Lawyers are not acrobats. But the series of balancing acts internal investigations require is unique even among legal professionals. True, the search for the truth (or, at least, an approximation thereof) is obviously the most immediate goal of any internal investigation. But that observation offers little more than spotting the pig in the python. In the complicated real world occupied by today’s companies, the search for the truth finds itself in constant tension with other important, and often outcome-determinative, considerations. And this pressure is felt by all involved from the day the investigation is launched.  This article surveys key investigation-related issues important to companies, including why investigations matter; balancing investigative objectives against business realities; key investigative steps (and pitfalls); how to avoid the "runaway investigation"; how to share investigative findings; and how to construct an effective remediation plan.

Unquestionably, investigations can be resource-intensive, not to mention expensive. But when facing claims of misconduct— especially claims of misconduct leveled against members of the board or management—it is critical that companies conduct appropriately scaled, appropriately overseen investigations. And for those who because of past bad experiences (or, more often, because they have insufficient experience with internal investigations) believe that internal investigations serve little more than as a last resort, consider the benefits of internal investigations:

• Shore up employee/company morale. When allegations of wrongdoing are overlooked by company leadership—or are perceived as having been overlooked or even worse, brushed under the rug—company morale inevitably suffers. This is especially true where the allegations of wrongdoing concern members of company leadership, such as those in the CSuite. Conversely, when companies appropriately and swiftly address such allegations, the message to company personnel and other stakeholders is that they are working at a place where compliance, good judgment, and accountability are not only valued, but also even-handedly enforced no matter on how high up the corporate ladder the wrongdoing may have occurred.
• Safeguard your brand: Protect your company’s hard-earned reputation. Public relations experts will tell you that getting ahead of a developing problem/scandal is the most important step a company can take. It, therefore, follows that a company which, with deliberate speed, launches a professional investigation into allegations of wrongdoing will be best positioned to protect its brand and address the important public relations/reputational issues that may arise. On the flip side of the coin, jumping the gun and making a public announcement before the company has a true understanding of the scope of the problem can also be dangerous. So, our bottom line is that a properly-conducted, carefully-calibrated investigation in which the interim results are shared with the public relations/human resources/management teams is the best way to protect what for most companies is the one asset they can’t afford to lose, namely, the public’s and their customers’ (and, as noted above, their employees’) trust and respect.
• Potential liability—Get ahead of it. If, say, a whistleblower makes claims of wrongdoing against members of management and threatens to take those claims public, the best thing a company can do is conduct an internal investigation to (1) know more than the whistleblower, and (2) as appropriate, seize any first-mover advantage by preemptively announcing the investigation to the public or the applicable enforcement agencies or regulators. This, in turn, puts the company in the best position to control exposure to a myriad of legal risks such as governmental/regulatory enforcement actions, shareholder derivative suits, and civil lawsuits and whistleblower claims. As experience has taught, whistleblowers and plaintiffs’ attorneys, no matter how genuine their concern, often only know one piece of the pie, meaning, they rarely know the “whole story.” By developing the full factual picture and determining the scope of any potential liability, the company will find itself more able to effectively frame and contextualize the issues in the public sphere and outmaneuver the opposition in the case of threatened or filed lawsuits.
• Remove problem actors to reduce risk of future issues (and demonstrate meaningful remediation). One central benefit of investigations is that they more often than not help root out problem actors within the company. Taking an active role in disciplining removing such individuals sends the right message to stakeholders and allows the company to “do the right thing” (and, of equal importance, to be seen doing the right thing), while reducing its risk of repeat problems in the future.
• Signal and pursue constant improvement. In most investigations, the client-company will learn of weaknesses in the company’s internal controls, processes, and/or governance structure that can be improved. These improvements not only reduce future legal risk, but also result in more efficient and streamlined operations within the company.
• Show board ownership of issues and reflect an appropriate “tone at the top.” An appropriately handled investigation sends a message that the board has its hand firmly placed on the ethical tiller. It also reflects a promising “tone at the top,” because the board demonstrates substantive engagement and oversight.

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