Retaining outside assistance does not mean that a lawyer abdicates responsibility for how an investigation is handled. Lawyers have ethical and even legal responsibility for the actions of those they retain, especially investigators.
By Nicholas G. Himonidis
Accurate and reliable facts, information and evidence are essential to properly handle any legal case or matter. For many valid reasons, an investigator from outside the lawyer’s firm often gathers these facts, information or evidence. Retaining this outside assistance, however, does not mean that the lawyer abdicates responsibility for how the investigation is handled. Lawyers have ethical and even legal responsibility for the actions of those they retain, especially investigators. The nature of investigative work, particularly the ever-shifting boundaries of legally-permissible conduct for private investigators, means these responsibilities can’t be taken lightly. They can pose very serious consequences for lawyers who don’t properly supervise investigators or who don’t know that certain methods may be illegal or unethical.
It is critical for lawyers to understand that investigative conduct is falling under increasingly close scrutiny. The universe of laws and regulations governing the scope of permissible investigative conduct is ever-expanding while the momentum propelling this oversight grows rapidly. Further complicating this fluid situation: relevant laws and regulations may vary significantly from one jurisdiction to another.
For the benefit of client, counsel and investigator, it is crucial to discuss these issues before any investigation begins and to provide the oversight that properly upholds legal and ethical boundaries.
WHY CONDUCT INVESTIGATIONS AT ALL?
Given the ever-increasing risks of investigations gone awry, why engage an investigator at all? Because thorough preparation is an ethical responsibility.
RULE 1.1 of the New York Rules of Professional Conduct (the “Code”) requires that lawyers provide competent representation to clients and states that “competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”
A lawyer cannot be adequately prepared unless he knows the applicable law and the available facts, information and potential evidence that can be utilized to the client’s advantage.
In many situations, the facts and supporting evidence are unknown or unavailable until discovered by additional investigation. Witnesses may need to be interviewed, photographs taken, background information on adverse parties and witnesses obtained, physical evidence gathered, etc. Someone will have to conduct this investigation -- and it should not be the attorney.
WHO SHOULD DO THE INVESTIGATING?
Some lawyers would make excellent investigators. In New York, attorneys may legally conduct investigations without holding any other form of license. Regardless of aptitude, ability, or experience however, attorneys risk costly pitfalls for themselves and their firms by conducting their own investigations.
If an attorney becomes a fact witness in his own case, he may be required to resign as counsel. While conversations between an attorney and his clients, and, to a lesser extent, clients’ “agents” may be privileged, interviews of witnesses or other third parties by the lawyer are not. A lawyer may be compelled to testify if he has first-hand knowledge of non-privileged factual information. The Code specifically addresses this issue:
RULE 3.7: Lawyer as Witness
(a) A lawyer shall not act as advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact unless: (1) the testimony relates solely to an uncontested issue; (2) the testimony relates solely to the nature and value of legal services rendered in the matter; (3) disqualification of the lawyer would work substantial hardship on the client; (4) the testimony will relate solely to a matter of formality, and there is no reason to believe that substantial evidence will be offered in opposition to the testimony; or (5) the testimony is authorized by the tribunal.
If a lawyer personally conducts an investigation and through it happens to become a witness to facts adverse to his client, the lawyer’s entire firm could be disqualified from representing the client:
(b) A lawyer may not act as advocate before a tribunal in a matter if: (1) another lawyer in the lawyer’s firm is likely to be called as a witness on a significant issue other than on behalf of the client, and it is apparent that the testimony may be prejudicial to the client; or (2) the lawyer is precluded from doing so by Rule 1.7 or Rule 1.9.
THE LAWYER / INVESTIGATOR RELATIONSHIP:
The relationship between attorney and investigator is critical. Not only the fate of the case, but the reputations, careers and futures of both lawyer and investigator can hinge on the most seemingly insignificant acts or omissions.
The investigator must understand what the lawyer requires, and must be well-versed in the increasingly complex menagerie of applicable federal, state and local laws and regulations defining the boundaries of private sector investigative activities. The lawyer must adequately inform the investigator of all relevant circumstances and review both the information required, and how it will be obtained.
The material presented below offers insights into often overlooked and “non-intuitive” legal and ethical issues that frequently arise in the lawyer investigator dynamic as well as strategies for avoiding liabilities and other problems.
SOURCES OF ETHICAL RULES:
- ABA Model Rules of Professional Conduct for Attorneys.
