An internal investigation is privileged only if it was conducted for the purpose of providing legal advice. Structuring it accordingly, from the outset, is what preserves the protection.
Direction by counsel. The investigation should be commissioned by in-house or outside counsel, with a written engagement or memorandum stating that its purpose is to enable legal advice.
Dual purpose. Where an investigation serves both legal and business purposes — as most do — courts apply varying tests, with the more protective asking whether obtaining legal advice was a significant purpose. Documenting the legal purpose contemporaneously is what makes that argument available.
Non-lawyer participants. Accountants, forensic examiners and consultants should be retained by counsel, under an engagement stating that they assist in providing legal advice.
Upjohn warnings to every employee interviewed: counsel represents the company, not the individual; the conversation is privileged and the privilege belongs to the company; the company may waive it. Give them, record that they were given, and use consistent language.
Reporting. An oral report to the board, minuted at a high level, preserves more than a detailed written report circulated widely. Where a written report is required, its distribution list should be controlled.
Waiver. Disclosing findings to a regulator, an auditor or a counterparty can waive privilege as to the subject matter. That decision belongs to the client, made with the consequences explained in writing.