As the corporate landscape continues to evolve under the Trump administration and becomes less regulated at the federal level, the role of internal investigations has transformed from a reactive necessity into a proactive safeguard.
Once considered a last resort in response to crises, today, an effective internal investigation is becoming a vital mechanism for ensuring compliance, managing risk, and maintaining the ethical backbone of an organization.
Recent Regulatory Shifts Under the Trump Administration
The Trump administration has initiated significant shifts in the regulatory landscape, emphasizing deregulation across a variety of industries, including financial services, healthcare, and environmental protections.
The administration's approach has focused on reducing what it deemed burdensome regulations, promoting economic growth and business expansion.
However, this regulatory rollback has shifted greater responsibility to corporations to self-regulate, making internal investigations even more crucial.
Why Internal Investigations?
At its core, an internal investigation serves as a mirror into corporate culture. Companies that prioritize proactive investigations acknowledge that they are operating in an uncertain environment where transparency and accountability are increasingly paramount.
Government scrutiny, shareholder activism, and public demand for corporate responsibility highlight the importance of ensuring internal controls and protocols are maintained for the long term.
For board members and executives, these investigations are more than just a legal obligation; they are a demonstration of corporate due care and responsible, decisive leadership.
By establishing an investigative framework and rhythm, corporations can preemptively address issues ranging from regulatory inquiries to internal complaints, laying the groundwork for trust and accountability, and mitigating risk early in a crisis.
Building the Right Team for Effective Inquiry
The success of an internal investigation hinges on assembling a team equipped with the right skills, objectivity, and independence. While in-house counsel may be familiar with the company’s operations, they may also face conflicts of interest, especially if their loyalty to the company conflicts with legal duties.
To avoid those issues, organizations often find value in engaging independent special counsel. With no ties to the company, special counsel can provide a level of impartiality that boosts the investigation’s credibility.
Additionally, special counsel often has insights into regulatory landscapes and developing legal trends, enabling them to navigate the intricacies of potential civil or criminal proceedings effectively and efficiently.
Swift and Thorough Execution
Promptness in investigating internal matters is paramount, not only in gathering accurate information but in reinforcing a culture of accountability. A well-structured, timely inquiry enables organizations to uncover issues quickly and take corrective action, often deterring similar incidents in the future.
Delays, on the other hand, may result in regulatory penalties, prolonged harm to corporate reputation, and potentially costly legal actions. Investigations conducted efficiently can yield a wealth of insights from document reviews, witness interviews, and occasionally, surveillance or workplace searches.
These strategies, though sometimes contentious, when used judiciously and within legal boundaries, allow organizations to uncover vital information without compromising trust.
Navigating Legal and Ethical Challenges
Internal investigations must balance between gathering information and respecting legal and ethical boundaries. Surveillance and searches, for instance, can provide necessary data but must be executed with care to avoid invasion of privacy claims or defamation.
For public sector employers, searches must comply with Fourth Amendment protections, whereas private sector employers often have broader discretion. Yet, all employers should proceed with caution to avoid legal repercussions, which can arise from overreach in investigations.
Confidentiality is also paramount in protecting both the company and the individuals involved. To uphold this confidentiality, many corporations employ legal counsel to conduct interviews and maintain attorney-client privilege, ensuring that sensitive information remains protected.
The work-product doctrine can also shield materials prepared in anticipation of litigation, enabling counsel to pursue the truth without fear that findings will be exposed prematurely or misused. Having a skilled investigative team with the ability to adapt to a company’s particular needs reinforces confidentiality throughout an investigation.
The Critical Role of Documentation and Reporting
Documentation is not only essential to the investigation process but a key factor in how a company responds and learns from each situation. The “Working Chronology”—a detailed, privileged timeline of events—serves as a roadmap for the investigation, documenting key evidence and interviews as they unfold.
Such records guide investigators, offering a comprehensive, up-to-date overview of an investigation while remaining protected by privilege.
The final investigative report represents the culmination of an investigation and is a critical document for leadership. It can provide management with insights, inform regulatory responses, and guide corrective measures.
These reports are not only valuable in cases of legal review but also in setting a precedent for how future investigations will be conducted, reinforcing an organization’s commitment to ethical and lawful operations.
Lessons in Accountability and Transparency
In today’s corporate climate, the value of an effective internal investigation cannot be overstated. It is not merely about addressing immediate misconduct but about demonstrating a culture that values integrity and accountability.
When carried out effectively, these investigations serve as a testament to corporate responsibility, guiding companies toward a more transparent, ethical path forward.
By embracing thorough investigations as part of regular corporate operations, organizations not only protect themselves from potential liabilities but also strengthen the trust placed in them by employees, stakeholders, and the broader community.
Conclusion
The evolving regulatory landscape under the Trump administration has reinforced the need for corporate vigilance. With reduced federal oversight, companies must take the lead in self-regulation and proactive compliance efforts.
Internal investigations are no longer optional but essential for maintaining integrity, managing risk, and ensuring accountability. By investing in robust investigative frameworks, corporations can navigate the complexities of modern business with confidence and resilience.
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Reprinted with permission from the April 7, 2025 edition of the “New York Law Journal” ©️ 2025 ALM Global Properties, LLC. All rights reserved.
Further duplication without permission is prohibited, contact 877-256-2472 or asset-and-logo-licensing@alm.com.
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