Preliminary Procedures for Internal Corporate Investigations

Lesley Brovner & Mark Peters
March 5, 2026

Before launching a full-scale internal investigation, companies must take deliberate preliminary steps to establish authority, define scope, and protect privilege. Early missteps—such as unclear authorization, poorly defined scope, or inconsistent disclosure—can undermine the credibility of the investigation and create unnecessary legal exposure.

Well-designed preliminary procedures help ensure the investigation is independent, defensible, and positioned to withstand scrutiny from regulators, courts, shareholders, and other third parties.

Establishing Authority to Conduct an Internal Investigation

An internal investigation should begin with clear authority documented in formal corporate records. This authority establishes who controls the investigation, who the client is, and how information may be collected and used.

Key preliminary steps include:

Clearly defining the authority to investigate and the scope of the inquiry
Identifying the client (e.g., full board, special committee, or management)
Establishing a legal basis for confidentiality and privilege
Conducting an initial factual and legal assessment to shape next steps

Authority is typically established through board resolutions, consent decrees, or engagement letters with investigative counsel.

Why an Investigative Plan Is Essential

A formal investigative plan is the foundation of a credible internal investigation. It sets expectations, defines responsibilities, and signals independence to anyone who later reviews the investigation.

Clarifying Independence and Oversight

The plan should specify whether investigative counsel is independent and confirm that investigators are authorized to follow the facts wherever they lead. Granting full independence to outside counsel is often critical to ensuring credibility.

The plan should also address:

Who selects and oversees investigative counsel
Whether oversight rests with the full board or a designated committee
Whether the committee has authority to implement remedial actions or only make recommendations

Defining Scope Without Handcuffing the Investigation

The plan should outline:

Relevant time periods
Types of transactions under review
Geographic scope
Categories of individuals to be examined

At the same time, the plan should preserve flexibility to expand or modify scope as new facts emerge, without requiring repeated board action.

Protecting Privilege and Confidentiality From the Outset

One of the most important functions of the investigative plan is preserving attorney-client privilege and work product protection.

The plan should clearly state that:

The investigation is conducted to provide legal advice
Materials are privileged and confidential
Work is undertaken in anticipation of litigation, regulatory action, or enforcement proceedings

Properly drafted authority documents significantly improve the ability to defend privilege claims later, especially if investigation materials are sought by regulators, plaintiffs, or foreign authorities.

Documents That Form the Investigative Plan

The documents comprising an investigative plan vary depending on how the investigation arises:

Government settlement or consent decree: consent order, board resolutions, engagement letter
Board-initiated investigation: board resolutions and engagement letter
Management-initiated investigation: engagement letter may suffice

As a best practice, investigative counsel—not the company—should retain auditors or consultants to strengthen privilege protections.

Disclosure Considerations for Internal Investigations

Whether and when to disclose an investigation depends on its origin and surrounding circumstances.

When Disclosure Is Required

Disclosure is typically mandatory when the investigation arises from a government settlement, consent decree, or formal regulatory inquiry. In these cases, SEC filings or public disclosures may already be required.

Voluntary Investigations and Strategic Disclosure

For voluntary investigations, disclosure is often a matter of business judgment. However, early notice to regulators may be advisable, particularly where cooperation credit or penalty mitigation is a consideration.

Even absent public disclosure, internal communication is essential to ensure document preservation and cooperation.

Internal Communications and Document Preservation

Management should notify relevant employees that an investigation is underway, even if no public disclosure is made. This allows the company to:

Issue document preservation notices
Reduce speculation and misinformation
Reinforce cooperation expectations
Emphasize confidentiality obligations

Notices should also warn against document alteration or destruction and, where appropriate, insider trading.

Conducting a Preliminary Inquiry Before Full Investigation

Before expanding into a full-scale investigation, counsel should conduct a focused preliminary inquiry to refine scope and identify key information sources.

Consulting With Management

Limited consultation with essential management helps identify:

Key personnel with relevant knowledge
Locations of documents and data
Former employees with relevant information
Prior or parallel investigations

Counsel should also request access to transcripts, audit materials, discovery productions, and prior investigative records.

Reviewing Prior Investigations for Efficiency and Accuracy

Reviewing prior investigative records serves several critical purposes:

Accelerates fact-finding by leveraging existing work
Avoids duplication of effort
Identifies gaps or errors in earlier investigations
Helps determine what went wrong and how to prevent recurrence

Prior investigations should inform—not replace—the current inquiry.

Preparing a Preliminary Report to the Board or Committee

After completing preliminary steps, counsel should prepare a preliminary report for the body directing the investigation.

The report should:

Explain the events and legal obligations necessitating the investigation
Summarize prior investigative findings and unresolved issues
Recommend scope, methodology, and timeline for the full investigation

Where appropriate, the report may also outline relevant legal standards to guide investigative focus.

The preliminary report should remain confidential and protected to the fullest extent possible.

How Peters Brovner Helps Structure Effective Investigations

Early decisions shape the credibility and defensibility of an internal investigation. Peters Brovner advises boards, committees, and management on designing investigative frameworks that protect privilege, ensure independence, and withstand regulatory and litigation scrutiny.

Thoughtful preliminary procedures can significantly reduce risk while positioning the company to respond effectively to future developments.

Missteps in the early stages of an internal investigation can increase regulatory exposure and weaken legal protections. Peters Brovner helps organizations design investigations that minimize risk and preserve credibility.

Search a Topic