In those cases in which we are hired as an independent advisor there are no fast and hard rules, you have to formulate that together with the client. But I don’t think that this is causing many issues. I believe that you need to make rules when they’re needed, not before. And I’m not using any investigative powers, I ask people would you come over to answer some questions, you may bring a lawyer, you don’t have to, that’s it. It’s a developing profession, seven years ago it didn’t even exist and now there are many large firms who are getting into the market. So there is probably going to be some kind of regulation in future, to set standards for our investigations. [Respondent 30 – forensic legal investigator/client]
The most recent player added to the field of corporate investigations is the lawyer (Jennen & Biemond, 2009). Lawyers have long been involved in corporate investigations, however, before they were mostly clients. As clients, lawyers are often also partly involved in the investigations, for example because there are some (simple) actions they may do themselves, or they may be involved in the role of expert on the legal aspects of the investigations (e.g. whether or not the behaviour might (or should) be framed as criminal or as a private law matter) (Van Almelo & Schimmel, 2014). At the conclusion of the investigations, when decisions are to be made about the steps that are to be taken, (labour) lawyers are often involved in the processes of advising and decision-making. More and more (large) legal practices have now developed their own investigative branch and smaller legal firms have also emerged that specialise in private investigations.
Much like the legal framework in place for accountants, there are no rules for lawyers that specifically focus on investigations. There are, however, more general laws regulating ‘traditional’ activities of lawyers, the Advocatenwet [the law on the legal profession] being the most important. Lawyers need to be registered to be able to act as a lawyer (article 1 Advocatenwet) and only those who are registered may call themselves lawyer (article 9a Advocatenwet). Like accountants, lawyers have a system of permanent education, with which they must comply (article 4.4
Verordening op de advocatuur).30 The basic education is university (or college) level. An oath is required for lawyers (article 3 Advocatenwet). All lawyers are required to be a member of the Dutch order of lawyers (Nederlandse orde van advocaten; NOvA).
30 There is no official education for investigative lawyers. However, there are some new initiatives targeting accountants and lawyers. These (academic) courses may be used for the permanent education points- system. For example the course ‘financial forensic expert’ of the Erasmus University Rotterdam aims at both accountants and lawyers.
This is a public body and its ordinances are legally binding (article 29 Advocatenwet). Disciplinary proceedings are held by Councils of discipline (presided over by a judge with two (or four) lawyer members and assisted by a clerk) in the district in which the lawyer operates and appeals may be made to the Court of discipline (presided over by a judge with one (or two) (judge) members and one (or two) lawyer members and assisted by a clerk). Disciplinary measures that may be taken are a warning, a reprimand, a fine, a one year suspension and a removal from the Bar register (article 48 Advocatenwet). It is also possible to take no disciplinary action.
The law dictates that a lawyer is responsible for the protection of his client. He does this in a way that is independent (from e.g. government), yet partial to his client and he should be competent, act with integrity and be a confidant to his client (article 10a Advocatenwet). In this sense, there is a difference between the other types of investigators, as this partiality is only for lawyers explicitly regulated by law. As the law is designed to regulate more traditional types of legal assistance and not investigations, this is not surprising. In the moderately inquisitorial judicial system of the Netherlands, lawyers have an important obligation to protect the interests of the suspect, who is more the object of investigations than an equal party to the proceedings (Cleiren, 2001).
The code of conduct, issued by the Dutch society for lawyers (NOvA) is an elaboration of the general principles as laid down in the Advocatenwet but remains focused on the lawyer’s ‘core business’ (NOvA, 1992). The code of conduct is not legally binding, rather it is meant as a guideline for practitioners and disciplinary proceedings. Some specific parts of the guidelines can be used by lawyers when doing investigative work as well. Rule 29 of the code of conduct for example, states that the role of the lawyer should be clear in all communications with third parties. In disciplinary proceedings, this rule has been used to claim that the roles of the (fundamentally partisan) lawyer and the (independent and objective) fact finder should not be blurred (ECLI:NL:TADRSHE:2012:YA2502). In the ruling referred to here, the court decided that the complaint that was launched had no merit, arguing that a lawyer always is a partial service provider because of his profession, even in the capacity of investigator (which ruling has been confirmed by the court of appeal) (ECLI:NL:TAHVD:2013:33). In the same way, rule 30 of the code of conduct may also apply to corporate investigations. This rule states that a lawyer should refrain from providing false information. This could apply to for example an interview situation, in which it would be considered wrong to provide the person who is interviewed with false information. Similarly, rule 36 may apply as it states that a lawyer is not allowed to make a recording of a conversation without the prior consent of the person. Still, there is no specific legal framework available for investigative activities by lawyers, either by law or in the form of self-regulation.
