Source: http://fkks.com/news/tinker-tailor-lawyer-p.i.-are-your-workplace-investigations-complying-with
Timestamp: 2019-04-18 18:50:37+00:00

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The recent high-profile trial in Ellen Pao vs. Kleiner Perkins [No. CGC-12-520719 (S.F. Cty. Super. Ct. filed 5/10/2012)], in which Pao unsuccessfully sued her employer, venture capital firm Kleiner Perkins, for gender discrimination and other claims, highlights the increasingly important role of attorneys who are retained by organizations to conduct impartial investigations of alleged workplace discrimination, retaliation, and harassment. Though not as widely covered by the mainstream media as other aspects of the case, the trial included crucial testimony from an attorney whom Kleiner Perkins had retained to independently investigate Ms. Pao’s complaints, as well as from opposing experts who testified with respect to the adequacy of that attorney’s investigation.
Many lawyers who perform such workplace investigations — in Silicon Valley and beyond —face confusion about their proper role and the ethical duties that govern them. In conducting such investigations, are they acting as attorneys? If so, how can they be impartial? And if not, in what capacity do they act? Moreover, increasingly, these questions are finding their way into court cases and judicial and administrative decisions. For example, at trial, the judge in Pao asked the employer’s expert whether the employer’s attorney investigator possessed authority under state law, absent a private investigator’s license, to conduct the type of workplace investigation he did.
Faced with such riddles, lawyers who conduct workplace investigations have taken different tacks. While some conduct investigations in their capacity “as attorneys,” many do not. Of those who do not, some structure their investigative engagements ambiguously, leaving it unclear whether they are acting as attorneys or not, while still others explicitly state in their engagement agreements that they are not acting as attorneys. Although not licensed private investigators, these attorneys insist they are not performing legal services in connection with the investigation. They contend that eschewing an attorney-client relationship and the responsibility to advocate for a particular client is the only way to ensure their investigation is truly impartial. They further contend that, since they are not acting as attorneys, the full range of attorney ethics rules do not apply to their investigative work.
In this article, we will show that this approach, when applied to workplace investigations in New York, violates New York’s statutory scheme, which allows attorneys to conduct workplace investigations without a private investigator’s license only if they are acting “in the regular practice of their profession.” Moreover, this approach misperceives the flexibility built into New York’s Rules of Professional Conduct (RPCs), particularly RPCs 1.2(c) and 2.3, which allow lawyers to limit their roles to purely impartial investigative functions. Finally, it ignores that while the RPCs do place strictures on what attorneys can do in investigations, they also provide advantages that non-attorney investigators do not have — most notably, the attorney-client privilege and work product protection.
New York, like most other states, requires private investigators to be licensed. Under New York General Business Law §70(2) (N.Y. GBL) [McKinney 2011], no person or entity “shall engage in the business of private investigator…without having first obtained from the department of state a license so to do.” N.Y. GBL §83, however, specifically exempts practicing attorneys from the licensure requirement, providing that “[nothing] contained in this article shall be construed to affect in any way attorneys or counselors at law in the regular practice of their profession” Similar exemptions exist in many other states.
determine if improper acts or omissions occurred. N.Y. GBL §71(1) defines “private investigator” broadly enough to encompass these activities, as it includes persons who investigate “the identity, habits, [and] conduct … of any person, group of persons, … firm or corporation,” “the credibility of witnesses or other persons,” and “the conduct, honesty, efficiency, loyalty or activities of employees, agents, contractors, and sub-contractors.” The definition also includes “the securing of evidence to be used before any authorized investigating committee, board of award, board of arbitration, or in the trial of civil or criminal cases.” [See Id.] In short, New York’s definition of “private investigation” encompasses the sort of factual inquiry often performed by attorneys.
The definition of “private investigator” in N.Y. GBL §71(1) and Megibow thus demonstrate the overlap between the work of an attorney and work that constitutes “private investigation” under New York law. N.Y. GBL §83 thus serves the important function of exempting “attorneys or counselors at law in the regular practice of their profession” from the need to obtain a separate private investigator’s license.
This result is consistent not only with the New York law of attorney-client privilege, but with the general principle that “the practice of law relates to the rendition of services to others that call for the professional judgment of a lawyer.” [Ethical Consideration 3–5 to the former N.Y. Code of Professional Responsibility; see also, ABA Task Force on the Model Definition of the Practice of Law (still good authority given that current RPC 5.5 is identical to former DR 3-101, governing the unauthorized practice of law); Proposed Model Definition, Sept. 18, 2002, “The ‘practice of law’ is the application of legal principles and judgment with regard to the circumstances or objectives of a person that require the knowledge and skill of a person trained in the law.”] As Spectrum Systems [78 N.Y.2d at 380], and the other cases cited show, a factual investigation often does involve “the professional judgment of a lawyer,” even if no ultimate legal conclusion is reached.
On appeal, Megibow argued that because attorneys are exempt from licensure requirements, all of his non-legal work at the investigative firm was creditable as qualifying experience, whether the firm had a private investigator license or not. This argument failed: Because the investigative firm was neither “licensed as a private investigator” nor “authorized to render professional legal services,” its business violated N.Y. GBL §70(2), and Megibow’s investigative work at the firm during that period was not creditable. [See 39-DOS-APP-12 at 5.] This aspect of Megibow makes clear that unless attorneys are acting “in the regular practice of their profession” (or are employees of a licensed private investigator), they are not exempt from N.Y. GBL §70(2) requirement of obtaining a private investigator’s license. In sum, in order to be deemed as acting “in the regular practice of their profession,” attorney investigators must possess an active law license (including authority to practice law in New York); must conduct their investigations within the context of an attorney-client relationship; and remain, in the conduct of the investigation, subject to the full panoply of legal ethical duties.
