Source: http://www.lmick.com/item/the-ethics-of-civil-practice-investigations-part-ii
Timestamp: 2019-04-22 19:55:48+00:00

Document:
Are the methods of investigation legal?
Are the methods of investigation ethical?
Are the methods of investigation smart?
Part I provided an overview of lawyer investigative competence and a brief review of the risks an incompetent investigation can create. This was followed by addressing the question “Are the methods of investigation legal?” Part I concluded with a review of the question “Are the methods of investigation ethical?” concerning the ethical issues a lawyer faces as an investigator. Part I appeared in the September 2007 issue of the Bench & Bar (Vol.71 No.5, page 31). It is available on Lawyers Mutual’s Website at lmick.com on the Risk Management page/Bench & Bar Articles. If you have not read it, you may want to glance at it before reading this article.
Part II completes consideration of the question “Are the methods of investigation ethical?” by reviewing the ethics issues when a lawyer supervises an investigation. It then addresses the question “Are the methods of investigation smart?” Part II concludes with suggestions for investigation risk management. Not considered in this article are criminal or government investigations and those aspects of civil investigations covered by rules of civil procedure.
Lawyers often assign nonlawyer staff or hire private investigators to perform background investigations, conduct surveillance, look for assets, and locate and interview witnesses. At times these investigations are undercover or covert in nature. Lawyers must know the professional conduct rules that apply to these investigations, be familiar with the laws governing private investigators in Kentucky, and have an appreciation of how lawyers have gone awry in supervising investigators to avoid the same mistakes. The following paragraphs address each of these considerations.
Lawyers generally employ assistants in their practice, including secretaries, investigators, law student interns, and paraprofessionals. Suchassistants, whether employees or independent contractors, act for the lawyer in rendition of the lawyer’s professional services. A lawyer should give such assistants appropriate instruction and supervision concerning the ethical aspects of their employment, particularly regarding the obligation not to disclose information relating to representation of the client, and should be responsible for their work product. The measures employed in supervising nonlawyers should take account of the fact that they do not have legal training and are not subject to professional discipline.
• as a managing lawyer or a direct supervisor knows of the conduct in time to avoid or mitigate the harm, but took no reasonable remedial action.
Whether a lawyer has such supervisory authority in particular circumstances is a question of fact. Partners of a private firm have at least indirect responsibility for all work being done by the firm, while a partner in charge of a particular matter ordinarily has direct authority over other firm lawyers engaged in the matter. Appropriate remedial action by a partner would depend on the immediacy of the partner’s involvement and the seriousness of the misconduct. The supervisor is required to intervene to prevent avoidable consequences of misconduct if the supervisor knows that the misconduct occurred. Thus, if a supervising lawyer knows that a subordinate misrepresented a matter to an opposing party in negotiation, the supervisor as well as the subordinate has a duty to correct the resulting misapprehension.
It is important to note that Kentucky has a Supreme Court rule outside the KRPCs specifically governing the activities of paralegals that must be read in conjunction with KRPC 5.3. SCR 3.700, Provisions Relating to Paralegals, is an extensive rule with detailed supporting comments. For the purposes of this article the primary import of the Rule is that a supervising lawyer is responsible for instructing a paralegal on the lawyer’s professional responsibility and that the lawyer is responsible for all actions taken by the paralegal — which I read to include investigative assignments.
Private Investigators: Hiring private investigators is often the best way to conduct a thorough investigation, but carries with it the heavy burden for the responsible lawyer to assure that private investigators adhere to the law and the professional conduct rules governing lawyers. Failure to do so can result in both civil liability and bar discipline. Some lawyers have tried to finesse this obligation by what has been called “studied ignorance” or a “don’t ask-don’t tell” relationship with the private investigator, but the authorities uniformly agree that this is an ineffective defense.6 Close supervision is not only the best practice, but the only way to operate.
