Occasionally, it is necessary for an organization to conduct an inquiry to discover salient facts which pertains to acts or omissions that can generate civil or criminal liability for an organization. Whether it be irregular stock trades, allegations of illegal employment discrimination, a civil lawsuit, a key employees sudden departure, or a grand jury subpoena, it is important that as soon as any substantial or credible evidence of wrongdoing surfaces, the organization conduct an early investigation. This allows the company more time in which to develop appropriate responses or defenses, reduces the likelihood of a qui tam lawsuit, and shows that the corporation or organization is responsible.
In conducting the investigation, the question should arise as to whom should be used? Most writers feel that inside counsel may be used when the misconduct is not substantial with the benefit that inside counsel brings familiarity with the company and are more readily accepted by the employees. However, outside counsel should be employed when the misconduct is substantial, where in-house counsel is likely to be a witness, or when senior management is implicated.
The decision on whether or not to employ outside counsel is especially crucial when one considers that the Model Rules of Ethics for attorneys state that counsel must inform employees of the client’s identity when it becomes apparent that the corporation’s interests are adverse to those of the employee. Moreover, counsel must advise the employee before getting started that the attorney represents solely the company, not any employee. Further, the company’s attorney-client privilege applies to the interview and the company retains the right to decide whether to reveal to regulators or others outside the company the information obtained in the interview. Additionally, the employee should be advised the counsel has determined it is necessary to talk with him or her in order to formulate legal advice and prepare for possible litigation. The employee should be counseled to keep the interviews confidential, including not sharing with other employees. Counsel for the organization should, in these situations, also advise the employee that they may want to consult his or her own attorney.
In this way, the organization may avoid any conflicts of interest,exposure of violations of the organization’s responsibilities to the employee, and the appearance of impropriety.
The law firm of Thomas M Fountain & Associates, P. C. is an AV Preeminent rated law firm located in The Woodlands, Texas which is in the greater Houston metropolitan area. Thomas M Fountain has 35 years of experience upon which the firm’s clients draw when necessary. The firm prides itself on being proactive rather than reactive.
For more information see our Website at www.HoustonTrialLaw.com or call (281) 296-6500.
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