Okay, so it's getting late, and I had trouble getting a certain Brooks & Dunn tune out of my head when I was writing the title for this post...
The Fourth Circuit recently considered in In re Grand Jury Subpoena, No. 04-4410 (4th Cir. July 18, 2005) (PDF) whether three employees of AOL Time Warner could prohibit the Company from waiving the attorney-client privilege when responding to a grand jury subpoena for interview memos generated during the internal investigation. The case is a good reminder about the importance of so-called "Upjohn warnings" during internal investigations conducted by lawyers.
AOL Time Warner hired a law firm to conduct an internal investigation regarding AOL's relationship with a company called Purchase Pro, Inc. The attorneys conducted interviews with several of AOL's employees. Normally, attorneys conducting internal investigations are strongly encouraged to issue "Upjohn warnings," to the employees, named for Upjohn v. United States, 449 U.S. 383, 389 (1981). The investigating counsel should warn each interviewed employee at the beginning of the interview that:
(1) counsel represents only the company, and not the employee personally;
(2) the attorney-client privilege under which the interview is conducted belongs solely to the company; and
(3) only the company will decide whether any facts learned in the interview will be shared with any third party, including government officials.
The investigating attorneys in this case gave a variation of the Upjohn warnings that led to some confusion about who they represented. The attorneys stated
(1) "we represent the company" (so far, so good);
(2) "these conversations are privileged, but the privilege belongs to the company and the company decides whether to waive it. If there is a conflict, the attorney-client privilege belongs to the company" (again, no problem); and
(3) "we can represent you as long as no conflict appears" (ouch).
That last part seemed to cause the most confusion with the employees. The Fourth Circuit panel held that all of the "essential touchstones for the formation of an attorney-client relationship between the investigating attorneys and the appellants were missing at the time of the interviews." However, it also called the warnings "watered down 'Upjohn warnings'" that created "a potential legal and ethical mine field."
The district court denied the motion to quash as to all of the employees, and the unanimous panel of the Fourth Circuit affirmed. It reiterated that "[a]n individual’s subjective belief that he is represented is not alone sufficient to create an attorney-client relationship." The troublesome statement that the attorneys "could" represent the individuals was insufficient "to establish the reasonable understanding that they were representing" the employees.
The moral to the story here is that when you do an internal investigation, have a script ready to read to each employee that contains the Upjohn warnings, and do not deviate from it. Follow up the interview with a written memorandum of the warnings. Better yet, write out the warnings and have the employees read and sign them before the interview begins. Otherwise, you may be creating an attorney-client relationship with both the company and its employee, and you may have to withdraw where, as here, a conflict arises.