Grand juries have traditionally been afforded wide latitude to inquire into violations of criminal law.1 The grand jury alone determines the course of its inquiry, its deliberations are secret,2 and it may compel the production of evidence or the testimony of witnesses that it deems appropriate.3
When a grand jury subpoenas a corporate employee to appear or produce documents before it, corporate counsel faces a myriad of issues.4 This article addresses only a few: specifically, who may raise or waive the attorney-client privilege, the work product doctrine, and the Fifth Amendment privilege against self-incrimination. Moreover, considering the harsh consequences of inadvertently waiving any of these evidentiary bars, what measures should corporate counsel undertake to ensure a cautious yet thorough internal corporate investigation?
This article does not address other relevant issues, such as the potential for conflicts of interest when corporate counsel represents both the corporation and its agents.5 It also does not discuss any of the academic theories of criminal corporate liability, as the quantum of culpable conduct necessary to impute liability to a corporation varies from statute to statute and from jurisdiction to jurisdiction.6 Nevertheless, what arguably remains constant is the protection the attorney-client privilege, the work product doctrine, and the Fifth Amendment privilege against self-incrimination afford corporations and certain corporate agents during a grand jury investigation.7
I. The Attorney-Client Privilege
As a general rule,8 the attorney-client privilege will be upheld when:
(1) legal advice of any kind is sought (2) from a professional legal advisor in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) except the protection be waived.9
Within the corporate context, however, the application of the attorney-client privilege is more problematic and requires analysis into the specific facts of each case.10 Because a corporation may act only through its agents, the invocation or waiver of the attorney-client privilege necessarily requires that an authorized agent acting on behalf of the corporation assert or waive the attorney-client privilege.11 In order to have a valid corporate invocation or waiver of the attorney-client privilege, a corporate agent must assert or waive the privilege in a manner consistent with the officer’s or director’s fiduciary duties to the corporation, and not solely for his or her personal interests.12
(A) Attorney-Client Privilege: Authority to Invoke
As the seminal case of Upjohn Co. v. United States illustrates, the decision to conduct an internal investigation raises certain risks.13 In Upjohn, general counsel for the pharmaceutical giant initiated an internal investigation surrounding the allegation that one of its foreign subsidiaries had made unlawful payments to government officials in order to obtain lucrative government contracts.14 In the course of its investigation, counsel distributed questionnaires to corporate management.15 These questionnaires were ultimately returned to counsel with information relating to the alleged unlawful payments.16 Upjohn then submitted a report to the Internal Revenue Service, disclosing its foreign subsidiaries’ payments to government officials.17 The IRS responded, instituting an investigation and commanding the production of the questionnaires, management’s responses, and counsel’s notes.18 Upjohn objected, invoking the attorney-client privilege and the work product doctrine.19
In an opinion authored by Chief Justice Rehnquist, the United States Supreme Court held that under the circumstances, the attorney-client privilege precluded the compelled disclosure of counsel’s questionnaire and management’s responses.20 In so doing, the Court rejected a strict application of the control group test, noting that counsel’s advice will often "be more significant to non-control group members than to those who officially sanction the advice, and the control group test makes it more difficult to convey full and frank legal advice to the employees who will put into effect the client corporation’s policy."21
(B) Attorney-Client Privilege: Authority to Waive
In-house counsel may inadvertently waive the attorney-client privilege.22 In Velsicol Chemical Corp. v. Parsons, a grand jury investigation was initiated to determine whether Velsicol had withheld information from the Environmental Protection Agency with respect to an allegation that its pesticides caused cancerous tumors in laboratory animals.23 Velsicol retained outside counsel to represent it during the grand jury proceeding. General counsel for Velsicol appeared before the grand jury and testified to specific communications between him and Velsicol’s prior outside counsel. As a result, grand jury subpoenas were issued commanding the appearance of Velsicol’s prior outside counsel and the production of certain documents exchanged between the two. Relying upon the attorney-client privilege and the work product doctrine, Velsicol moved to quash the subpoenas.24
