Episode 1, Investigations Unpacked: So you want to investigate

Peter Richard:

Well, hello to all our listeners out there and welcome to this first episode in our Investigations Unpacked podcast series. I want to begin today by acknowledging the Gadigal people, traditional custodians of the land on which we are recording today and pay my respects to their elders past and present. I extend that respect to Aboriginal and Torres Strait Islander peoples listening today.

Peter Richard:

My name is Peter Richard. I'm a counsel at Ashurst. My practice is in the area of dispute resolution, but the topic of investigations which we'll be talking about today is one that crops up in so many areas of the law. In fact, when I say investigation, any number of things may spring into your mind, from a police investigation into potential criminal conduct, to an investigation by archeologists or historians into some aspect of our past, through to a special investigation, carried out by journalists and aired on a current affairs program in a prime time time slot. All of these types of investigations have different motivations, of course they do, but they'll often unfold along broadly similar lines. There will be a process of setting the scope, gathering and analysing the evidence, formulating conclusions and presenting those conclusions to interested stakeholders. When we as lawyers are called in to investigate, it's often because our clients may be aware of or may suspect that something significant has gone wrong in their business.

Peter Richard:

Our job will be to work out the extent of the problem, if there is one, and help the client to manage the consequences, especially with other stakeholders such as regulators, if they're involved. And we'll also have a role in recommending measures to address the problem, to make sure that it doesn't happen again. Fortunately, my guest today, Rani John, a partner in our dispute resolution team here at Ashurst and co-leader of our corporate crime practice, has been through that process many times with clients. Rani has some fantastic insights, both legal and practical to share with us, which will hopefully benefit all our listeners who investigate conduct, engage with regulators and manage the time, costs and risks of the investigation process. Rani, welcome.

Rani John:

Thanks Peter. Great to be here.

Peter Richard:

Should we start by asking you just a little about your background to share with our listeners and in particular, how you became interested in investigations?

Rani John:

Sure. I think my interest in investigations really came out of my work as a commercial litigator. As a litigator, you need to have as complete an understanding of the facts that give rise to the dispute that you're dealing with as you can, in order to give your clients the best possible advice. And I've always enjoyed the process of digging into the facts, looking at documents and interviewing potential witnesses, and really forensically assessing the underlying facts and their causal connections. Investigations work involves a very similar skill set and I started to really focus on this area around the time of the GFC. At that time, a lot of clients needed help with understanding legacy issues in their business, dealing with regulatory and other pressures and remediating customers. And it was a moment in time where in my view, the litigator's skillset was really valuable.

Rani John:

I found that I liked that work, I've continued to do it in the ensuing years. You're not always trying to win a case, but you are often trying to secure a favourable outcome for your client, with a regulator who might be investigating in parallel to the client itself, or you might be helping your client manage the consequences of misconduct internally to the best effect, or managing a remediation process. I really enjoy helping clients with solving those sorts of problems.

Peter Richard:

There's certainly a lot of crossovers there between what you might call traditional litigation and investigations work. And it's interesting that you mentioned the pressures that can be associated with a regulator who's investigating in parallel, it's not dissimilar from what you might experience from an opponent in a litigation case.

Rani John:

Yeah, that's right Peter. In many instances for the investigation work that I'm involved in, ASIC, the Australian Securities and Investments Commission, which is Australia's corporate markets and financial services regulator, is the relevant regulator. And while talking about their functions and their enforcement approaches could probably be a whole other episode, the point that I thought was worth making is that there can be a range of circumstances where you want to communicate to ASIC about the outcome of an internal investigation that you've conducted. For example, you might conduct an internal investigation and then make a decision to self-report certain conduct to ASIC. If you cooperate with ASIC in its enforcement activities (and just to be clear, cooperating means doing more than simply complying with your legal obligations), that can have various benefits for the company, both in terms of influencing the course that an investigation by the regulator might take, or the enforcement approach it might take, and in mitigating any penalties that might otherwise ensue from the conduct that you've been looking at.

Rani John:

Being able to demonstrate that you've properly and fully investigated an issue internally, and that you've got measures that have been put in place to stop the relevant misconduct happening again, will often be very important to enforcement choices that are made by a regulator. A good investigations lawyer, I think, can really help an organisation to leverage all of that effort of an internal investigation to best effect with ASIC or indeed with other regulators who will have similar philosophies about the import of that kind of self-reporting or cooperation.

Peter Richard:

Sure. And many of our listeners will no doubt have experienced a situation in their organisations where an issue's been identified and a decision needs to be made quickly on what to do next, including whether and what to report to a regulator.

Rani John:

Yeah. And even if there aren't any specific regulatory issues, there might be a whole range of other circumstances why it's still important to effectively investigate an allegation that's been made internally.

Peter Richard:

Absolutely. What do you think are some of the key matters that our listeners should be mindful of when planning their approach to an internal investigation and carrying it out?

Rani John:

The first thing I think is to be as clear as you possibly can be about the scope - what is it that you are in fact investigating? That can obviously evolve as an investigation proceeds and as the facts are uncovered, but it's really important to be as clear as you can be at all times about what are the questions you are seeking to answer, and what are you not doing. What are you not looking at? And that shapes the lines of inquiry that you pursue, what kind of topics you're examining. What sort of documents are you looking at? Who are the witnesses that you would like to speak to? And ultimately, what does the investigations team report on? Being clear about the scope also helps you manage costs, obviously. It helps you maintain the integrity and the robustness of the investigation that you're conducting.

Rani John:

That investigation process that you've undertaken can be the subject of scrutiny down the track, including by regulators, if regulators are involved. That's the first thing I think. The second thing is that you need to make a choice pretty early on about who's going to conduct your investigation. That could be an in-house team, or it could be an external advisor, particularly if resourcing or independence are important considerations for the particular subject matter of the investigation Whether or not you've chosen an internal or an external team, you need to make sure that there aren't conflict of interest issues at play.