Lawyers have a special position in the Dutch legal system, insofar as they not only have an obligation to discretion (article 11a Advocatenwet) but they also have legal privilege (inter alia article 218 WvSv31). This means that – with few exceptions – they are not obliged to give authorities information about clients. There is some debate among investigators (and clients) whether the use of this legal privilege in investigations is an asset or should be considered as stretching the law. One of the risks of private investigations is that the report may be subpoenaed by investigative agencies and notwithstanding their obligation to discretion, investigators must comply with this, unless they have legal privilege. If the use of legal privilege is deemed necessary in investigations a lawyer will be involved, either as the investigator, or as the client to other investigators.
In case study 1, Observation Company 1 was hired by a legal firm to do the investigations. This course of action was chosen over a direct relationship with the organisation in which the norm violation had taken place for several reasons, but the most important one was the derived legal privilege that may protect the outcomes of the investigations. All reports and communications with the law firm are protected by a derived legal privilege. This means that the reports do not need to become public. Since a public organisation was involved in this case, and legislation provides any citizen with the right to ask for inspection of documents of public authorities (Wet Openbaarheid Bestuur), without the protection of legal privilege, privacy sensitive information might have become public before the investigations were concluded. [Case study 1]
Many investigators and clients feel that the use of (derived) legal privilege is a safe way to proceed. However, others see some downsides to the use of legal privilege in corporate investigations.
We as forensic accountants have no legal privilege but lawyers do. If we’re involved by a lawyer we get derived legal privilege. But the thing is, if you do your internal investigations under the protection of legal privilege, a prosecutor or a supervisory authority will not accept the outcomes of the investigations. Because lawyers are really careful about what is written down in the end and everything that may harm a client will be left out. But if you don’t use legal privilege they might use your report and might not investigate fully themselves as well. You can use legal privilege, that’s the choice an organisation will have to make. But just know that your report will be judged differently if you choose to report to the authorities in the end. [Respondent 27 – corporate investigator]
When the lawyer acts as a client, the investigators who are hired may appeal to a ‘derived’ or ‘secondary’ legal privilege.
It is not inconceivable that we act as legal representative to defend the position of our client in a legal procedure – well in such a case it is perfectly legitimate to do this in your capacity as legal privilege holder. And all the auxiliaries you use – whether that is your secretary or a translator, another expert or accountant – all act under the banner of your privilege. [Respondent 28 – forensic legal investigator/client]
There is some debate about whether or not this derived privilege is something that will hold up in court. In a 2015 ruling, the Dutch Supreme court has decided that investigators who have derived legal privilege are not exempt from complying with a subpoena; they should provide the documents to the examining magistrate, who then decides whether or not the documents are protected by (derived) legal privilege (ECLI:NL:HR:2015:3714). As such, it is not entirely clear whether or not derived privilege protects an investigation, even when the investigations are done under auspices of a lawyer. There is, however, consensus that when derived privilege is used, the lawyer should actually be involved in some way and not merely be recruited when a precarious situation arises, in order to use legal privilege (Keupink & Tillema, 2013). The minister of security and justice has expressed the same opinion in response to questions from Parliament (Minister of security and justice, 2013).
What you should not allow to happen is misuse of your privilege. Say, for example, that a forensic accountant is investigating and that he finds something which he thinks is disagreeably sensitive. Without legal privilege, such a report is very convenient for the prosecution office, prosecutors could say ‘great we don’t have to investigate it further, thank you very much’. That’s the danger. Doing internal investigations without someone who has legal privilege to protect it, well, all the prosecution office has to do is ask for the report. But as a lawyer you shouldn’t allow your privilege to get abused. A lawyer shouldn’t just do some trivial things for show so that legal privilege will be applicable. No, that can’t be. [Respondent 28 – forensic legal investigator/client]
In a ruling in a civil court case between the housing association Vestia and its managers, the court of The Hague has decided that the report following internal investigations by a law firm is not protected by legal privilege if the investigations are purely intended as fact finding (no juridical findings, qualifications or conclusion being presented). The court sentence states that ‘according to its assignment the investigation’s purpose was to acquire an independent and objective image of the facts. (...) This makes the claim that the report falls within the (functional) legal
privilege of the (lawyers of ) De Brauw void’ (ECLI:NL:RBDHA:2015:248). For legal privilege to be applicable, it should be relevant for the (traditional) position of the lawyer as partisan representation of the client in legal proceedings.
Many voices have suggested that the lack of regulation applicable to lawyers who operate as corporate investigators is problematic. As it is popular opinion that the code of conduct for lawyers needs to be updated, it has been suggested that the new version should include specific rules on investigative activities and the use of legal privilege (see e.g. Mr. Online, 2016). Others feel that the corrective effects of ‘the market’ and the judicial system ensure the quality of investigations (see e.g. Van Almelo, 2013). This argument, however, could also be applied to the other investigators (with the possible exception of in-house investigators) who are regulated. In addition, as we will see in chapter 4, many corporate investigations never end up in court. It would therefore be very difficult for the judicial system to correct misbehaviour by