Work Product Doctrine in SEC Document Requests

When the Securities and Exchange Commission comes knocking with a document request, your first instinct is probably to figure out what you have to hand over. Fair enough. But here is the thing that keeps experienced securities lawyers up at night: the work product doctrine that you think protects your internal investigation materials has more holes in it than most people realize.

At Spodek Law Group, we have watched companies make devastating mistakes during SEC investigations. Not because they refused to cooperate. Because they cooperated in exactly the wrong way. They thought they were earning goodwill while keeping their most sensitive materials protected. They were wrong.

The difference between walking away from an SEC investigation with your defense intact and handing plaintiffs lawyers the ammunition to destroy you in civil litigation often comes down to decisions made in the first seventy-two hours. Decisions about what to say. What to share. And what the work product doctrine actually protects versus what you assume it protects.

What Work Product Doctrine Actually Protects

Work product doctrine sounds straightforward. Materials prepared in anticipation of litigation get protection from discovery. Your attorneys mental impressions, legal theories, and strategic thinking cant be demanded by the other side. The doctrine traces back to Hickman v. Taylor, a 1947 Supreme Court case that recognized lawyers need protected space to prepare for litigation without fear that there work will be handed to opponents.

But heres were things get complicated.

Not all work product gets the same protection. Courts draw a sharp line between what they call "opinion work product" and "fact work product." And that distinction matters enormously when your dealing with SEC investigations. Many executives walking into there first enforcement action have no idea this distinction exists. They assume work product is work product. Its not.

Opinion work product includes an attorneys mental impressions, conclusions, legal theories, and strategic thinking. This gets nearly absolute protection. Courts describe it as receiving protection in "extraordinary circumstances" only. The SEC's own enforcement manual explicitly says they dont seek "non-factual or core attorney-client communications or work product" including "an attorneys mental impressions or legal theories." Your lawyers strategy memo about how to defend against potential charges? Thats opinion work product. Its probly safe.

Fact work product is different. Dramaticaly different.

Fact work product covers the factual information your attorney gathered during an investigation. Interview notes that record what a witness said. Chronologies of events. Summaries of document findings. Compilations of factual data your legal team assembled. This material gets weaker protection. An opposing party can overcome fact work product protection by showing "substantial need" and that they cant obtain equivalent information through other means without "undue hardship."

Read that again. Your attorneys interview notes about what witnesses told them during an internal investigation? Thats fact work product. And the protection is not absolute.

The practical reality is even more concerning. Courts have repeatedly found that the SEC and private plaintiffs have "substantial need" for fact work product from internal investigations. After all, the witnesses interviewed by company counsel may be unavailable, their memories may have faded, or they may be hostile to one side or the other. The SEC can argue they cant recreate what your lawyers documented years earlier. And courts often agree.

Securities lawyers know this distinction intimately. Many clients dont. And that gap in understanding leads to catastrophic mistakes when the SEC starts asking questions.

The Fact vs Opinion Work Product Trap

Heres the trap that catches companies off guard.

You hire sophisticated counsel to conduct an internal investigation. There lawyers interview witnesses, review documents, and prepare detailed memoranda summarizing there findings. You assume all of this is protected work product. After all, you hired litigation counsel specificaly because you anticipated an enforcement action.

The problem: much of what your attorneys created is fact work product, not opinion work product.

The interview memoranda? Mostly facts about what witnesses said. The document review summaries? Facts about what the documents show. The timeline of events? Facts about what happend and when. The witness credibility assessments might be opinion work product. The factual recitations are not.

Yes, these documents were prepared by attorneys in anticipation of litigation. Yes, they technicaly qualify as work product. But there fact work product. And courts have proven willing to order production of fact work product when the SEC or private plaintiffs demonstrate substantial need.

It gets worse. The line between fact and opinion work product is, as courts themselves admit, "not always clear." A single document might contain both factual recitations and strategic observations. Courts sometimes conduct in-camera review to separate the two. Sometimes they order disclosure of the entire document because the factual portions predominate. Sometimes they order redactions. The uncertainty itself is a problem.

