Law Firms
BigLaw firms’ internal investigation likely protected from lawsuit disclosure, 6th Circuit says
The fruits of internal investigations conducted by two BigLaw firms for an energy company are likely protected from disclosure by attorney-client privilege and the work-product doctrine. (Image from Shutterstock)
The fruits of internal investigations conducted by two BigLaw firms for an energy company are likely protected from disclosure by attorney-client privilege and the work-product doctrine, a federal appeals court said in an Aug. 7 order.
The 6th U.S. Circuit Court of Appeals at Cincinnati reached that conclusion when it temporarily stayed a federal judge’s order for disclosure of investigative materials in a shareholder lawsuit against the FirstEnergy Corp.
Law.com and Law360 have coverage.
The FirstEnergy Corp. and its board hired Jones Day and Squire Patton Boggs after the company was implicated in an alleged scheme to pay bribes in the form of campaign donations to obtain a billion-dollar nuclear plant bailout.
The allegations were revealed in a July 2020 indictment of Larry Householder, a former speaker of the Ohio House of Representatives. He was later sentenced to 20 years in prison in 2023 for leading a racketeering conspiracy to receive nearly $61 million in bribes.
The FirstEnergy Corp. resolved a Department of Justice investigation in 2021 with a $230 million deferred prosecution agreement, according to Law.com and Law360.
The 6th Circuit cited the U.S. Supreme Court’s 1981 decision in Upjohn Co. v. United States, which held that attorney-client privilege applies when companies seek legal advice through internal investigations in response to criminal and civil investigations.
After Householder’s arrest, the FirstEnergy Corp. was facing civil and criminal investigations by the DOJ, as well as suits and regulatory action. The law firms hired to investigate produced “precisely the kinds of communications that Upjohn contemplates,” the 6th Circuit said.
“The district court thought that none of this mattered because FirstEnergy also used this advice for business purposes. That approach gets it backwards,” the 6th Circuit said. “What matters for attorney-client privilege is not what a company does with its legal advice but simply whether a company seeks legal advice. … After all, a corporation could hardly justify expending resources on legal advice that wasn’t business-related.”
Turning to the work-product doctrine, the appeals court said it protects documents created in reasonable anticipation of litigation. The FirstEnergy Corp.’s materials likely meet that standard, given the “flood of legal and regulatory action” that prompted the investigations, the appeals court concluded.
The 6th Circuit also cited a strong public interest in preserving attorney-client privilege and the work-product doctrine, as evidenced by numerous briefs by amici supporting the FirstEnergy Corp.
6th Circuit Chief Judge Jeffrey Sutton and Judge Alice Batchelder and Judge John Nalbandian were on the 6th Circuit panel that granted the stay of discovery.
Write a letter to the editor, share a story tip or update, or report an error.
