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Justin Okun is a senior corporate counsel with T-Mobile, where he handles regulatory and operational compliance. Justin was formerly a shareholder in Lane Powell’s Investigations, White Collar and Compliance practice group. Before joining Lane Powell, Justin spent over a decade in government service as an Assistant U.S. Attorney in Los Angeles, a DOJ trial attorney in Washington, DC, a supervisory attorney with the Department of the Navy, and a judge advocate in the Marine Corps, where he began his career. While Justin no longer exercises like a Marine, he still drinks beer like one, especially when he’s blogging.

Been a while — not sure “Roundup of White Collar News” is the catchy phrase we’re looking for after a month or so, but here we go:

  • Interesting explanation of the Carter Page FISA application over at Lawfare
  • The Attorney General announced the publication of the Cyber-Digital Task Force Report — Question: does anyone actually read a bureaucratic monstrosity like this?
  • Good for the DOJ — firing reservists because they’re performing military duty is awful, not just illegal
  • Good for the DOJ again — I can never get enough of health car fraudsters getting caught and being made to pay
  • Blows my mind that we’re even having a debate as to whether a president’s conduct amounts to treason
  • Very sad day for L.A. — Jonathan Gold, the man who informed me it was ok, even right, to put yellow mustard on my pastrami sandwich died today
  • Ron Rockwell Hansen, a former Defense Intelligence Agency case officer, was arrested in Seattle for spying on behalf of China — here’s the arrest warrant and complaint
  • So many ways to commit fraud — here’s gift card fraud complete with reverse engineering, algorithms, and other techy Seattle things that lawyers don’t understand, as exemplified by the indictment
  • Apparently, embezzling from a tribe is its own separate crime
  • I love the Washington Post but they get this story about civil asset forfeiture completely wrong and in the most lazy way by simply repeating an attorney’s allegations — a post to follow about how asset forfeiture really works
  • Another laugher from the Washington Post about the possible end of legalese — legalese will never die and we’ll have a future post on why
  • The SEC is going after a lawyer here in Seattle who specializes in sham IPOs

  • Disgusting — Seattle man charged with selling food that was supposed to be destroyed or recycled into agricultural feed to discount grocery stores
  • The Ninth Circuit said you don’t have to know you’re transporting ammo to be convicted of smuggling ammo
  • Panasonic Avionics Corporation agreed to pay a $137.4 million penalty for falsifying its books and concealing payments to third-party sales agents
  • VW’s board is thinking of going after its former CEO
  • The UK’s data protection watchdog has ordered Cambridge Analytica to release information on US professor David Carroll
  • Interesting interview from a a compliance chief regarding a “speak up culture”

Chaplin later regretted this satirization

 

  • Lots of pernicious activity in the PNW, beginning with sending a false distress message to the Coast Guard, a big no-no
  • An interesting conspiracy to get around sanctions against Iran involving Chinese, Turkish, and Portuguese companies — the indictment was handed down in Washington, DC, but the plea will be in Seattle where the defendant was arrested and has remained in custody
  • This case was transferred to Seattle from Florida — ransomware used to extort people into paying “fines” to phony law enforcement organizations
  • I’m seeing a spinoff of WAGSWWCCs
  • Even listenin’ to Slippin’ couldn’t convince the judge not to give DMX some prison time
  • Most disturbing of all this week: massive wine fraud in the Rhone Valley — life really does imitate The Simpsons…

Following our recent post on disclosures to the EPA, this week we’re going to look at disclosures to outside auditors, often in the context of internal investigations, and steps to take to limit any waiver of attorney work-product protection.  Here we go . . .

Work-product protections are not automatically waived by disclosure to third parties.  Rather, they are waived when such disclosures are to an adversary or increase the likelihood of disclosure to an adversary.  As usual in the world of law, there is a split of authority over whether the disclosure of work-product to an independent auditor, such as a Big Four accounting firm, waives work-product protection.

Most courts have concluded that disclosures to outside auditors do not have the requisite adversarial relationship for waiver. See, e.g., SEC. v. SchroederIn re JDS Uniphase Corp. Sec. Litig.SEC v. RobertsMerrill Lynch & Co. v. Allegheny Energy, Inc.

However, other courts have concluded that disclosures to outside auditors do amount to a waiver. See, e.g., Middlesex Ret. Sys. v. Quest Software, Inc.Medinol, Ltd. v. Boston Scientific Corp.; Samuels v. Mitchell.

The only federal appellate court to have ruled on the question is the D.C. Circuit in United States v. Deloitte LLP, which concluded that work product protections are not waived by disclosure to independent auditors.

But relying on the “majority view” or one appellate court’s opinion is not a risk most people want to take.  So to protect against the risk of waiving work-product protection, or if you’re in a minority jurisdiction, here are certain concrete steps that attorneys can take to help protect against waiver of the work-product doctrine:

  • Ensure that disclosures made to the auditors are oral rather than written.
  • Be aware that auditors’ notes concerning oral communications with counsel may be discoverable if there is a later determination that there has been a waiver.
  • Request that the audit team confine their notes only to those facts that are essential to performing their audit function.
  • Answer only those specific questions asked by the auditors.
  • Do not volunteer to disclose work-product such as interview memoranda or any written report of the privileged investigation.
  • Answer auditors’ questions by providing facts that have been gathered during the investigation, which are not privileged regardless of their form and thus would not constitute a waiver.
  • Focus on the process underlying the investigation—the number of witnesses interviewed, length of those interviews, and the general thoroughness of the investigation—to assure auditors of the robust nature of the investigation or a client’s internal controls while minimizing the risk of waiving privilege.
  • Discuss the auditors’ confidentiality obligations in advance of any oral report.
  • If there is not already a confidentiality agreement in place, then one should be put in place.
  • The confidentiality agreement should ensure that any information sent to the auditors is confidential and that the auditors will not further disclose that information.
  • Specify that the confidential information is subject to work-product protection.
  • Document the legal basis for the work-product protection when the work-product is transferred to the auditors.
  • The agreement with the auditors should include a provision that if litigation arises and the auditor is subpoenaed,your in-house or outside counsel will review any auditor work papers that may contain privileged material before they are produced.
  • Finally, ensure that other indicia of anticipated litigation, such as a litigation hold, are in place to strengthen the case that you both reasonably anticipate such a dispute and are taking steps to safeguard your information.

Finally, remember, even after all precautions have been taken, there is a limit to one’s control over events . . .