Think about what this means for your internal investigation materials. Your probly assuming there locked away, protected by the work product doctrine. The reality is more complicated. Much of what your attorneys created has only qualified protection. And that protection can be overcome.

Weve seen companies spend millions of dollars on internal investigations, believing every page of every memo was sacrosanct. Then the SEC moved to compel production, demonstrated substantial need, and the company had to hand over materials they never expected to disclose. The look on a general counsels face when this happens is something you dont forget.

The Cooperation Credit Illusion

Now lets talk about something that should make you very nervous.

The SEC has an official position on privilege and cooperation credit. According to there enforcement manual, "a partys decision to assert a legitimate claim of privilege will not negatively affect its claim to credit for cooperation." The Department of Justice says basicly the same thing. Both agencies emphasize that full cooperation doesnt mean privilege waiver. They claim to want facts, not protected communications.

Sounds reassuring. You can cooperate fully with the SEC while maintaining your privilege protections. You can earn cooperation credit without waiving your work product protection. Thats what the policy says.

OK so heres were the illusion falls apart.

The SEC's definition of "full cooperation" includes providing "all relevant facts within your knowledge." That requirement sounds reasonable until you realize what it means in practice.

When the SEC investigates, they often want what securities lawyers call "oral downloads" - verbal summaries of what your internal investigation discovered. There not asking for your attorneys privileged legal conclusions. There asking for facts. Just the facts about what witnesses said, what documents showed, what happend. They frame it as a reasonable request. You want cooperation credit. They want facts. Seems like a fair trade.

And companies, eager to demonstrate cooperation and earn credit that might reduce penalties, provide those oral summaries. Theres counsel meets with SEC staff. Describes what twelve witnesses said during interviews. Summarizes the key findings. Walks through the timeline. All oraly. No documents change hands.

The company thinks its being smart. Sharing facts while protecting documents. Earning cooperation credit while maintaining work product protection. Sophisticated counsel advises that this approach threads the needle.

Let that sink in for a moment.

Because what happends next is the part that destroys companies. The part that nobody warned them about. The part that transforms oral cooperation into permanent waiver.

When Oral Proffers Become Written Waivers

This is the section you need to read carefully.

In December 2017, a federal magistrate judge in the Southern District of Florida issued a ruling in SEC v. Sandoval Herrera that should terrify every general counsel in America. The case involved General Cable Corporation, a Kentucky-based company that had retained Morgan Lewis to investigate accounting problems at its Brazilian subsidiary. The investigation uncovered inventory overstatements of $46.7 million and alleged fraud in net income reported from 2008 to 2012. Serious stuff.

Morgan Lewis did what sophisticated counsel does during internal investigations. They interviewed witnesses. Prepared memoranda. Documented there findings. They created the kind of investigative record that companies pay seven-figure legal bills to assemble.

When the SEC investigated, General Cable cooperated. Morgan Lewis met with SEC staff and provided oral summaries of twelve witness interviews. Not the memoranda themselves. Verbal descriptions. An "oral recitation of what each witness stated during interviews." The company believed this demonstrated full cooperation while protecting there actual documents.

General Cable ultimately settled with the SEC in 2016, agreeing to a cease-and-desist order and paying $6.5 million. They probly thought the investigation chapter was closed.

Then the SEC sued two individual officers - the former CEO and CFO of General Cables Latin American operations. And those officers wanted Morgan Lewis's interview notes to defend themselves against the SEC. They argued that General Cables cooperation disclosures waived work product protection.

Heres what the court ruled: the oral summaries Morgan Lewis provided to the SEC were the "functional equivalent" of producing the actual interview notes. By describing what witnesses said verbaly, counsel had waived work product protection over the written memoranda.

