Proper report structure. The entire investigation should be conducted by preparing a final report with the decision on whether to create a written or oral report decided later in the process. In preparing the report, counsel must proceed with caution. Counsel can prepare the report in a way that best serves the client’s interests by understanding the anticipated uses of the report, whether by the client, law enforcement, regulators, or private litigants.
Proper Report Structure
While the following section describes the preparation of a written report, the principles outlined here may also be used for an oral report. Even if it is decided early in the process to prepare only an oral report, counsel should begin assembling an outline of a report early in the investigative process. This outline should be protected by the work product doctrine.
Facts can be added or changed to the outline as the investigation continues. In addition, the outline should contain cites of the source of the information so that it can be tracked quickly if necessary. The following is a description of the various general subject matters that may be addressed by the report, along with a brief explanation of each.
Background And Mandate
The first section of the report should address the procedural background that led to the retention of counsel to conduct the investigation. This should describe the counsel’s understanding of all of the events leading up to its retention. This section will also lay out the counsel’s understanding of the posture of the matter before the investigation to provide context to later portions of the report. If the investigation was undertaken according to an outside mandate, such as from a bankruptcy examiner or as part of a settlement, that information should be disclosed in this section.
Perhaps most importantly, this first section should also contain an explicit identification of the client (for example, whether it is the company, the board, or a special committee) and a description of the counsel’s mandate in undertaking the investigation. The report should state in clear and precise terms exactly what issues counsel was hired to investigate and what limitations if any, were placed on counsel by the client.
The report should state whether counsel was limited to investigating the matter that led to the investigation in the first place or whether counsel had to explore any related matters as deemed appropriate. Finally, to obtain the maximum protection of the attorney-client privilege, when applicable, this section of the report should explicitly state that counsel was retained to provide legal advice to the client.
This section should provide a summary of the findings and conclusions. This makes it easier for the reader to review the report, particularly if the written report is extensive. Also, since the written report may be read by persons with different agendas and objectives, an executive summary should be written for readers with various perspectives.
Review Of The Investigation
The next section should focus on reviewing the steps taken to conduct the investigation. This section can include information such as the length of time it took to conduct the investigation, the number of counsel involved in the investigation, the total number of hours worked on the matter, the number and types of documents collected and analyzed, all locations visited and searched for relevant documents (including storage facilities), the number and identities of those interviewed, and whether any outside experts were hired and consulted.
It is also important to identify any witnesses who declined to cooperate or were otherwise unavailable and the reasons they provided, as well as, to the extent possible, a description of any known documents or data that could not be reviewed. Finally, counsel should provide a narrative assessment of whether they believe they had sufficient cooperation from the client and others to conduct the investigation. Clients and others who are aware that this will be discussed in the report of an investigation may be more likely to be fully cooperative in the course of the investigation.
This section should lay out a narrative description of the relevant facts. The organization of this section will depend on the number and types of matters that were investigated. In some instances, this section may lay out the facts in chronological order, while in other instances, it may make sense to group the facts by, for example, transactions, business groups, or issues.
However it is organized, this section may include either a detailed recitation of the facts or a more summary-type description. The contents of this section will serve as the basis for the later legal conclusions and recommendations. To the extent that the report will include significant details, it is crucial to the credibility of the report as a whole that counsel should be able to identify the basis for every statement in this section.
If assertions by witnesses are contradictory or conflict with documentary evidence, that should be stated clearly, but in a non-inflammatory manner, focusing only on the fact of the inconsistency. Any areas where counsel was unable to verify information or where there are questions as to the accuracy or authenticity of particular documents or information should also be noted and explained.
This section is significant as it provides an assessment of the potential legal vulnerabilities of the company based on the facts identified during the investigation. The report should lay out the legal standards used and should be limited to only those facts that were discussed in the “Findings” section. The structure of this section is heavily dependent on the purpose of the investigation.
For example, suppose the investigation was conducted to discover the extent to which a certain practice exists inside a company. In that case, the legal conclusions section may focus on the company and individual workers’ possible culpability for offenses related to that practice. If the inquiry is being conducted as counsel to a bankruptcy examiner, the focus of the legal conclusions may be on determining the relative strength of the bankruptcy estate’s claims for recoveries against various parties. In laying out its legal conclusions, counsel may want to address those laws that may have been violated or those claims that can be asserted, and also violations or claims that it considered but found lacking in support.
This can help the client by providing a framework for analyzing potential culpability should new information come to light. More importantly, a well-reasoned discussion of why the company’s conduct was not violative of any law or regulation can be used by the company to persuade the relevant authorities that charges against the company are not warranted.
To the extent requested by a client, there may be a section on counsel’s recommendations for any actions it believes the company should or is compelled to take. The types of recommendations which are generally included in such reports include: personnel actions, such as firing, suspending, reassigning, or otherwise disciplining particular employees; structural reforms, such as changes to reporting lines or review structures, the creation of new committees or positions.
The elimination of particular business practices, or even the sale of part or all of the company; improvements to the company’s internal control processes; description of areas requiring additional scrutiny, whether by the same counselor as part of a separate investigation; and legal actions to be taken by the company, such as a civil suit, regulatory action, or filing for bankruptcy protection.
Careful attention should be given if recommendations are made. If the company declines to follow the recommended course of action, it may expose itself to scrutiny by regulators or civil litigants. Therefore, counsel should be wary of the potentially burdensome effects of its recommendations (both individually and cumulatively) as it crafts this section of the report.
The elements of an effective report of the investigation will be the same no matter what form the report takes. Even if no written report is produced, counsel should be prepared to address all of the topics noted above in an oral report. By keeping these elements of the final report in mind during the investigation, counsel will be able to investigate in a manner calculated to maximize its utility to the client.