Internal investigations are a staple in today’s corporate environment. Often, when the conduct under investigation involves senior management or sensitive issues, a company’s board of directors will authorize and form a special committee of directors to oversee and direct the investigation. To ensure that the ensuing investigation is independent and thorough, the special committee will engage outside counsel. (Moreover, to prevent even the appearance of impropriety or conflict, special committee counsel should not typically be the company’s regular counsel or counsel who has performed recent, material work for the company. See, e.g., Lahm v. Tremont, 694 A.2d 422, 426, 429-30 (Del. 1997) (applying the same logic in the adviser and expert context).) Of the many important issues arising during such investigations, protection of privileged material is paramount. This article explores the contours of the attorney-client privilege as it applies to special committees’ internal investigations, including with respect to employee interviews and board briefings.

The Attorney-Client Privilege and Work Product Protection. Courts acknowledge that the attorney-client privilege exists between a special committee and its separately-retained counsel because the special committee is seeking legal advice. See, e.g., In re OM Group Sec. Litig., 226 F.R.D. 579, 587 (N.D. Ohio 2005) (stating, in the special committee context, “Where a client seeks legal advice from a professional legal advisor, the communications relating to that purpose made in confidence are protected by the attorney-client privilege.”). Similarly, the work product protection extends to documents prepared by counsel for the special committee in the course of its investigation. See In the Matter of Continental Ill. Sec. Litig., 732 F.2d 1302, 1314 (7th Cir. 1984) (assuming work product immunity where report was prepared by special litigation committee and counsel); In re LTV Sec. Litig., 89 F.R.D. 595, 620 (N.D. Tex. 1981) (work product of special counsel to audit committee protected because investigation and report required legal acumen and expertise).