Think about the implications. Morgan Lewis never handed over a single page of interview notes. They gave verbal summaries. And the court said that was enough to waive protection over documents they never produced.

Magistrate Judge Goodman's words should haunt every securities lawyer: "I am not convinced there is a meaningful distinction between the actual production of a witness interview note or memo and providing the same or similar information oraly."

Let me make sure you understand what just happened. The company never produced the documents. They described the contents oraly. And the court ordered production of the underlying documents based on the oral descriptions.

The waiver extended to ALL interview memoranda. Not just the twelve that were oraly summarized. The court ordered disclosure of materials that Morgan Lewis had never described to anyone. The logic was that once you start disclosing the substance of interviews oraly, you cant cherry-pick which ones to reveal and which to protect.

This is the trap. You think your being strategic. Sharing facts while protecting documents. But detailed oral descriptions can waive protection over materials you never intended to produce.

Theres no clear line establishing when a "general summary" becomes sufficiently detailed to trigger waiver. A high-level overview probly doesnt create waiver. A witness-by-witness recitation of who said what almost certainly does. But where exactly is the line? The honest answer is nobody knows. The safer assumption is that any detailed oral proffer about witness interviews creates waiver risk.

The Auditor Backdoor

If oral proffers to the SEC werent dangerous enough, theres another waiver path that catches companies off guard.

Your external auditors.

SEC v. RPM International, decided in 2020, demonstrates how disclosure to auditors can strip away work product protection. RPM, an Ohio-based company, had retained Jones Day to investigate timing issues with financial statement accruals. The SEC was already investigating whether RPM had failed to properly disclose a DOJ investigation into overcharging the government on contracts. As part of the engagement, Jones Day shared interview summaries with Ernst & Young, RPM's auditor.

The sharing made business sense. EY needed information to complete there audit work. Jones Day was trying to be helpful. Nobody thought of EY as an adversary. After all, auditors work with companies, not against them. What harm could come from sharing?

The SEC later subpoenaed EY's workpapers. Those workpapers contained references to the interview summaries Jones Day had provided. And the SEC argued that RPM's disclosure to EY waived work product protection.

The district court agreed. Even though Jones Day had drafted the actual interview memoranda weeks after providing summaries to EY, the earlier disclosure created waiver over the subsequently-created documents. RPM was ordered to produce all nineteen interview memoranda to the SEC.

RPM petitioned the D.C. Circuit for mandamus relief. The D.C. Circuit summarily denied the petition. The memoranda went to the SEC. RPM ultimately paid a $2 million penalty.

This ruling has profound implications for how companies should handle internal investigations.

Your auditors arent adversaries. Sharing information with them feels safe. Theyre trying to help you prepare accurate financial statements. Theyre required by professional standards to obtain evidence supporting there audit opinions. What could go wrong?

Alot, it turns out.

When you share investigation findings with auditors, those findings can end up in workpapers. When the SEC subpoenas workpapers, which is routine in financial fraud investigations, they get access to information you shared with the auditors. And courts may rule that your disclosure to the auditors waived protection over related documents.

The RPM case shows that waiver can extend to documents created after the initial disclosure. Jones Day didnt draft there interview memoranda until weeks after briefing EY. Didnt matter. The waiver clock started when they shared summaries with the auditors. The later-created documents were covered by the earlier waiver.

Think about the consequence chain:

1. Counsel shares findings with auditor to assist with financial statements
2. Auditor includes summaries in workpapers
3. SEC subpoenas workpapers (routine in financial fraud cases)
4. Court rules disclosure to auditor waived work product protection
5. SEC obtains interview memoranda counsel never intended to produce

This is how companies lose control of there internal investigation materials. Not through deliberate waiver. Through backdoor disclosures they never thought would matter.

Protecting Your Materials Before Its Too Late

So what can you actualy do to protect yourself?

