by James Albert Jennings and Teresa Holland
Employers of all sizes can learn from the storm of public criticism as to both the NFL and its Commissioner, Roger Goodell, regarding the conduct of an allegedly “independent” investigation, well known to the public as the “Deflategate” investigation. Much of the criticism arose as a result of hiring the NFL’s usual outside counsel to conduct the investigation. A great deal of such controversy was directly avoidable.
As a general matter, a prior counsel’s relationship and its financial connection with the party sponsoring the investigation can readily be criticized as creating—or at least appearing to create—the risk that a law firm’s personal interests might have affected the outcome of an investigation. Such a perceived conflict is inherent in the situation. No assertion (nor even the reality) of complete integrity on the part of such an investigator eliminates that apparent, perceived conflict.
A further, deeper conflict arises when an investigator has given prior advice or been previously consulted on the specific situation being investigated. The perceived severity of the conflict increases if the investigating firm or attorney has assumed the additional role of counselor or advocate for the company at any point in the investigation. Such situations are not unheard of and can result in a potential violation of the Code of Professional Responsibility; legal action against the attorney/firm by the client; and arbitral or judicial suspicion or outright rejection of the results of the investigation. Of course, in the real world, such legitimate conflict concerns are often brushed aside by counsel, whose fear of alienating a long-time or key client by refusing to do such an investigation as requested by them outweighs better judgment.
But seasoned counsel recognize their personal legal relationships and the financial repercussions of advising a client to hire an “outsider” are far outweighed by the great danger, on many fronts, to the client of conducting a non-credible investigation.
The independence of internal investigations is a fundamental expectation of parties with an interest in the outcome—whether employees and corporate boards or government agencies and the judiciary. If an investigation even appears to be “conflict tainted,” the credibility of the results will be undermined. A mistrusted investigation is often a far worse outcome than having made no investigation at all—even where one was clearly warranted.
To the extent an internal investigation involves an employee, all employees aware of the situation will be keenly interested in fairness. The key is procedural fairness. It is not enough that an investigation be fair; it must be perceived as fair. If not, the results will be a “hard sell” to the employees. Some of these adverse employee-related consequences include severe employee morale problems, a generalized suspicion of the company in a broader range of matters, and inciting employees to look outside the company for redress.
Again, any perceived conflict of interest of either the investigation or any particular investigator will materially affect the credibility of the findings. Such a flawed process may even be perceived as a “white wash,” or perhaps even a “witch hunt” designed to satisfy someone within management and to scapegoat some unfortunate employee. Even worse, the result of an investigation that appears less than independent will often be viewed by employees, and even outsiders, as being a mere tool to exonerate management or its favorites or as an abject cover-up of misdeeds. In particular, judges who doubt an investigation’s findings will also then tend to doubt the credibility of all other evidence the company may produce before them—a reality noted in many a decision. And jurors themselves, who often tend to start out with bias against companies, will be even further prejudiced by any apparent biased findings.
All this is bad enough when the investigation at issue is fairly low profile. But in those where media interest is a factor, the stakes grow exponentially, and all bets are off. Major corporations and those in the public eye have even greater concerns with promoting the appearance of a truly independent investigation. Press accounts of a particular situation will undoubtedly emphasize and seize upon any apparent wrongdoing by the company and even the smallest appearance of a biased investigation will be the headline.
These problems can be avoided in large measure by utilizing a truly independent, experienced third party attorney to conduct internal investigations. Someone who has no prior relationship with the business and its executives and no interest in the outcome will lend substantial credibility and perceived procedural fairness to the investigative results.
Why even create the potential for a perception of a conflict of interest? Hire an experienced independent attorney to investigate a matter any time a conflict could be perceived.
James Albert Jennings is Principal Shareholder at Erhard & Jennings, P.C., and can be reached at email@example.com. Teresa Holland is of counsel at the firm and can be reached at firstname.lastname@example.org.