Preserving Attorney-Client Privilege During an FTC Civil Investigative Demand

Preserving Attorney-Client Privilege During an FTC Civil Investigative Demand

Receiving a civil investigative demand (CID) from the Federal Trade Commission can be an intimidating and stressful experience for any business. However, it’s important not to panic. With the help of experienced legal counsel, businesses can appropriately respond to an FTC CID while also protecting sensitive information and preserving attorney-client privilege.

What is a Civil Investigative Demand?

A CID is essentially a subpoena that the FTC issues during an investigation into potential violations of consumer protection laws or antitrust regulations. Through a CID, the FTC can legally compel a company to provide documentation, submit written reports, or give oral testimony related to the investigation [1].

While concerning, receiving a CID does not necessarily mean the FTC intends to file a lawsuit or take formal enforcement action. In some cases, the investigation concludes after the FTC reviews the information provided in response to the CID. However, it’s still critical for businesses to take CIDs extremely seriously given the FTC’s broad authority.

Preserving Attorney-Client Privilege

One of the most important priorities when responding to an FTC CID is preserving attorney-client privilege. This privilege protects confidential communications between an attorney and their client made for the purpose of obtaining legal advice or representation. It enables open and honest discussions so lawyers can provide their clients with appropriate counsel [4].

While attorney-client privilege is not absolute, breaching it can have severe consequences. Even inadvertent disclosure of privileged information to the FTC could result in privilege being waived altogether. This makes identifying and protecting privileged communications essential when dealing with a CID.

Best Practices for Preserving Privilege

Here are some best practices businesses should follow to preserve attorney-client privilege when responding to an FTC CID:

Consult Experienced Legal Counsel

Upon receiving a CID, businesses should promptly consult with an attorney experienced in handling FTC investigations and CID responses. Qualified counsel can provide guidance on preserving privilege, negotiate with the FTC on the company’s behalf, and prepare a response strategy [5].

Issue a Litigation Hold

Counsel will likely recommend issuing a litigation hold to preserve all communications and documents relevant to the CID. This ensures no records that could be responsive or privileged are accidentally destroyed. Failing to properly retain responsive records could lead to charges of spoliation.

Carefully Review Responsive Documents

Before producing any records to the FTC, businesses must thoroughly review all materials to identify and redact any privileged communications. This could include messages with outside or in-house counsel discussing legal strategy. Even minor disclosures could waive privilege.

Protect Confidentiality

Businesses must take all reasonable precautions to prevent inadvertent disclosure of privileged information when responding to an FTC CID. This includes securing records, restricting access, and using redaction software if producing electronic documents.

Assert Privilege Claims

If requesting certain documentation would infringe on attorney-client privilege, businesses can formally assert privilege claims to the FTC. However, all claims should be reviewed by counsel beforehand to ensure they are justifiable.

Working with Legal Counsel on Your CID Response

Responding to an FTC CID while also preserving privilege and protecting your legal interests can be an enormously complex process. Working with qualified counsel is highly recommended when dealing with a CID.

Experienced FTC defense lawyers can help with [6]:

• Negotiating – Counsel can confer with the FTC regarding deadlines, scope of requests, and any other compliance issues. This includes asserting valid privilege claims.
• Document Review – Your legal team can thoroughly vet all responsive materials to identify privileged communications before anything gets produced.
• Written Responses – Counsel will prepare your official written response and manage all other communications with the FTC. This helps prevent any unauthorized or accidental disclosures.
• Mitigation Strategies – Your lawyers will aim to resolve the CID investigation through negotiation while limiting risk exposure for your business.
• Privilege Protection – Preserving attorney-client privilege remains an overarching priority throughout the response process with guidance from counsel.

Consequences of Improper Disclosure

Given the serious repercussions attorney-client privilege waiver can have, it’s imperative to consult experienced counsel as soon as you receive an FTC CID. Attempting to handle the complexities of a CID response without legal guidance often leads to mistakes being made.

In fact, research indicates that around 80% of all privilege waiver findings result from inadequate privilege review procedures and insufficient lawyer oversight [7]. Common problems include conducting deficient keyword searches, using inadequate technology, and producing electronic documents without appropriate redaction.

If attorney-client privilege gets waived, any confidential communications you shared with counsel can become subject to disclosure. This means potentially sensitive information about your legal strategy could get openly exposed.

Responding Effectively While Protecting Your Interests

Receiving a civil investigative demand from the FTC can be unsettling. However, with the assistance of qualified legal counsel, businesses can respond appropriately while keeping privileged communications protected.

Follow best practices like issuing litigation holds, thoroughly vetting materials before production, formally asserting privilege claims, and letting your lawyers interface with the FTC on your behalf. This helps mitigate risks as much as realistically possible.

Keep in mind that not all FTC investigations end with lawsuits or settlements. Particularly when working with experienced counsel, it may be possible to resolve the inquiry once the FTC receives the information requested through the CID.

However, if the worst happens and the FTC does ultimately file a complaint, demonstrating that you took the investigation seriously and cooperated fully with the CID (while protecting privileged materials) can only help your case. Having skilled legal representation on your side puts you in the best position for an optimal outcome.

Resources

For more help responding to an FTC civil investigative demand, check out the following resources:

• FTC Guide to Civil Investigative Demands [3]
• CID Response Checklist
• CID FAQs for Small Businesses
• Tips for Responding to an FTC CID
• Managing Privilege Risk When Responding to CIDs

1. https://developer.mozilla.org/en-US/docs/Learn/HTML/Introduction_to_HTML/Document_and_website_structure
2. https://lawreview.law.uic.edu/news-stories/attorney-client-confidentiality-vs-privilege-what-is-the-difference/
3. https://www.ftc.gov/system/files/attachments/us-submissions-oecd-2010-present-other-international-competition-fora/privileged_information_united_states.pdf
4. https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_6_confidentiality_of_information/comment_on_rule_1_6/
5. https://www.perkinscoie.com/en/news-insights/protecting-internal-investigation-materials-from-disclosure.html
6. https://globalinvestigationsreview.com/guide/the-practitioners-guide-global-investigations/2023/article/privilege-the-us-perspective
7. https://www.jud.ct.gov/juv_infoguide/IJCP_LG_Privileges.html