Employers know that when allegations of wrongdoing in the workplace arise (e.g., harassment, discrimination), they have a legal obligation to conduct an investigation. Such an investigation is also necessary in the world of potential corporate wrongdoing, as the New York Times reported yesterday in an article about G.M.’s recent commission of an investigation into why the company failed to alert outsiders to a design defect responsible for accidents and deaths. (See the article here). The article questions G.M.’s decision to use its regular outside counsel to conduct the investigation. CEO Mary Barra called upon law firms King & Spaulding and Jenner & Block to conduct an “unvarnished” investigation. Both firms have represented G.M. in, among other things, product liability cases. So they once (and perhaps will again) defended G.M. in litigation for the same or similar issues they are now charged with investigating. Does this suggest a conflict of interest?
As the Times points out, law firms have become increasingly sophisticated in handling internal investigations. For example, they could set up so-called “Chinese walls” between the individual attorneys who represented the company in litigation and those acting as independent investigators. However, the perception of a conflict of interest is enough to render me wary. Will the law firm who gets a significant portion of its revenue from G.M. really be willing to follow the facts wherever they lead, even if doing so could harm G.M.? Some might be willing to; others would not. Be the fact that the question even has to be asked suggests a conflict of interest: perceived, actual, or perhaps both.
The selection of the investigator is a critical first step in any kind of internal investigation. My advice to employers is to select someone who is, and appears to be, completely independent.
(Photo credit Reuters)