Velsicol argued that general counsel was not authorized to waive the attorney-client privilege or the work product doctrine with respect to communications between Velsicol and its prior outside counsel.25 The Seventh Circuit Court of Appeals disagreed, finding that general counsel was before the grand jury as Velsicol’s agent, authorized to act on its behalf, and able to waive the attorney-client privilege even as to communications between Velsicol and its prior outside counsel.26
(C) Attorney-Client Privilege: Its Limitations
The attorney-client privilege does not protect all communications between corporate counsel and corporate agents. For example, the attorney-client privilege does not apply to communications between counsel and corporate agents when the grand jury seeks information concerning the adequacy of a document search.27 In In the Matter of Grand Jury Proceeding (Barton), counsel was subpoenaed to appear before the grand jury, where he was questioned about the authenticity of certain documents produced in accordance with a prior subpoena duces tecum.28 Asserting the attorney-client privilege, counsel refused to provide the names of the individual who had been directed by counsel to conduct the search underlying the Government’s subpoena.29 Relying upon its prior decision in In Re Feldberg30, the Seventh Circuit Court of Appeals held that counsel could be compelled to answer because the Government’s questions did not call for the disclosure of legal advice, irrespective of whether counsel was the records custodian for the corporation.31
The court’s opinion in Barton illustrates that the attorney-client privilege will not protect communications between a corporate agent and corporate counsel without the requisite showing that confidential communications were exchanged for the purpose of seeking legal advice. In addition, the Supreme Court’s decision in Upjohn demonstrates that the attorney-client privilege may not attach to communications between corporate counsel and a corporate agent unless corporate counsel (1) acting as such, (2) at the express direction of corporate officers, (3) seeks communications within the scope of the employees’ corporate duties, (4) for the purpose of rendering legal advice to the corporation, and (5) sufficiently alerts the corporate agent of such at the time of the communication.32
As a practical matter, certain measures are recommended in order to preserve the attorney-client privilege during an internal corporate investigation incidental to a grand jury subpoena. First, corporate counsel should obtain written authorization to conduct an internal investigation.33 Secondly, the scope of counsel’s investigation should be memorialized in order to evidence the corporation’s intent to gain legal advice, as the attorney-client privilege is narrowly construed to protect against the compelled discovery of confidential information communicated for the purpose of obtaining legal advice.34 Thirdly, any written responses to counsel should include a prefatory paragraph indicating that counsel directed the corporate agent to respond in writing and that counsel intends to rely upon the information supplied by the corporate agent in rendering his or her legal advice to the corporation.35
In addition, corporate counsel should maintain the confidentiality of communications by marking "privileged" or "confidential" on documents,36 and limiting access to those on a need-to-know basis.37 Documents should be authored, at least in part, or be addressed to counsel.38 Finally, counsel should sign or otherwise indicate his or her review and control over confidential documents.39
When corporate counsel interviews an employee not entitled to the attorney-client privilege, counsel should instruct the employee (1) that he or she is conducting an internal investigation on behalf of the corporation; (2) that he or she does not represent the employee; (3) that the employee may not assert the attorney-client privilege as to their communications;40 and (4) that the purpose of the interview is to gather facts in order to render legal advice to the corporation.41 As the foregoing precautionary measures indicate, at the risk of inadvertently waiving the attorney-client privilege, corporate counsel must play an active role in an internal corporate investigation incidental to a grand jury subpoena.