- New York Rules of Professional Conduct. (Effective April 1, 2009, replaced prior Disciplinary Rules of the Code of Professional Responsibility.)
- New York.
- Other States (Multi-Jurisdictional Cases).
SUBSET OF PERTINENT ETHICAL RULES:
While the scope of various laws which may apply to any given investigative activity is quite broad, the recurring ethical considerations can be narrowed to the following four (4) ethical rules:
- The Ethical Prohibition of Contact with a Represented Party.
- The Ethical Prohibition of Assisting a Party in committing a crime – or directly engaging in illegal conduct.
- The Ethical Duty of Action / Notification regarding Potentially Illegal Activity of Officers / Employees of an Organization / Company which is the client of, or employs the Attorney.
- The Ethical Duty to Protect Client’s Confidences / Confidential Information.
LEGAL AND ETHICAL RESPONSIBILITY FOR THE CONDUCT OF THIRD PARTIES:
Actions of third parties acting under an attorney’s direction, such as investigators, can be imputed to the law firm or organization in the context of attorney ethics. (See ABA Committee on Ethics and Professional Responsibility, Formal Op. 95-396 [investigator acting as lawyer’s alter ego; lawyer ethically responsible for investigator’s conduct]). This does not surprise many lawyers. However, civil and criminal legal ramifications also have been imputed to attorneys via the conduct of investigators.
The widely-publicized Hewlett Packard (HP) case is one of the best known examples of “vicarious legal responsibility” for the conduct of outside investigators. The fallout of HP’s efforts to track down media leaks in 2005 persists to this day. Two former private investigators involved in the scandal were sentenced to three years of probation as recently as July of 2012.
Pretexting by several private investigators hired indirectly through a security consultant retained by HP was found illegal under California law (and under federal law). Criminal charges were levied not only against these investigators but against HP’s Chairwoman, its Chief Ethics Officer and its managing director of security outsourcing solutions, among others. They were accused of fraudulent wire communications, identity theft, wrongful use of computer data and conspiracy. While these felony charges against HP executives were eventually dropped, the lessons of this case still resonate loudly.
The HP case has become the poster child for the urgent need to know what your investigators are doing, how they are doing it, and whether such conduct violates relevant laws or regulations. The HP example is not, however, unique. Other instances of attorneys being held legally accountable for the conduct of their investigators are not difficult to find. In another case that received some notoriety, attorney Terry Christensen of California was convicted in 2008 of conspiracy to commit wiretapping and of aiding and abetting a wiretap. Christensen’s private investigator here was Anthony Pellicano, who was convicted of wiretapping in connection with his work on a case for Kirk Kerkorian. No physical evidence of the wiretaps was ever produced and there was apparently no proof that Christensen actually directed Pellicano to conduct the illegal wiretaps or expressly approved them. The evidence against Christensen reportedly consisted of government wiretaps of his conversations with Pellicano. They talked about the information Pellicano had obtained, which the government argued “could only have come from illegal wiretaps.” Christensen apparently told Pellicano to get him more of the same kind of information.
This case should shock many lawyers. Ignorance, willful or not, about details won’t save an attorney from criminal responsibility for his investigator’s conduct. Saying “I don’t want to know how you got this information, just get me more of it,” won’t cut it. The only safe course is knowing your investigator(s) very well, knowing what they are doing and knowing how they are doing it.
The crux of the Pellicano case is conduct known to be illegal by attorney and investigator alike. Questions arise whether the lawyer actually knew if it was going on, should have known and/or somehow condoned it. The wiretapping should never have occurred in the first place, thus rendering the latter question moot.
Cases like HP, however, illustrate a different quandary. Beyond knowing what their investigators were doing -- which HP apparently only learned about later -- a serious question surfaces: whether anyone stopped to analyze the legality of the conduct itself. The conduct in question -- obtaining private phone records through pretexts and other deceptive practices -- was not clearly a federal crime in 2005 , and may not have been criminal then, or now, under the laws of many other states (although it is clearly illegal now under federal law – see Footnote 2). Time, place and context greatly influence what is, and is not, legally permissible in private sector investigations, as illustrated in the examples that follow.
