Sixth Circuit Issues Significant Decision On Attorney-Client Privilege And Work-Product Doctrine In Internal Investigations

When a corporate crisis hits, companies and boards frequently retain outside counsel to conduct an internal investigation. Last year, in a decision that received widespread attention among outside and in-house investigative counsel, a federal trial court in Ohio held that the attorney-client privilege and work-product doctrine did not apply to communications and materials prepared during such an investigation conducted for a public company. The company—supported by numerous friend of the court briefs¹ —appealed the decision.

On October 3, 2025, the U.S. Court of Appeals for the Sixth Circuit reversed the trial court's decision. In doing so, the Sixth Circuit recognized the important role that internal investigations can play in helping companies and boards form both legal and business strategy in the wake of a corporate crisis. The decision also provides helpful guidance as to when investigative materials will be deemed privileged, and the decision's rationale can also be extended to other contexts in which outside counsel provides legal advice that later informs business decisions.

Background

The decision, In re First Energy Corp. No. 24-3654 (6th Cir. Oct. 3, 2025), involved materials created during internal investigations conducted by First Energy Corporation (the "Company") and its board of directors.

By way of background, in 2020, the U.S. Department of Justice filed criminal charges against the Speaker of the Ohio House of Representatives, alleging that he had participated in a bribery scheme, in which, in return for campaign contributions from the Company, he had agreed to support certain legislation. When it filed the charges, DOJ also issued subpoenas to the Company. Soon thereafter, the Company and the board of directors each retained outside law firms to conduct an internal investigation (the "Internal Investigation").

Other related litigation and regulatory action followed against the Company. These matters included class-action suits by shareholder-plaintiffs, alleging violations of the federal securities laws, based on the alleged bribery allegations and a drop in the Company's stock price once the allegations regarding the Speaker became public.

During discovery in the securities class action, the plaintiffs sought to compel disclosure of materials created during the Internal Investigation. The Company refused to disclose the materials, asserting that the attorney-client privilege and the work-product doctrine both protected the materials. The attorney-client privilege applies to confidential communications between a client and their attorney if the purpose of the communication is to obtain legal advice. In Upjohn v. United States, 449 U.S. 383, 394-95 (1981), the Supreme Court held that the privilege applies when companies seek legal advice through internal investigations. As relevant here, work-product doctrine protects documents "prepared in anticipation of litigation."

The trial court appointed a special master to address the issue. The special master concluded that neither the attorney-client privilege nor work-product doctrine applied. It reasoned that the Internal Investigation was "conducted for audit/SEC filing purposes and for human resource decisions/public relations benefits," even if those decisions and the facts involved in both purposes would likely inform litigation preparation. The Special Master therefore ordered the Company and its witnesses to produce documents and answer deposition questions relating to the Investigation. The Company sought review from the trial judge, but he agreed with the Special Master, also citing (among other things) the plaintiffs' arguments that the company had conducted the investigation to "satisfy its auditor" so the company could make relevant SEC filings and to avoid a "declaration of default" by its lenders.

The Company then appealed to the Sixth Circuit.

The Sixth Circuit Decision

On October 3, the Sixth Circuit issued its decision, reversing the trial judge, and holding that the Internal Investigation materials were protected by the attorney-client privilege and work product doctrine.

Attorney-Client Privilege. As to the attorney-client privilege, the Sixth Circuit easily concluded that the privilege applied to the Internal Investigation. As the court put it, "[i]n asking for outside counsel's analysis about what happened and in seeking its legal advice about what to do in response to the very significant legal risk it suddenly faced, . . . [the Company] and the board clearly sought legal advice." The Sixth Circuit rejected the idea that the privilege was lost because the lawyers' advice later informed business-related decisions. As the Court stated, "[w]hat matters under the attorney-client privilege is whether a company seeks legal advice, not what it later does with that advice."

The Court also rejected the plaintiffs' argument that the privilege did not apply because the Internal Investigation had merely been a fact-finding exercise. It explained "[t]here is no such thing as legal advice without facts," and "[t]he investigating firms, at any rate, did not simply recite facts learned from third parties; they determined what happened, whether it was lawful, and what civil and criminal liability could result."

Work Product. Similarly, the Sixth Circuit concluded the work-product doctrine applied to materials created in the Internal Investigation. The key question was whether the documents were prepared in "anticipation of litigation." The court agreed they were, finding that the Company and the board reasonably anticipated they would "would face government investigations, civil litigation, and regulatory proceedings . . . [i]n the aftermath of" the House Speaker's arrest on charges that implicated the Company and "the 45% decline in [Company] stock a day later . . . ."

The Sixth Circuit also rejected the lower court's view that "employment decisions and business concerns" prompted the investigations, finding "that conclusion [was] possible only if we overlook the realities of litigation that [the Company] faced." The Sixth Circuit again cited the DOJ charges against the Speaker, the DOJ subpoenas to the Company, and numerous civil lawsuits and other actions filed following the Speaker's arrest.

Effect of Disclosure to Outside Auditors. Finally, the Court also rejected the Plaintiffs' argument that the Company waived the privilege by "disclosing some materials" to its outside auditor. The Court explained that, while the attorney-client privilege may be waived by disclosing materials to a third-party, work-product doctrine is generally waived only by disclosures to an adversary. Further, the Court noted that professional auditors are bound by ethical standards prohibiting them from disclosing confidential client information.

Takeaways

1. The decision reinforces that, as long a lawyer's input was sought in the first instance for the purpose of obtaining legal advice, the attorney-client privilege will still protect the communications providing that input, even if the client later makes use of that legal advice to inform business decisions.
While this decision arose in the context of an internal investigation, the same rationale could easily apply to, and protect, legal advice sought in the context of other board decisions regarding (for example) the status of key executives or SEC filing requirements, or in the transactional context. Still, it is important for companies, boards, and counsel to make a contemporaneous record of why a lawyer's services were requested and that the lawyer actually provided legal advice (without disclosing the actual advice provided)

2. The decision takes a very practical view of when a company can "anticipate litigation," such that the work-product doctrine can apply. As evidence for the fact that the Company reasonably anticipated litigation, the Court cited, among other things, the 45% decline in the Company's stock after the DOJ charges became public.

3. Frequently during internal investigations and other corporate crises, the company's investigations counsel may receive inquiries from the company's outside auditors, in connection with preparation of the company's financials and related matters. The decision is also helpful in that it reiterates that, even though disclosure of materials to a third-party may waive the attorney client privilege, the work-product doctrine is generally waived only when materials are disclosed to an adversary, and therefore the work-product that the Company disclosed to its outside auditor remained protected.

4. While binding only in the Sixth Circuit (which covers the federal courts in Tennessee, Ohio, Kentucky, and Michigan), the decision should still be useful for company counsel to defeat broad discovery requests by private plaintiffs seeking materials from a company's internal investigation or internal work product created in response to a government investigation. At the same time, it bears noting that materials actually shared with government regulators, as part of a document production or presentation by counsel, for example, will generally not be privileged and will be subject to discovery in related private litigation.

Footnote

1 Baker Botts partner Brendan Quigley served as one of the principal authors of a friend of the court brief filed by 39 law firms in support of reversal of the trial court's decision. See Docket, 24-3654, ECF No. 20.

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