The Kentucky Private Investigators Licensing Act7 requires that private investigators in the state be licensed.8 Fortunately for lawyers, the Act does not require licenses for “An attorney-at-law, or an attorney’s bona fide employee, performing duties within the scope of the practice of law or authorized agent with duties limited to document and record retrieval or witness interviews; ….”9 The Act prohibits private investigators from knowingly making a material misrepresentation to the client (i.e., the supervising lawyer) regarding an investigation.10 Ethical private investigators will follow lawyers’ instructions and not mislead them about their methods. A review of KRS Chapter 329A, Private Investigators, is recommended professional reading.
Overt investigations in which investigators identify their roles and principals and do not mislead or deceive anyone.
Physical observations, measurements and the like.
Surveillance, even if covert, so long as investigators do not trespass or invade privacy.
The Indiana case Allen v. International Truck and Engine13 is an ideal case to illustrate many of the ethical issues in supervising an investigation that involves deception. International Truck (IT) at its Indianapolis facility had racial problems and faced a pending suit over racial graffiti. IT’s general counsel hired a private investigation company to “find out who the graffiti artist were” and prepare an overall report on the working environment at the plant.
Before and during the investigation the general counsel sought and received advice from IT’s outside counsel on how to direct the investigation. That advice included that IT “should not identify [to the investigators] the plaintiff-employees in the current law suit and … give minimal practical direction to the investigators.” Outside counsel “did not advise [IT] to affirmatively instruct the undercover investigators not to speak with named plaintiffs about the subject matter of the lawsuit or not to make false representations to named plaintiffs or employees generally.” IT’s general counsel, in fact, did not tell the investigators to avoid talking to plaintiffs about the lawsuit and did not instruct other house counsel to ensure that the investigators did not talk to plaintiffs.
The investigators posing as IT employees initiated contact with IT’s employees, including plaintiffs. During the investigation, the general counsel became aware that investigators had talked to a plaintiff, but took no remedial action. Plaintiffs learned of the covert investigation and sought to depose the investigators. At the hearing to consider IT’s motion to quash IT’s outside counsel made a sweeping denial of giving any directions to the investigators and that firm lawyers had had no contact with the investigators.
As a result of one of those fluke occurrences that never cease to amaze, evidence fell into the plaintiffs’ possession completely undermining IT’s outside counsel’s denial of direct involvement with the investigation. Inadvertently, IT included in a filed exhibit outside counsel’s billing records. These records showed that several members of outside counsel’s firm were actively involved in assisting and directing the covert investigation. They revealed that outside counsel lawyers reviewed summaries of investigation reports, prepared memorandum concerning them, met with IT’s house counsel to discuss the reports, met with investigators, and on one occasion met with house counsel lawyers to discuss investigator contact with named plaintiffs.
allowed the investigators to give false information about who they were to the plaintiffs and other employees. …. [and] that counsel directed and/or caused the undercover investigators to have contact with named plaintiffs about the substance of the underlying litigation and other employees under false pretenses, in violation of these rules.
The Magistrate Judge, obviously appalled at how the investigation had been directed and the ethical behavior of IT’s lawyers in and out of court, concurred with the plaintiffs’ claims. He recommended that IT’s lawyers be publicly reprimanded for violation of Rules 4.2, 4.3, 5.3, and 8.4 (in Kentucky 8.3). Allen v. International Truck and Engine is highly recommended professional reading.
Is Any Deception Permissible When Investigating?
Digest: In New York, while it is generally unethical for a non-government lawyer to knowingly utilize and/or supervise an investigator who will employ dissemblance in an investigation, we conclude that it is ethically permissible in a small number of exceptional circumstances where the dissemblance by investigators is limited to identity and purpose and involves otherwise lawful activity undertaken solely for the purpose of gathering evidence. Even in these cases, a lawyer supervising investigators who dissemble would be acting unethically unless (i) either (a) the investigation is of a violation of civil rights or intellectual property rights and the lawyer believes in good faith that such violation is taking place or will take place imminently or (b) the dissemblance is expressly authorized by law; and (ii) the evidence sought is not reasonably and readily available through other lawful means; and (iii) the lawyer’s conduct and the investigator’s conduct that the lawyer is supervising do not otherwise violate the New York Lawyer’s Code of Professional Responsibility (the “Code”) or applicable law; and (iv) the dissemblance does not unlawfully or unethically violate the rights of third parties. These conditions are narrow. Attorneys must be cautious in applying them to different situations. In most cases, the ethical bounds of permissible conduct will be limited to situations involving the virtual necessity of non-attorney investigator(s) posing as an ordinary consumer(s) engaged in an otherwise lawful transaction in order to obtain basic information not otherwise available. This opinion does not address the separate question of direction of investigations by government lawyers supervising law enforcement personnel where additional considerations, statutory duties and precedents may be relevant. This opinion also does not address whether a lawyer is ever permitted to make dissembling statements directly himself or herself.
