Written by: Glenn Tuazon

Most internal investigations do not require external counsel.

Many complaints can and should be handled internally. HR, compliance, internal audit, and in-house legal teams are often perfectly capable of gathering facts, interviewing employees, and addressing issues as they arise. But companies often ask the wrong question. The question is usually framed as whether the allegation is serious enough to justify bringing in outside lawyers.

In our experience, that is rarely the determining factor.

The better question is whether the investigation itself may later become part of a dispute.

What begins as an employee complaint may turn into a labor case. A whistleblower report may lead to a regulatory investigation. A disagreement among business partners may become shareholder litigation. Once that happens, attention frequently shifts from the underlying allegations to the company’s response. The investigation itself comes under scrutiny. Who conducted it? Was it independent? Was evidence preserved? Were the right people interviewed? Did management act promptly?

Viewed from that perspective, the decision to involve external counsel is not really about fact-finding. It is about risk management.

One common example is when allegations involve senior management. Even where an internal investigation is conducted entirely in good faith, questions may later arise about independence. Employees, regulators, and courts are often more willing to accept the outcome of a process that was visibly separate from the ordinary reporting structure. The issue is not necessarily whether bias existed, but whether the company can demonstrate that the process was credible if challenged.

The same concern arises once litigation becomes reasonably foreseeable. At that point, management must start thinking beyond the immediate investigation. Decisions that seem routine in the moment may later be examined by opposing counsel or regulators. Which documents were preserved? Which witnesses were interviewed? What steps were taken once the issue was reported? Every action becomes part of the record.

This is also why timing matters. Many companies assume they can wait until a formal claim is filed before seeking advice. By then, however, the most important decisions have often already been made. Key witnesses may have left. Relevant documents may have been deleted. Critical facts may no longer be easy to verify.

In some situations, delay becomes a source of risk in its own right. Employment matters provide a familiar example. A company may ultimately prevail on the merits and still face criticism because it failed to respond promptly or failed to implement the appropriate process, such as setting up a CODI. Similar issues arise in regulatory and compliance matters, where investigators often focus not only on the reported conduct but also on how the company responded after learning about it.

That is why the value of external counsel is not limited to conducting interviews or preparing reports. Often, the greatest value lies in helping management preserve evidence, assess risk, structure the investigation, and make defensible decisions while the facts are still developing.

This does not mean every complaint should be outsourced. To the contrary, internal investigations remain appropriate in many situations.

But where independence may be questioned, litigation appears increasingly likely, significant business interests are at stake, or delay itself may create legal exposure, companies should at least consider obtaining external advice early.

In conclusion, the decision to involve external counsel is rarely about the complaint itself. It is about what may happen next. Once a matter has the potential to become a labor case, regulatory proceeding, shareholder dispute, or lawsuit, management should start considering how the investigation will look if it is later examined by an arbiter, regulator, judge, or opposing counsel. The best time to think about how an investigation will look in a future dispute is before that dispute exists.

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