Sixth Circuit Reinforces Attorney-Client Privilege and Work-Product Protection in Corporate Internal Investigations

At a Glance

• The appellate court clarified that using legal advice from an internal investigation to inform business decisions does not remove the protection of attorney-client privilege, nor does it convert legal advice into mere business advice. Privileged communications remain protected, even when they subsequently influence corporate decision-making.
• This ruling underscores that internal investigations conducted amid the threat of litigation retain both attorney-client privilege and work-product protection and that district courts finding otherwise face reversal under even the highest standards of review.

A recent federal court of appeals decision fortified critical legal protections for corporations conducting internal investigations amid the threat of criminal and civil proceedings. In granting a writ of mandamus, the U.S. Court of Appeals for the Sixth Circuit reaffirmed corporations’ ability to engage outside counsel to conduct confidential and privileged investigations into allegations of problematic conduct.

The Sixth Circuit granted FirstEnergy Corporation’s mandamus petition after the U.S. District Court for the Southern District of Ohio ordered the production of material covered by the attorney-client privilege and the work-product doctrine.

Background of the Case

FirstEnergy Corporation’s troubles began after federal criminal charges implicated it in a bribery scheme surrounding a piece of legislation that promised FirstEnergy a $1.3 billion bailout and a fixed revenue stream of $100 million annually at consumers’ expense. The charges were filed against a then-member of the Ohio House of Representatives; and although FirstEnergy was not named, FirstEnergy was implicated in the charges and engaged counsel to respond to subpoenas. FirstEnergy’s stock dropped 45% and the company faced an onslaught of legal and regulatory actions. FirstEnergy and its board engaged separate outside counsel to conduct independent internal investigations and provide legal advice concerning exposure to criminal charges and associated civil litigation.

Among the legal actions was a shareholder securities class action alleging fraud by FirstEnergy and several executives. During discovery, plaintiffs sought all documents collected during the internal investigations. The district court ordered the disclosure of these materials, rejecting claims of privilege. After an unsuccessful attempt at interlocutory review, FirstEnergy petitioned the appellate court for mandamus relief.

Key Legal Issues: Attorney-Client Privilege and Work-Product Protection

At issue were the protections afforded by the attorney-client privilege and the work-product doctrine. The privilege safeguards confidential communications seeking legal advice, whereas the work-product doctrine protects materials prepared in anticipation of litigation.

The district court had found that the internal investigations were merely business-related and ordered FirstEnergy to produce “all previously withheld documents related” to its internal investigations.

The Sixth Circuit disagreed. In reversing the district court — on a standard reserved only for “exceptional circumstances” involving a “judicial usurpation of power” or a “clear abuse of discretion[,]” In re United States, 817 F.3d 953, 959-60 (6th Cir. 2016) — the Sixth Circuit emphasized that the investigations and the materials produced were prompted by and directly related to the company’s response to criminal and civil allegations and, therefore, were protected from disclosure in discovery.

The appellate court clarified that using legal advice from an internal investigation to inform business decisions does not remove the protection of attorney-client privilege, nor does it convert legal advice into mere business advice. Privileged communications remain protected, even when they subsequently influence corporate decision-making. The panel further noted that denying protection in this context ignored the realities of litigation that FirstEnergy faced and would undermine decades of precedent and create irreparable harm to FirstEnergy’s legal interests, justifying mandamus relief.

Implications for Attorneys and Corporations

This ruling underscores that internal investigations conducted amid the threat of litigation retain both attorney-client privilege and work-product protection and that district courts finding otherwise face reversal under even the highest standards of review.

Corporations and their counsel should be reassured that legal advice obtained in this context remains confidential, even if it informs subsequent business decisions. The decision will likely serve as a critical precedent for safeguarding privileged communications during complex legal and regulatory matters.