LEGALITY, ETHICS and ADMISSIBILITY:
While interrelated, legality, ethics and admissibility are actually three different concepts. Their link in any given circumstance is often dictated by the rules of the applicable jurisdiction. Thus, conduct may be legal, but not ethical (e.g., contact with a represented party). Whether the fruits of such legal but unethical conduct is admissible in a proceeding depends on where this conduct occurs. In the federal courts, for example, the evidence in question may be inadmissible solely on this basis. Conversely, it may be admitted, depending on the circumstances. (See, Midwest Motor Sports Inc. v. Arctic Cat Sales, Inc., 347 F.3d 693 (8th Cir. 2003).
By contrast, the general rule of law in New York is that violating the law or ethical rules does not trigger inadmissibility, absent specific legal basis for suppression. For example, CPLR 4506 renders inadmissible evidence obtained in violation of Penal Law Article 250 (eavesdropping and wiretapping). Absent a specific statutory basis for exclusion however, such evidence is generally admissible. (See Stagg v. New York City Health and Hospitals Corporation, 162 A.D. 2d 595; 556 N.Y.S.2d 779 (App. Div. Second Dept., 1990).
APPLICATION OF PERTINENT ETHICAL RULES:
The Ethical Prohibition of Contact with a Represented Party:
When does this rule apply? Several threshold questions must be answered. First, is there a “matter”? Generally, this is interpreted broadly to include not only pending litigation but also any situation or set of circumstances likely to generate litigation or a legal dispute between parties.
Is the fact of the representation known? Unlike the first question, this one is interpreted quite narrowly and literally, at least in New York. An attorney must have actual knowledge that the party is being represented for the rule to be triggered. Circumstances suggesting that an attorney “should have known” a party was represented are not sufficient. (See, Schmitt v. State of New York 695 N.Y.S.2d 225 (Court of Claims of NY 1999)).
Corporation or Organization as “Party” – is their Employee a “Party”?
Is the employee part of “senior management” (i.e.: “control group”)? See ABA Formal Op. 95 – 396 stating “protected employees” extend beyond “control group.”)
Does the employee “speak for the company” – can their statements be imputed to the company for liability purposes?
The Government Agency or Municipality as a Party:
State employees are not “automatically represented” by the attorney general when a lawsuit is filed against the state. In general, the rules that apply when determining whether an employee of a company is a represented party also apply here. (Schmidt v. State of New York, 695 N.Y.S.2d 225 (Court of Claims of NY, 1999) decided under NY DR 7-104, modeled directly on ABA Model Rule 4.2, Court refers to Model Rule and Comments.)
Prohibition on “Criminal Conduct”:
Rule 1.2 of the Code states:
A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is illegal or fraudulent, except that the lawyer may discuss the legal consequences of any proposed course of conduct with a client.
“Assist a client,” as referenced in this rule, could encompass knowing participation in conduct by a third party (e.g., an investigator) “on behalf of” the client.
Rule 3.4 (a)(6) states that a lawyer shall not knowingly engage in other illegal conduct.
Here, the “knowing” requirement clearly qualifies the act of engaging in the conduct – but significantly not the fact that the conduct itself is illegal. Thus, it is imperative to know whether the conduct of your investigator is, or is not, violating the law.
The following list of substantive laws routinely comes into play when considering the scope of permissible (legal) investigative conduct.
Statutes Concerning Communications Privacy:
Surreptitious recording of telephone calls and in person conversations with witnesses is a key element in many investigations.
New York is a “one-party” state. You must have consent of at least one party to record a telephone call, in-person conversation or electronic communication.
While this is the legal standard for an investigator, under the Codes of many states, including New York, attorneys have been held to a higher standard. They cannot, for example, record conversations or phone calls with other attorneys, absent the consent of all parties involved.
Recording (or mechanical overhearing) a conversation or intercepting an electronic communication without the consent of at least one party is a Class E Felony under New York Penal Law Sec. 250.05
Not all states however, are one-party states, and the law becomes even more complicated with interstate conversations.
The following states require the consent of only one party to a conversation:
Alabama Louisiana Ohio
Alaska Maine Rhode Island
Arizona Minnesota South Carolina
Arkansas Mississippi South Dakota
Colorado Missouri Tennessee
D.of C. Nebraska Texas
Georgia Nevada Utah
Hawaii New Jersey Vermont
Idaho New Mexico Virginia
Indiana New York West Virginia
Iowa North Carolina Wisconsin
Kansas North Dakota Wyoming
Kentucky Oklahoma Oregon
States Requiring Two-Party Consent:
California Florida Montana
Connecticut Massachusetts New Hampshire
Delaware Michigan Nevada
Illinois Maryland Pennsylvania
Interstate / Conflicts of Laws Issue:
Investigations today almost invariably extend beyond the borders of one particular state. Witnesses or parties may be located anywhere, their mobility abetted by cell phones that can be carried, along with their phone numbers, from state to state, further complicating the one or two-party consent rules.
