburton Company et al the District Court in Washington DC found that neither legal professional privilege nor attorney work-product privilege applied to internal investigations conducted by the defendant. The investigation had been started without contemplation of litigation and was conducted in the ordinary course of business. In order trigger legal privilege, the investigation must have non-cosmetic legal involvement from the outset.


The District Court in Washington DC has recently delivered an important judgment which impacts on the application of legal professional privilege to internal corporate investigations in the United States. The decision in United States ex rel. Barko v. Halliburton Company et al. Case No. 1:05-CV-1276 (D.D.C. March 6, 2014) (Gwin, J.) found that documents created as part of an internal investigation by Halliburton were not protected by legal professional privilege and ordered their disclosure.

The documents requested in ex rel Barko related to internal audits and investigations conducted by Halliburton. Halliburton had launched these investigations pursuant to its Code of Business Conduct (COBC). These internal investigations involved COBC investigators interviewing personnel, review relevant documents, and obtain witness statements. A report was then generated by investigators and transmitted to the legal department. Halliburton claimed these documents were protected by attorney-client privilege and the attorney work-product doctrine, and refused to produce them.

The Court found that the documents were not the subject of legal privilege and ordered them to be disclosed to plaintiffs. The Court found that firstly, the defendant had failed to demonstrate that the legal privilege applied to the documents. Secondly, the Court found that the investigations were undertaken pursuant to regulatory law and corporate policy rather than for the purpose of obtaining legal advice.

According to the Court, the COBC investigation “was a routine corporate, and apparently ongoing, compliance investigation required by regulatory law and corporate policy.” The investigation failed to meet the “but for” test required to show the application of legal professional privilege, as the investigation would have been conducted to comply with regulations regardless of whether legal advice was ultimately sought or not. The Court also pointed to the fact that the employees interviewed were not informed that the purpose of the interviews was to obtain legal advice. The Court contrasted the COBC investigation with the investigation in Upjohn Co. v. United States 449 U.S. 389 which was conducted only after in-house attorneys conferred with outside counsel on whether or not to launch an investigation. Therefore, as the COBC investigation was not for the primary purpose of seeking legal advice, related documents were not entitled to be protected of the attorney client privilege.

The defendants also argued that the attorney work-product doctrine applied to the documents. The work-product doctrine protects from disclosure an attorney's “mental impressions, conclusions, opinions, or legal theories” prepared in anticipation of litigation. The test that governs whether or not documents are covered by this privilege is the “becauseof” test which asks “whether, in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation.” In order to show that this is the case the attorney “must at least have had a subjective belief that litigation was a real possibility, and that belief must have been objectively reasonable.” (United States v. ISS Marine Servs., Inc., 905 F. Supp. 2d 121 at 133-134 (D.D.C. 2012)). The Court rejected the argument that this privilege applied, pointing out that government regulations required an investigation of this sort to take place and that it was conducted in the ordinary course of business.

The Court also drew attention to the fact that the investigation was conducted by non-attorney investigators and this made it harder to assert the documents were prepared in anticipation of litigation. The Court found that “while documents produced by non-attorneys can be protected under the work-product doctrine, the fact that non-attorneys are conducting the investigation is another indication that the documents were not prepared in anticipation of litigation.”

Courts on both sides of the Atlantic have been struggling to decide to what extent legal professional privilege applies to reports and documents generated as part of a corporate internal investigation.

The recent decision of the Court of Appeal in Rawlinson and Hunter Trustees SA v Akers[2014] EWCA Civ 136,otherwise known as the Tchenguiz case, also contained some important pronouncements in this regard. The case concerned a refusal to disclose of five reports complied by Grant Thornton while acting as liquidators for a group of companies. Grant Thornton claimed the reports were protected by litigation privilege. However, the court in Rawlinson found that Grant Thornton had failed to establish litigation was the dominant purpose behind the creation of these documents. It also could not be shown that all of the reports were created at a time when litigation was reasonably in prospect. The Court of Appeal ultimately decided that each case should be considered individually and it is no longer possible to assume privilege automatically applies to documents created as part of large scale liquidations. Those making assertions of privilege must prove in specific terms that the prospect of litigation is more than a mere possibility in order for litigation privilege to apply.

Both cases demonstrate that in order for documents relating to internal investigations to be protected by privilege lawyers need to be involved in the investigation from an early stage and in a substantial not cosmetic way.

Image via Flickr (Casey Marshall)

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The views expressed in this article represent those of the author and not Bright Line Law.

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