13 May 2008.
Companies routinely conduct internal investigations of alleged wrongdoing and receive reports summarizing
the investigators' findings. Companies also regularly turn those reports over to the government in connection
with a government investigation of the matters at issue. But handing investigative reports to the government
can lead to an unintended consequence: They may be discoverable in the shareholder suit that often follows the
investigation. The decision in In re Initial Public Offering Securities Litigation is the most recent
illustration of the unintended waiver of work product protection. In that case, the company investigated alleged
misconduct in the allocation of shares during initial public offerings and the company's outside counsel created
a report summarizing interviews of company personnel. The company gave the report to the U.S. Attorney's Office
for the Southern District of New York and to the Securities and Exchange Commission, pursuant to letter agreements
containing promises of confidentiality.
In the ensuing securities class action, the plaintiffs sought to discover the report and the company resisted
production based on the work product doctrine. The plaintiffs contended that, by producing the report to
the government, the company had waived any privilege that might otherwise have protected against its discovery.
The company argued that producing the report to the government constituted only a "selective waiver" of work
U.S. District Court Judge Shira A. Scheindlin rejected the company's assertion of "selective waiver."
Consistent with recent federal appellate and trial court decisions, she held that "[v]oluntary disclosure of
attorney work product, regardless of the existence of a confidentiality agreement, will waive work product
privilege absent special circumstances." Scheindlin ruled that the company had failed to present any evidence
such "special circumstances," specifically rejecting the company's confidentiality agreement with the government
as a ground to prevent the report's disclosure.
As Judge Scheindlin noted, "[p]arties wishing to take advantage of the privilege that protects attorney work product
must zealously maintain the confidentiality of that work product from their adversaries."
For more information on this decision or on protecting attorney client privileged communications and work
product when conducting an internal investigation, please contact
Justin P. Klein at 215.864.8606 or
John C. Grugan at 215.864.8226.
If you have a question regarding securities litigation, please contact
William A. Slaughter at 215.864.8114 or
Stephen J. Kastenberg at 215.864.8122,
and for questions regarding white collar litigation, please contact
Ronald A. Sarachan at 215.864.8333.
Finally, for the most recent developments in the application of the attorney client privilege under Pennsylvania law,
Burt M. Rublin at 215.864.8116.