Peter Richard:

Sure. And another consideration to think about when selecting investigators is what the end product of the investigation is going to be, is it going to be a written report or something else? And who's going to receive that report.

Rani John:

Yeah, that's right. Should there be a direct reporting line from the investigations team to the CEO, or one or more members of the board, or to a board subcommittee? There are all sorts of structures that one could put in place for an investigations team. As a general rule, it might sound obvious, but people who are close colleagues or peers of the person or people who are the subject of the investigation or at risk in the investigation clearly should not be part of the investigations team. They also shouldn't be the recipients of information flows from that team, or be the recipients of reports from the investigations team.

Rani John:

And then another factor is whether or not you want the report of the investigations team to be privileged and we can come back to that. Then there's resourcing considerations. So an investigation might require some specialist resource or additional resource, either because of the subject matter of the investigation or some sort of technical specialty, or because there's anticipated to be particular legal issues at play and that might tip the balance in favour of external advisors to conduct or at least to assist with the investigation. Where there's urgency in conducting the investigation, that also obviously has a bearing on how you choose to resource it and there can obviously be a tension between cost and scope and urgency.

Peter Richard:

I think that tension between cost and scope and urgency is the story of the corporate lawyer's life a lot of the time! You mentioned privilege. Can you talk a little bit more about that for us?

Rani John:

I think privilege is quite a critical but often overlooked issue so if you assess that it's desirable for the end product of an investigation to be protected by legal privilege, then you'll need to make sure that from the outset the investigation is being conducted in a privileged way, that is for the dominant purpose of obtaining or providing legal advice. And that will impact on the choice of investigator and a whole bunch of steps along the way in terms of the investigation.

Peter Richard:

So if an investigation report does meet the test for privilege, that means it can be withheld from third parties, such as regulators and other parties in possible future litigation, is that right?

Rani John:

That's right, Peter. Having said that organisations can, and sometimes do decide to voluntarily disclose privilege material to a regulator, for example, as part of efforts to cooperate with that regulator and they can seek to do so on what's called a limited waiver basis. So in other words, you disclose the investigations report to a regulator on a confidential basis, but in doing so, you don't agree that you are waiving privilege as against the rest of the world. If an investigation report is not privileged, that means that among other things it can be called for by a regulator pursuant to a compulsory notice to produce documents, it can also be required to be discovered or produced on a subpoena in litigation.

Peter Richard:

There are just so many knotty issues when it comes to privilege, aren't there? Really warrants its own podcast episode and I think we do have one in the works, would that be right?

Rani John:

Yes, we do. It's so important to carefully think about privilege at really every stage of an investigation, including how you're going to conduct the investigation, how you're going to conduct interviews, how you're going to report on the findings of the investigations. It'll be good to dig into that in a bit more detail.

Peter Richard:

Yeah. We'll look forward to that in the near future. So let's just say, we've worked out the scope, resourcing and the approach to privilege. What other practical tips can you give our listeners about investigating effectively?

Rani John:

So usually once you've identified the parameters of an investigation and who's going to conduct it and whether or not it's intended to be a privileged exercise, the next thing to do is to preserve, collect, and then review documents that are relevant to the subject matter of the investigation. And there's a range of practical considerations in going about that. So for example, you might need to arrange to turn off any routine document destruction processes that exist within the company, you might need to advise relevant individuals within the company, not to delete any material that might be relevant to the investigation. Another matter to consider there is who is in the tent in terms of document collection and indeed in terms of the investigation as a whole, and that can turn on the subject matter or the urgency of the investigation. I It might be possible to do at least some of your document collection electronically and sort of sit behind people's business as usual activities so it doesn't disrupt them and indeed may not be visible to them.

Rani John:

And there might be a series of reasons why you don't necessarily want to disclose the fact of the investigation broadly within a company, at least at an early stage. That can include because there are whistleblower confidentiality concerns. In some circumstances, there might be concerns that notifying people of the fact of the investigation might precipitate still further misconduct on the part of certain individuals. It's also advisable to check company policies that might be relevant. So you might have company policies about being able to access employee emails for example, that's usually not an issue, but wise to make sure that you've covered your bases there.

Rani John:

And then once you've reviewed your relevant documents, you may well identify further lines of inquiry, there might be additional documents you want to try to get hold of. Reviewing the documents will usually help you come to a landing on the witnesses that you would like to try to speak to. And there's a range of considerations then in how you go about arranging and conducting your witness interviews. That includes making sure that you are appropriately respecting individual employee entitlements, that you are managing whistleblower confidentiality concerns, for example, and so on.

Peter Richard:

It's very interesting, all of those steps and thinking about witnesses and document retrieval in particular, those things can take up quite a significant amount of time and resources in an investigation.

Rani John:

Yeah, that's so true. There's quite a lot to consider on that front, just in terms of managing privilege issues apart from anything else.

Peter Richard:

Yeah. Well, I think we can pick that up in our next episode.

Rani John:

Sounds good.

Peter Richard:

We'll be discussing that in a bit more detail. Thanks so much, Rani, it's been really delightful chatting to you and hearing about some key tips for managing a successful investigation.

Rani John:

Oh pleasure, Peter, I was really pleased to join.

Peter Richard:

We hope all of our listeners have enjoyed today's chat. We look forward to bringing you further instalments of our Investigations Unpacked podcast series. If you'd like to learn more about our podcast channels, please visit ashurst.com/podcasts. And to make sure you don't miss future episodes, subscribe now on Apple podcasts, Spotify, or your favourite podcast platform.