The short of it is that attorneys who perform workplace investigations while disavowing the existence of an attorney-client relationship are breaking the law. These attorneys place themselves in a double-bind: By presenting the services as non-legal, they are unlikely to be deemed as acting “in the regular practice of their profession,” and thus, unless they possess a separate private investigator’s license, are violating N.Y. GBL §70(2). At the same time, New York courts and disciplinary bodies are likely to view the services as nonetheless subject to the full panoply of legal ethics rules, because, as discussed further below, New York law generally presumes that services offered by an attorney — or even acts taken by an attorney in her non-legal capacity — are subject to the RPCs. This places the attorney between the proverbial rock and a hard place — especially if, under the misconception that the RPCs did not apply, he or she has failed to observe them in conducting the investigation. For example, the attorney may have failed to observe the so-called “no contact” rule [RPC 4.2] — a not uncommon error of attorney investigators who think they are not “acting as attorneys.” Therefore, in attempting to conduct an investigation as a “non-legal” service, such an attorney may have unwittingly violated both New York’s private investigator law, as well as the RPCs.
The potential consequences for this illegal conduct are severe. Under N.Y. GBL §70(4), a person who violates the private investigator licensing requirements is guilty of a Class B misdemeanor, punishable by up to three months in jail, a $500 fine, and possible additional financial penalties. [N.Y. Penal Law §70.15 and §80.05.] Moreover, the violator faces disciplinary consequences for committing a crime and/or misrepresenting his or her qualifications. [See RPCs 8.4(b) and (c), an attorney shall not “engage in illegal conduct that adversely reflects on the lawyer’s honesty, trustworthiness or fitness as a lawyer” or “engage in conduct involving dishonesty, fraud, deceit or misrepresentation.”] The violator also could face civil liability, or the loss of privileged status of his or her communications with the employer. An investigation that was not conducted under a proper license (i.e., under either a private investigator’s or law license) also could be challenged in litigation on the grounds that the investigation was conducted unlawfully; this has actually happened in California. [Complaint, Jolly Tech., Inc. vs. Robert Half Intl., Inc., No. CIV529256, (San Mateo Super. Ct. 6/25/2014).] Finally, out-of-state attorneys who conduct workplace investigations in New York but who are not authorized to practice law in New York could face discipline for the unauthorized practice of law, or see their investigations challenged on this ground in civil litigation.
For all these reasons, unless they are prepared to apply for a private investigator’s license under N.Y. GBL §72, investigative attorneys should embrace, rather than distance themselves from, the label “attorney.” Doing so will not, as some attorneys fear, mean they cannot conduct an independent and impartial investigation. The RPCs allow investigative attorneys to structure their client-attorney relationships so that they can act independently.
Even assuming that the investigative attorney would otherwise be required to “favor” the employer-client in conducting an investigation — a proposition we consider dubious, but which finds some support, in RPC 1.1(c)(2) (prohibiting a lawyer from “prejudic[ing] or damag[ing] the client during the course of the representation”) — compliance with RPC 1.2(c) solves the problem. If the client wants a truly independent investigation, the attorney can provide it by obtaining the necessary informed consent. Once again, Megibow 397-DOS-13 (2011), provides a perfect example. There, Kramer Levin was asked to perform a purely investigative function, reporting on facts uncovered while the corporate client had other attorneys analyze those facts and advise the Board. This allowed Kramer Levin to be fully independent and impartial in its work, knowing the client’s other lawyers would protect its interests. RPC 1.2(c) provides the vehicle for this kind of limitation.
Of course, the existence of an attorney-client relationship imposes additional obligations on the investigative attorneys. For example, attorneys have certain duties in communicating with third parties that non-lawyers do not possess, such as the duty already noted under RPC 4.2(a) not to communicate with persons known to be represented by counsel without their counsel’s consent, the duty under RPC 1.13(a) to provide adequate warnings as to the lawyer’s identity and role, and the duty under RPC 1.13(b) to make disclosures and “climb the ladder” if wrongdoing is uncovered. Nonetheless, attorneys who currently conduct workplace investigations “as attorneys” do not report that complying with these or other attorney ethics rules has impeded their ability to conduct fair and effective investigations.
In short, clarifying the attorney investigator’s proper role as that of an attorney arguably enhances his or her ability to conduct fair, impartial and effective workplace investigations — because the rules of the road, including the ethical duties and standards that apply, are well-established and clear to all participants.
Under N.Y. GBL §83, only attorneys engaged “in the regular practice of their profession” are permitted to conduct workplace investigations without a private investigator’s license. Just as important, the idea that investigative attorneys must eschew the attorney-client relationship in order to maintain their independence is a myth; under RPCs 1.2(c) and 2.3, investigative attorneys can craft limited scope engagements with their employer clients that afford them all the independence they need, even to the point of disclosing adverse information to third parties. Finally, the burdens an attorney-client relationship imposes on investigative attorneys are few, but the advantages, particularly from the attorney-client privilege and work product protection, are vast. Attorneys conducting work-place investigations should embrace their role as attorneys, not reject it. Doing so is better for them, better for their clients and better for the public.

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