In one example, a New York trial court was asked to apply the Pennsylvania wiretap law — which requires consent of all parties — to a call placed by a female prostitute in Pennsylvania to a man in New York. The New York statute requires the consent of only one party and this call was recorded with the woman’s consent. The New York court ruled that the law of the state where the injury occurred, New York, should apply. Krauss v. Globe Int'l, 25 Media L. Rep. (BNA) 1082 (N.Y. Sup. Ct. Sept. 16, 1996). Other cases have reached similar results (See e.g.: Locke v. Aston, 814 NYS 2d 38 (1st Dept. 2006). Bear in mind, these are New York cases, interpreting other states’ criminal statutes and applying choice of law principles in that context. This choice is a very fact-intensive analysis, weighing which jurisdiction bears the greater interest in having its law applied. A close review of these cases demonstrates clearly that a divergent conclusion could easily be reached on slightly different facts, or by a court with a different point of view, such as the court in the other state.
A 2010 Law Review article by Carol M. Bast, an associate professor of legal studies at the University of South Florida, entitled “Conflict of Law and Surreptitious Taping of Telephone Conversations” excellently covers this ground. (54 NYL Sch. L Rev. 147 2009/2010). Since it is extremely difficult to predict how a court may interpret a given set of facts, the only safe harbor for surreptitious recording of interstate calls appears to be conversations from one-party state to another one-party state.
The same caution must extend to other forms of communication. Intercepting an “electronic communication” without the prior consent of at least one involved party is a class E felony in New York. This definition of electronic communications not only encompasses telephone calls but also includes:
- Instant Messaging
- Text Messaging
- Online Chat
New York Penal Law Section 250.05 refers to “intercepting or accessing electronic communications” as a violation of the statute. Yet despite this wording, New York courts have consistently held that retrieving or recovering electronic communications, such as emails, from a hard drive or storage device, does not constitute a violation of 250.05. See: Moore v. Moore, 240 N.Y.L.J. 32 (Supreme Court of New York, New York County, 2008); Gurevich v. Gurevich, 886 N.Y.S.2d 558 (Supreme Court of New York, Kings County, 2009).
Mobile Tracking Devices (GPS):
Many jurisdictions, including New York, now require law enforcement to obtain a warrant when using covert GPS devices. This is a Fourth Amendment issue, not directly applicable to private sector investigations. However, there is a push in many states to outlaw, or at least to regulate, GPS use in covertly tracking individuals. Such use currently remains legal in New York, absent other conduct that would cause illegality. Certain media reports have misinterpreted the filing of criminal charges stemming from covert use of GPS technology in New York and elsewhere. A review of these cases indicates other salient factors triggering the criminal charges: either a statutory prohibition on the conduct (e.g., California ) or “additional conduct” beyond covertly using the GPS which is unlawful, such as violating a stalking statue, or an order of protection.
Federal Driver Privacy Protection Act (FDPPA) 18 U.S.C. 2721 et seq.:
Federal law protects driver’s license and motor vehicle registration information from indiscriminate disclosure. Pursuant to the FDPPA, someone must have a “permissible purpose” as defined in the statute to obtain motor vehicle information, must keep records of this data and may be required to disclose the names of all to whom this information was disseminated.
Obtaining the records without a statutorily defined “permissible purpose” is a federal criminal offense under the FDPPA.
Gramm-Leach-Bliley Act (15 U.S.C. 6801 et seq.) :
The G-L-B Act, also known as the Financial Services Modernization Act of 1999, carries stiff (including criminal) penalties for using false pretenses to obtain private banking information -- a practice that, until this law, had been commonplace among private investigators.
Subtitle B of the G-L-B Act., entitled Fraudulent Access to Financial Information provides in pertinent part: 521. Privacy Protection for Customer Information of Financial Institutions. It shall be a violation of this subtitle for any person to obtain or attempt to obtain, or cause to be disclosed or attempt to cause to be disclosed to any person, customer information of a financial institution relating to another person - (1) by making a false, fictitious, or fraudulent statement or representation to an officer, employee, or agent of a financial institution; (2) by making a false, fictitious, or fraudulent statement or representation to a customer of a financial institution; . . . ’’
The penalties for breaking this law are severe: “Whoever knowingly and intentionally violates, or knowingly and intentionally attempts to violate, section 521 shall be fined in accordance with Title 18 United States Code, or imprisoned for not more than 5 years, or both.”
