The ultimate outcome of an internal investigation is, in many respects, dictated by the investigation report. But not all reports are created equal.

Every report reflects the specific external and internal circumstances facing a company.

On the external front, the key issues are whether the government has initiated a civil and/or criminal investigation(s)? Is there a potential whistleblower action? Is there pending related civil litigation?

Internally, the report should reflect who is supervising the investigation and the specific charge of the investigation. The report should be coordinated with the person(s) responsible for presenting the results of the investigation to the supervising entity, e.g. the Audit, Compliance or Special Committee.

One initial question which needs to be answered is whether or not outside counsel should prepare a written report for the client/company? It is important to remember that such a report could end up in the hands of the government if the company chooses to cooperate and waives its attorney-client and work product privileges. Before preparing a report, the purpose of the report, the basic findings and the recommendations should be evaluated in the overall strategy adopted by the company.

Most reports have two fundamental purposes: (1) to describe the facts surrounding relevant events and potential violations of the law or corporate policies; and (2) to identify and recommend remedial or correction actions.

As Jack Webb coined the phrase, “Just the facts, ma’m.” An investigation has to set forth all the relevant facts. To the extent there are inconsistencies and potential credibility issues, the report should fairly describe the issues. The report should also identify factual issues which remain unknown.

The report should describe potential criminal and civil risks and liabilities, as well as potential liabilities for company officers, managers and employees. As part of the potential liability issues, the report should analyze and assess all potential disclosure obligations under the securities laws, Sarbanes-Oxley and any other applicable requirement.

Of course, the report is protected by attorney-client privilege and attorney work product. Nonetheless, it should only be shared with those company officials who have a need to know the results of the investigation.

If there is an ongoing government investigation, the company needs to develop a strategy for dealing with the government. The goal of the company’s internal investigation is to stay in front of the government’s own investigation, or even have the government suspend its investigation while the company conducts its internal investigation.

If the company decides to cooperate with the government, the company has to define the nature and scope of the cooperation, including production of documents, availability of witnesses for interviews, and preserving or waiving the attorney-client privilege.

The company has to weigh the full implications of a waiver of the attorney-client privilege. It has consequences in the government investigation but in a number of collateral matters – potential State government enforcement and civil litigation. Once the privilege is waived it is difficult, if not impossible, to try and assert the privilege in other contexts.

If the company chooses to cooperate with the government, the company must commit itself to full cooperation. Prosecutors who detect foot-dragging or half-hearted attempts to cooperate become very frustrated and are likely to hold it against the company when it negotiates a resolution of the investigation.