The work product doctrine precludes "an attempt, without purported necessity or justification, to secure written statements, private memoranda and personal recollections prepared or formed by an adverse party’s counsel in the course of his legal duties."42 Whereas the attorney-client privilege purports to preserve the confidentiality of communications between attorney and client, the work product doctrine ensures that counsel’s mental impressions and trial strategies will not generally be subject to discovery. For example, in Upjohn, the United States Supreme Court extended the attorney-client privilege to counsel’s questionnaires and management’s responses.43 On the other hand, the Court found that the work product doctrine protected counsel’s notes and memoranda from compelled disclosure.44
An internal investigation may be corporate counsel’s only means of responding to a subpoena duces tecum or preparing an adequate defense that succeeds in limiting further exposure for the culpable conduct of the corporation’s employees.45 Considering that counsel will ultimately need to take notes, dictate memoranda, or otherwise memorialize his or her impressions or findings relating to an internal investigation, certain precautionary measures must be observed in order to protect counsel’s work product unless counsel intends to effectively prepare the Government’s case.46
Preservation of counsel’s work product requires dominion over documents prepared in anticipation of litigation.47 In order to evidence that documents were prepared in anticipation of litigation, counsel’s written authorization to conduct the internal investigation should explicitly state that litigation is anticipated .48 When experts are used to assist counsel in its internal investigation, an engagement letter should be drafted detailing the scope of the expert’s duties and authority as well as the fact that the expert’s opinions are being sought for the purpose of cooperating in or defending against anticipated government litigation.49
Because the work product doctrine protects against the production of compelled documents evidencing the mental impressions, legal theories, or trial strategies of counsel, the corporate attorney should ensure that his or her work product contains legal theories and opinions, and not just factual recitations.50 Accordingly, to minimize disclosure, counsel should avoid the assistance of verbatim records, such as audio or visual recordings, or witness interview transcripts.51 Moreover, to avoid any appearance of impropriety, counsel should consider distributing a "freeze letter" to all employees in order to vitiate against an otherwise standard and acceptable policy of destroying corporate records.52
III. The Fifth Amendment Privilege Against Self-Incrimination
The Fifth Amendment to the United States Constitution proscribes compelled self-incrimination.53 However, a corporation may neither resist a subpoena based upon the Fifth Amendment privilege against self-incrimination,54 nor invoke the privilege against self-incrimination during a grand jury proceeding.55 Hence, a grand jury may compel a corporation to incriminate itself without violating the Fifth Amendment’s prohibition against self-incrimination.
A corporate officer may raise and waive his or her Fifth Amendment privilege against self-incrimination.56 In United States v. Kordel, a corporate officer answered certain government interrogatories on behalf of the corporation.57 Later, the corporation asserted the Fifth Amendment privilege against self-incrimination and sought to suppress some of the information contained within its prior answers to the Government’s interrogatories.58 In a unanimous decision, the Supreme Court held that the corporate officer waived his privilege against self-incrimination when he answered and verified interrogatories on behalf of the corporation.59
The Court in Kordel reasoned that the government’s interrogatories obliged the corporation to select an authorized agent without a "real and appreciable" risk of self-incrimination.60 Having voluntarily answered the government’s interrogatories, the corporation could not later invoke an officer’s Fifth Amendment privilege in order to suppress incriminating information.
In City of Chicago v. Reliable, the corporate defendant contended that it could not answer the City’s discovery requests because none of its agents could verify the truthfulness of the responses called for therein without a real and appreciable risk of self-incrimination.61 At the time the City propounded its discovery requests in the civil action, Reliable had already been involved in a grand jury investigation, where some of its agents had timely asserted their privilege against self-incrimination.62
The court in Reliable ordered the corporation to appoint an authorized agent who could respond to the City’s discovery requests. In so doing, the court avoided the compelled self-incrimination of any particular corporate agent and, at the same time, effectively ordered counsel to conduct an internal investigation in order to determine who could comply with the City’s discovery requests without raising any real and appreciable risk of self-incrimination. Moreover, the court’s order did not address the Fifth Amendment privilege against self-incrimination to the extent that it granted the corporation the discretion to appoint and authorize an agent to obtain information from "books, records, other officers or employees, or other services,"63 necessary to answer the City’s interrogatories.64
The privilege against self-incrimination does not afford individuals the right to refuse to appear before the grand jury.65 In In the Matter of Walsh, counsel appeared at the courthouse in response to a grand jury subpoena, but refused to enter the grand jury room and be subjected to examination.66 Noting that "the public’s right to every man’s evidence" requires a witness to "take the stand and answer or refuse to answer," the Court in Walsh found that counsel was not entitled to invoke the protections of the Fifth Amendment (or attorney-client) privilege without providing the facts necessary to establish the basis of his objection.67
To properly invoke the Fifth Amendment Privilege against self-incrimination, corporate counsel should notify the Government of the corporate agent’s intent to assert the privilege and prepare a statement for the witness to read before the grand jury.68 Whether the communications between corporate counsel and a corporate employee, leading up to the employee’s invocation of the Fifth Amendment privilege against self-incrimination, are subject to disclosure depends upon the facts of each case in light of the rules of law discussed above.