In summary, lines cannot be confidently drawn in this area; at best, lawyers must evaluate associated risks on a continuum from “clearly impermissible to clearly permissible conduct. In terms of practical guidance, lawyers considering an undercover investigation should first research the law in their jurisdiction relating to [Rule 8.3 (c)] …. If the investigation will take place in a jurisdiction other than that in which the lawyer practices, the lawyer should research the law in both jurisdictions. If a lawyer determines either that there is no law on point, or that lawyers may supervise undercover investigations without violating [Rule 8.3(c)] …, the lawyer may have to conduct additional research if the target of the investigation is an organization. If an organization is the target, the lawyer must research Rule 4.2 … to determine which employees are off limits. After that is done, the lawyer is prepared to plan the investigation. The planning must include careful instructions to investigators about to whom they can speak and what they can say. A target’s employees should never be tricked into saying or doing things that they would not normally say or do when dealing with actual customers.
Gatti was investigating whether fraud was involved in how medical reviews were prepared that enabled the insurance companies to deny benefits. Among other misrepresentations he misrepresented himself by stating that he was a chiropractor interested in working for the medical review company and gave fictitious qualifications. The fact of the misrepresentations was uncontested, but defended on the basis that public policy justified an exception for allowing investigators and discrimination testers to misrepresent their identify and purpose when they were investigating suspected unlawful conduct.
The Oregon Supreme Court refused to create an exception to the professional conduct prohibition on deceit and misrepresentation by judicial decree, holding that any exception must come by following the procedures for adopting and amending the professional conduct rules. Gatti was given a public reprimand.
… it shall not be professional misconduct for a lawyer to advise clients or others about or how to supervise lawful covert activity in the investigation of violations of civil or criminal law or constitutional rights, provided the lawyer’s conduct is otherwise in compliance with these Rules of Professional Conduct. “Covert activity” as used in this rule, means an effort to obtain information on unlawful activity through the use of misrepresentations or other subterfuge. “Covert activity” may be commenced by a lawyer or involve a lawyer as an advisor or supervisor only when the lawyer in good faith believes there is a reasonable possibility that unlawful activity has taken place, is taking place or will take place in the foreseeable future.
Even after concluding that the investigative methods to be used are legal and ethical, lawyers should pause and carefully consider whether it is smart to use them. Many judges, lawyers, jury members, and members of the general public find covert investigations repugnant regardless of whether they are legal and ethical. While some investigations are benign fact gathering ventures, others involve digging up the dirt, dumpster diving, secret tape recording, and deceiving unsuspecting persons. As the Hewlett-Packard scandal over pretexting shows, there can be considerable bad publicity once the deceitful actions are revealed – this hurts the client, the lawyers involved, and the targets of the investigation. It certainly did for all concerned at Hewlett-Packard.
The results of a ‘not smart’ investigation, in addition to bad publicity, can be evidence preclusion, mistrust by a judge and jury, as well as civil suits by offended persons. Before triggering an investigation using covert methods, get a second opinion on just how smart it is. This could save considerable embarrassment at a critical point in the proceedings.