Despite frequent misstatements to the contrary, pre-texting is not by itself an illegal act in all circumstances -- only in proscribed situations, such as detailed in the G-L-B Act.
Fair Credit Reporting Act (FCRA) (15 USC Section 1681 et seq.)
Under the FCRA you must have a person’s consent to obtain his consumer credit report, with very limited exceptions. Violations may constitute a criminal offense. Using false pretenses to knowingly and willfully obtain information about someone from a consumer reporting agency risks up to two years in prison and or fines under Title 18 of the United States Code [15 U.S.C.§ 1681q].
Employers must have written consent from employees or job applicants to obtain their Consumer Report or Investigative Consumer Report (i.e. reports of background investigations) and must follow strict guidelines in using these reports.
The Ethical Duty of Action / Notification regarding Potentially Illegal Activity of Officers / Employees of an Organization / Company which is the client of or employs the Attorney:
Rule 1.13 states:
“If a lawyer for an organization knows that an officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act… [In] violation of law which reasonably might be imputed to the organization, and is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization.”
The complexity of this rule is underscored by analyzing it in the context of the HP scandal. One or more lawyers at HP arguably knew about the pretexting, if not from the beginning, certainly before the scandal became public. How is such a lawyer required to act in those circumstances? According to this rule, they must act “as is reasonably necessary in the best interest of the organization.” However in the HP situation, such a course of action may not have been entirely clear at any point.
The obvious lesson: prevent law-breaking by knowing your investigator, discussing the scope and manner of the investigation in advance and supervising the conduct by keeping in close contact with the investigator(s) or their relevant supervisors.
Rule 1.6: CONFIDENTIALITY OF INFORMATION: Acting Competently to Preserve Confidentiality – 1.6 (c):
A lawyer shall exercise reasonable care to prevent…others whose services are utilized by the lawyer from disclosing or using confidential information of a client…
The responsibility to safeguard confidentiality should begin immediately upon retaining experts or investigators. Information obtained by a licensed private investigator in the course of an engagement is confidential under New York State law, and wrongful disclosure is a criminal offense (NY GBL Sec. 82).
There is no recognized “private investigator” privilege and absent the applicability of some other privilege (attorney client work product, etc.) the information and reports of a private investigator are subject to disclosure under compulsory legal process.
The mere fact an investigator is retained by counsel does not guarantee that any privilege will apply. (See e.g.: John Doe Co. v. US, 79 Fed. App. 476 (2nd Cir., 2003) holding that private investigator reports to corporation counsel are not privileged work product, absent evidence that such reports were intended to be privileged, nor that they were submitted specifically to assist counsel in rendering any legal advice in particular.)
To fully protect an investigator’s work product and maximize the potential application of all available privilege, use of a Kovel Letter is highly recommended. Under the Kovel Doctrine (U.S. v. Kovel, 296 F.2d 918 (2d Cir. 1961)), proof of the nature and purpose of the engagement is critical in establishing that the relevant privilege should extend to the expert or consultant. A Kovel Letter documents this at the outset of the engagement.
Nicholas G. Himonidis, is an attorney, licensed Private Investigator, Certified Fraud Examiner and Certified Computer Forensic Specialist. He is a Vice President at T&M Protection Resources, LLC in New York City, where he heads the firm's Private Investigation Division. For more information visit our website at www.tmprotection.com.
 New York General Obligations Law Article 7 exempts licensed attorneys and their full time employees from the requirement of having a state-issued private investigator license that is otherwise required to engage in most forms of investigative conduct in New York; without this license, or an exemption, engaging in conduct defined in Article 7 as investigative conduct may be a criminal offense (Class A Misdemeanor).
 The federal Telephone Records Privacy Act of 2006, 18 U.S.C. Sec. 1039 et seq., criminalized, on a federal level, the practice using a pretext to obtain a party’s private phone records.
The California Penal Code provides that “No person or entity in this state shall use an electronic
tracking device to determine the location or movement of a person . . . ’’ (California Penal Code,
Title 15, Ch. 1.5, Sec. 637.7). Other states have begun to legislate in similar fashion as well.