Although corporate counsel should feel comfortable interviewing employees during the course of an internal corporate investigation incidental to a grand jury subpoena, counsel must remain mindful of the Federal Witness Tampering Statute, 18 U.S.C. § 1512. Under section 1512, it is a crime to influence a witness’s testimony through misleading conduct.69 "Misleading conduct" has been defined broadly to include "coaching" a witness into making a false statement.70
Grand juries have wide latitude to compel the production of corporate documents and the appearance of corporate agents. Nevertheless, under the appropriate circumstances, the attorney-client privilege, the work product doctrine, and the Fifth Amendment privilege against self-incrimination play an integral role in corporate counsel’s response to a federal grand jury subpoena. In order to reconcile the tension between complying with the grand jury’s subpoena and preserving these evidentiary bars, counsel should undertake certain measures to ensure a cautious yet thorough internal corporate investigation.
1 See United States v. Calandra, 414 U.S. 338, 343 (1974).
4 For a discussion of the contrasts between the protections afforded by the attorney-client privilege in federal and Illinois state courts, see Frederick R. Ball, Corporate Clients and the Attorney-Client Privilege in Illinois State and Federal Courts, 86 Ill. B. J. 426 (Aug. 1998).
5 For an overview of the potential conflicts of interest corporate counsel faces amidst a pending grand jury investigation, see Stanley S. Arkin, Grand Jury Investigations, Conflicts of Interest and Securing Outside Counsel for Individuals, 711 PLI/Corp. 9 (1990).
6 See generally Cynthia E. Carrasco and Michael K. Dupere, Corporate Criminal Liability, 36 Am. Crim. L. Rev. 445 (Summer 1999); and H. Lowell Brown, Vicarious Criminal Liability of Corporations for the Acts of their Employees and Agents, 41 Loy. L. Rev. 279 (Summer 1995).
7 These evidentiary bars are not without their exceptions, see e.g., In Re Special September 1978 Grand Jury (II), 640 F.2d 49, 59-64 (7th Cir. 1980) (discussing the ongoing fraud exception to the attorney-client privilege and work product doctrine).
8 For an annotation of cases addressing the issues of which corporate agents may raise or waive the attorney-client privilege, see Alexander C. Black, What Persons or Entities may Assert or Waive Corporation’s Attorney-Client Privilege—Modern Cases, 28 A.L.R. 5th 1 (1995). For a discussion of the split of opinion between the Federal Circuits on the issue of waiver, see generally, Alec Koch, Internal Corporate Investigation: the Waiver of Attorney-Client Privilege and Work Product Protection through Voluntary Disclosures to the Government, 34 Am. Crim. L.Rev. 347, 355-366 (Winter 1997).
9 See In the Matter of Walsh, 623 F. 2d 489, 492 (7th Cir. 1980), citing 8 Wigmore, Evidence § 2292 at 554.
10 See Commodity Futures Trading Comm’n v. Weintraub, 471 U.S. 343, 348 (1985).
12 Id. at 349.
13 449 U.S. 383 (1981).
