Today, the D.C. Circuit granted a mandamus petition in an important case, In re Kellogg Brown & Root, involving to preservation of the attorney client privilege for internal investigations in today’s heavily regulated government contracting environment. The ability of companies to seek and protect the advice of counsel—which is critical to a company’s ability to conduct its business, and respond to and investigate compliance issues—is substantially bolstered by the decision in two vital ways.

First, the D.C. Circuit determined that the fact that an internal investigation involved individuals under the direction of counsel, whether in-house or outside counsel, does not dilute the privilege. The court specifically noted that communications made by and to non-attorneys serving as agents of attorneys in internal investigations are protected. This is an important clarification because the issues that counsel for contractors face often involve the application of not only complex regulations, but analysis of highly technical facts that require the assistance of internal experts such as engineers and accountants. Companies should be able to obtain information from such employees in the most efficient means possible, and that will often include an employee working under the direction of counsel. Clarification that such information collection will not vitiate the privilege is helpful to contractors.

Second, the D.C. Circuit dismantled the district court’s position that an internal investigation undertaken in part to comply with regulations vitiated the privilege. The appeals court recognized that communications by (or at the direction of) attorneys can have more than one purpose, and it rejected the notion that an attorney client communication must have only a legal purpose. For Government contractors, compliance with the procurement statutes and regulations is an essential part of everyday business—the FAR and its supplements run to 18 volumes and there are numerous new statutes and regulations every year. The district court’s position that a contractor cannot obtain the advice of counsel in a question if those communications intertwine business needs and regulatory issues departs from reality. Indeed, the D.C. Circuit noted that the district court’s privilege ruling would have upset “settled understandings and practices.”

The business community weighed in heavily in this case with amicus participation addressing the impact of the uncertainty created by the district court’s opinion. Those amici briefs were cited repeatedly in the appellate court’s opinion, and that collective view regarding problems with lower court ruling appears to have made a big difference in the decision to grant mandamus.