The primary risk management tool is that before you begin an investigation answer the three questions that are the theme of this article – are the investigative methods contemplated legal, ethical, and smart. If the matter is multijurisdictional, you must answer these questions for all jurisdictions concerned. If in doubt about the ethics of the investigation, call the KBA Ethics Hotline for guidance before you begin the investigation.20 Get a second opinion from a disinterested colleague if the investigation methods contemplated may have even remotely embarrassing or counter-productive unintended consequences. Be sure to keep the client fully informed of the investigation plan, progress, and costs. Get the client’s concurrence when it is decided to terminate the investigation.
Ask whether the person is represented by counsel on the matter at issue; if so, obtain consent before going further.
Check ethics opinions in your jurisdiction (or ask for an opinion) before interviewing a present employee or an organization represented by counsel.
Reveal you identity and purpose.
Take someone with you as an observer (and potential witness).
Obtain a written or recorded statement if possible.
Do not tape the interview or record a phone conversation without the consent of all parties unless it is clear that you can ethically and legally do so.
Do not interview the opposing party’s treating physician or retained expert without consent or court order.
Inform the investigator of the limits on your conduct, and tell the investigator to abide by those limits.
In closing I can only continue to stress the sensitivity of both the legal and ethical issues involved when conducting a civil matter investigation. You must know what you are doing. Finally, I note that the Kentucky Rules of Professional Conduct are now being actively considered for revision by the Supreme Court. Perhaps the Oregon rule revision that provides guidance for permissible investigation covert activity would be a good fit for Kentucky. What do you think?
Babbs v. Minton, Huddleston and R.C. Components Inc., Court of Appeals of Kentucky No. 2004-CA-000332-OA (6/18/2004); Not reported in S.W.3d, 2004 WL 1367621 (Ky. App.).
Another example of a violation of this Rule is an Oregon case in which a lawyer was given a public reprimand for “directing a private investigator to pose as a journalist to interview a party to a potential legal dispute.” The Oregon Supreme Court found misconduct because the ruse was a misrepresentation by nondisclosure within the meaning of the rule that a lawyer should not knowingly assist or induce another to violate disciplinary rules. In re Ositis, 40 P.3d 500 (Or., 2002).
See SCR 3.130 Terminology (5).
E.g.; In re Cohen, 847 A.2d 1162 (D.C., 2004); Formal Advisory Opinion 05-10, Supreme Court of Georgia (4/25/2006).
Rogers, Misrepresentation – Scandals Involving Investigators Ensnare Lawyers, ABA/BNA Lawyers’ Manual On Professional Conduct, Current Reports, Vol. 22, No. 21, p.507, 513 (10/18/06).
KRS 329A.055 Prohibited acts. (4).
Rogers, Misrepresentation – Scandals Involving Investigators Ensnare Lawyers, ABA/BNA Lawyers’ Manual On Professional Conduct, Current Reports, Vol. 22, No. 21, p.507, 511 (10/18/06).
Caragozian, Private Eyes, Los Angeles Law. 31 (December 2004) (not available to me).
Not Reported in F. Supp.2d, 2006 WL 2578896 (S.D. Ind.).
Fortune, Underwood, Imwinkelreid, Modern Litigation and Professional Responsibility Handbook, 2d Ed. 2002, § 5.7, p. 230, Interviewing Witnesses.
Richmond, Deceptive Lawyering, 74 U. Cin. L. Rev. 577, 598 (2005).
Fortune, Underwood, Imwinkelreid, Modern Litigation and Professional Responsibility Handbook, 2d Ed. 2002, § 5.7, p. 233, Interviewing Witnesses.
8 P.3d 966 (Or., 2000).
In Richmond, Deceptive Lawyering, 74 U. Cin. L. Rev. 577, 606 (2005), the author recommends that other states follow Oregon’ example and provides model language similar to Oregon’s.
Fortune, Underwood, Imwinkelreid, Modern Litigation and Professional Responsibility Handbook, 2d Ed. 2002, § 5.13, p. 257, Preventive Ethics Checklist.
Reibold, “Hidden dangers of using private investigators,” 17 South Carolina Lawyer 18 at p. 29 (July 2005).

References: v. 
 v. 
 v. 
 § 5
 § 5
 § 5