14 Id. at 386-87.
15 Id. at 387.
18 Id. at 388.
20 Id. at 396.
21 Id. at 392.
22 Velsicol Chemical Corp. v. Parsons, 561 F.2d 671, 676 (7th Cir. 1977).
23 Id. at 672.
25 Id. at 674.
26 Id. at 675.
27 See In the Matter Re Grand Jury Proceedings (Barton), 68 F.3d 193, 196 (7th Cir. 1995).
28 Id. at 194.
30 862 F.2d 622 (7th Cir. 1988).
31 Barton, 68 F.3d at 197.
32 449 U.S. at 394.
33 Id.; see also Judah Best, A White Collar Defense Primer: An Overview of Internal Corporate Investigations, Grand Jury Investigations and Parallel Proceedings, with Emphasis on Problems of Former Adjudication, Attorney-Client Privilege, Multiple Representation and Prosecutorial Misconduct, 584 PLI/Corp. 549, 553 (Nov. 1987) ("Best").
34 Janis M. Berry, Defense of Businesses, Individual Officers and Employees in Corporate Criminal Investigations, 19 Pub. Cont. L. J. 648, 665 (Summer 1990) ("Berry").
35 See John Savarese and Carol Miller, Protecting Privilege and Dealing Fairly with Employees While Conducting an Internal Investigation, 1121 PLI/Corp. 525, 550 (May-July 1991) ("Savarese").
36 Berry, supra note 34, at 666.
37 See Best, supra note 33, at 559.
38 See Berry, supra note 34, at 666.
40 See Joseph Thesing, Jr., Confidentiality Concerns in Internal Corporate Investigations, 25 Tort & Ins. L. J. 48, 62 (Fall 1989).
41 See Savarese, supra note 35, at 556.
42 Hickman v. Taylor, 329 U.S. 495, 510 (1947).
43 449 U.S. at 392.
44 Id. at 397.
45 See generally, Berry, supra note 34.
46 Id. at 665.
48 Id. at 666.
49 Id. at 666-67.
50 Id. at 667.
52 See Best, supra note 33, at 559-60.
53 See Braswell v. United States, 487 U.S. 99, 105 (1988).
54 Id. at 105.
55 See United States v. Insurance Consultants of Knox, Inc., 187 F.3d 755, 757-58 (7th Cir. 1999)
56 See United States v. Kordel, 397 U.S. 1, 7-8 (1970).
57 Id. at 5.
58 Id. at 6.
59 Id. at 9-10.
60 Id. at 10.
61 See City of Chicago v. Reliable Truck Parts Co., Inc., 1989 WL 32923, *2 (N.D. Ill. Mar. 31, 1989).
62 Id. at *1.
63 Id., citing In Re Folding Carton Antitrust Litigation, 76 F.R.D. 417, 419 (N.D. Ill. 1977).
64 See Reliable, 1989 WL 32923, at *3.
65 See, e.g., Walsh, 623 F.2d at 493-94.
66 Id. at 491.
67 Id. at 493.
68 See Best, supra note 33, at 575.
69 18 U.S.C. § 1512(d)(3).
70 See e.g., United States v. Poppers, 635 F. Supp. 1034, 1037 (N.D. Ill. 1986) (distinguishing coaching a witness to lie from coaching a witness to present a story in "the best light").
Aaron W. Rapier is an associate at the Schaumburg office of Graft, Sciaccotta & Associates. Mr. Rapier earned his bachelor of arts in 1995 from Marycrest College in Davenport, Iowa, and his J.D. in 1999 from the Chicago-Kent College of Law. This article was written on behalf of the DCBA Business Law & Practice Committee, of which Mr. Rapier is the Secretary.
Mr. Rapier would like to recognize the time and effort Marji A. Rapier, Esq., D. Chad Anderton, Esq., and Mitchell J. Edlund, Esq. volunteered in drafting and revising this article.