Analysis
14 July 2018

New challenges arising from the conduct of internal investigations by attorneys

Bastille Day Newsletter 2018 - What’s Hot

 

The development of internal investigations triggered a change of paradigm through the intervention of attorney ab initio, prior to any litigation, rather than in its traditional role ex post, after the launch of criminal prosecutions.

This new stance raises challenges for attorneys tasked with expertise or assistance and counselling activities while remaining compelled to comply with strict professional ethics.

Through a resolution passed in March 2016, the Paris Bar Council considered that internal investigations fell within attorneys’ professional field. Six months later, in September, the Paris Bar Council introduced the “Vademecum for attorneys tasked with carrying out an internal investigation”[notehttp://www.avocatparis.org/mon-metier-davocat/publications-du-conseil/nouvelle-annexe-xxiv-vademecum-de-lavocat-charge-dune[/note] providing for recommendations to be inserted in the National Regulations of the profession1 and aiming at regulating this new practice.

General and specific recommendations to be incorporated in the RIBP (internal rules of the Paris Bar) were thus set to provide a minimal framework to the activity of internal investigation and ensure that attorneys do not circumvent their ethical obligations.

General recommendations for the activity of internal investigation

The Vademecum provides that any attorney carrying out an internal investigation must comply with the core principles of the profession: conscience, independence, humanity, loyalty, delicacy, moderation, competence and prudence2.

Further, the Vademecum recalls that attorney mission is non-coercive. Hence, if an attorney interviews third parties for the purpose of carrying out an internal investigation, he/she has to inform the interviewee that he/she is not compelled to answer the questions and that the exchanges may ultimately be transcribed in a report3.

Specific recommendations for the activity of internal investigation

• Assistance and counselling activities

An attorney may be mandated to carry out an internal investigation aimed at giving an opinion or advice on a given factual situation in the light of positive law. In this case, the field of intervention falls within his mission of advice and assistance and the mandated attorney may be the usual attorney of the client, without further restrictions.

The attorney will in this case be bound by the attorney-client privilege towards his//her client exclusively – the latter being free, as opposed to his counsel, to reveal information gathered during the investigation. To ensure transparency of the investigation, the attorney will also have to inform the individuals he/she interviews that he/she acts on behalf of the client who retained him/her to carry out this investigation.

If it appears that the interviewee may be held accountable for any wrongdoing at the outcome of the investigation, the attorney will then have to inform him/her that he/she may be assisted by an attorney. An attorney failing to respect this obligation would expose himself/herself to disciplinary sanctions (French legislator limiting measures to disciplinary sanctions not to impose undue burden on French attorneys compared to UK or US counsels not subject to equivalent obligations).

After the investigation, the attorney may assist his/her client in a mutual agreement procedure or in a dispute, related or subsequent to the internal investigation, but will refrain from representing his/her client in such procedure if it is directed against an individual that he/she has interviewed during the internal investigation4. In any case, it is impossible for an attorney who conducted an internal investigation to take legal action against anyone he/she interviewed.

• Expertise activity

An attorney may also be tasked with carrying out an internal investigation in the context of an expertise activity, the attorney being in this case mandated by two parties (a legal authority and a company or one of its employees or managers)5. The attorney is then a neutral and objective third party competent to assess a given factual situation6.

In any case, the attorney will refrain from accepting such mission if he/she already is the counsel of the person retaining him/her. This prohibition stems from the fact that ethical guidelines applicable to attorneys acting as an expert or as a counsel are diametrically opposed, since an attorney in the context of an expertise activity is not bound by the attorney-client privilege (the attorney being mandated to provide a report to every parties involved).

The attorney must therefore refrain from representing one of the parties in any other procedure relating to or arising from the internal investigation, even in amicable proceedings7.

* * *

Internal investigations constitute a genuine revolution in the missions entrusted to criminal attorneys: before Sapin II law of 2016 providing for the implementation of compliance programs and setting up a new settlement framework, judicial confrontation and absolute secrecy were prevailing, since then, a move has been made to cooperation and transparency.

Recent enforcement actions have demonstrated increasing cooperation between French authorities and foreign enforcers, including US and UK enforcers8. The real stake for Sapin II law will then to become a serious competitor to FCPA and UKBA to contain their extraterritorial reach and ensure respect with non bis in idem principle.

Related content

Analysis
CumEx files
13 January 2022
CumEx files, from tax optimization to tax fraud?
A look back at the revelations of the "CumEx files" and key take aways on these practices of tax optimization...
Press review
Press review - Week of 27 March 2022
31 March 2023
Press review – Week of 27 March 2023
In this week's press review, Navacelle piggybacks on the raids of several banks in Paris and La Défense as part...
Analysis
29 March 2023
Arbitration between Alstom & ABL: the Versailles Court of Appeal confirms the exequatur on 14 March 2023
Following a lengthy legal battle between Alstom and ABL, the Versailles Court of Appeal approved the 30 March 2016,...
Event
will the recent French case law harm the position of Paris as preferred arbitral seat
29 March 2023
Will the recent French case law harm the position of Paris as preferred arbitral seat?
For Paris Arbitration Week 2023, Navacelle’s Arbitration team invites you to participate in its round table on the following topic...
Press review
Press review - Week of 20 March 2022
24 March 2023
Press review – Week of 20 March 2023
In this week’s press review, Navacelle looks at the arrest warrant issued by the Prosecutor of the International Criminal Court...
Publication
LIR - Second edition - Greenwashing
21 March 2023
Boosting the fight against greenwashing in France
In the recent years, French rulemakers, regulators and the judicial system have contributed to strengthen the fight against greenwashing.
Press review
Press review - Week of 13 March 2022
17 March 2023
Press review – Week of 13 March 2023
This week in the press review, first in criminal business law, Pakistani investor Arif Naqvi lost his appeal against extradition...
Analysis
15 March 2023
US FinCEN issues new rule on beneficial ownership reporting under the Corporate Transparency Act
As of January 1, 2024, companies operating in the United States will be required to report information about their beneficial...
Press review
10 March 2023
Press review – Week of 6 March 2023
This week in the press review, HVI Cat Canyon Inc. has been ordered to pay more than 65 million dollars...
Analysis
9 March 2023
Historical sanctions by the Financial Markets Authority
The Financial Markets Authority’s Enforcement Committee imposes record-breaking fines on a British asset management company and two of its executives...
Press review
Press review - Week of 27 February 2023
2 March 2023
Press review – Week of 27 February 2023
This week in the press review, the Minister of Public Accounts visited the United States to discuss improving tax cooperation....
Press review
Press review - Week of 20 February 2023
24 February 2023
Press review – Week of 20 February 2023
This week in the press review, Navacelle focuses on the cancelation of a record fine against Swiss laboratories for anti-competitive...
Press review
Press review - Week of 13 February 2023
17 February 2023
Press review – Week of 13 February 2023
This week in the press review, Shell executives were accused of endangering the company’s sustainability. German authorities raided companies suspected...