First, understand that the decisions you make in the first seventy-two hours of an investigation matter enormously. Once youve made disclosures that trigger waiver, you cant take them back. The time to think strategicaly is before you start talking. Before the SEC meeting. Before the auditor conversation. Before anyone shares anything with anyone.

Second, consider clawback agreements and Rule 502(d) protective orders.

Federal Rule of Evidence 502 provides some protection for inadvertent disclosures. If you inadvertently produce a privileged document, and you took reasonable precautions and promptly tried to rectify the error, the disclosure may not constitute waiver. Clawback agreements formalize this protection. They provide a mechanism for retrieving documents that slip through during large productions.

But heres the critical distinction: clawback agreements protect truly inadvertent disclosures. They dont protect strategic choices to share information that later turn out to be waiver-creating.

If you voluntarily provide oral proffers to the SEC, thats not inadvertent. If you deliberately share findings with auditors, thats not inadvertent. Clawback agreements wont save you from the consequences of those choices. You cant claw back words youve already spoken. You cant retrieve information youve already shared. These protections have real limits.

Third, think carefully about the distinction between facts and work product.

Todd Spodek and the attorneys at Spodek Law Group understand this balance intimately. You can share facts with the SEC without sharing your attorneys work product. But the line is thinner than most people think. Detailed descriptions of what witnesses said starts to sound alot like producing the interview notes themselves. The question isnt whether you handed over paper. Its whether you conveyed the substantive content.

The goal is to demonstrate cooperation - which the SEC values and which can reduce penalties - without making disclosures that create waiver. This requires careful planning before any substantive communications with SEC staff. It requires knowing exactly what you can say and what you cant.

Fourth, compartmentalize your investigation.

Consider separating the work that will be shared externaly from the work that must remain protected. Some companies hire seperate counsel for different purposes: one firm to handle SEC communications and cooperation, another to conduct the privileged internal investigation. The two tracks stay seperate. Information flows in only one direction.

This approach has costs. Its more expensive. It requires careful coordination. It can create logistical headaches. But it can help preserve protection over your most sensitive materials. When the SEC asks about witness interviews, cooperation counsel can truthfully say they werent involved in those interviews. They cant waive protection over materials they never saw.

Fifth, document the purpose of your investigation from day one.

The RPM court found that counsel wasnt hired primarily for litigation purposes, but rather to satisfy the auditor. That finding undercut work product protection. If your investigation is truly conducted in anticipation of litigation, document that purpose clearly from the outset. Create a paper trail that demonstrates why you hired counsel and what you expected them to do. Make the litigation purpose explicit.

When You Need A Securities Defense Attorney

Heres the reality that most people facing SEC investigations dont want to hear.

By the time you realize you need specialized counsel, you may have already made disclosures that damaged your position. The oral summary you gave to SEC staff. The findings you shared with your auditor. The cooperation you showed to earn goodwill. Any of these could have created waivers you didnt intend.

93% of defendants who face SEC enforcement actions ultimately settle. The terms of those settlements often depend on materials the SEC obtained through cooperation-created waivers. Materials you thought were protected. Materials that ended up in the SECs hands because you didnt understand how the work product doctrine actualy functions in practice.

The SEC's stated policy - that cooperation doesnt require privilege waiver - obscures how there cooperation requirements actualy function. The gap between what they say and what courts rule creates traps for companies trying to do the right thing. Companies that cooperate because thats the ethical approach. Companies that share information because they want to be good corporate citizens. Companies that follow there attorneys advice without realizing the downstream consequences.

You need counsel who understands these traps before you walk into them. Who can structure your cooperation to maximize credit while minimizing waiver risk. Who knows the difference between sharing facts and creating waivers. Who has seen how these cases actualy play out in court.

At Spodek Law Group, we handle SEC investigations with full awareness of how the work product doctrine actualy operates in enforcement proceedings. We have seen companies make devastating mistakes. We have seen how oral proffers became document waivers. We have seen how auditor disclosures created backdoors to internal investigation materials.

The difference between protected and exposed often comes down to decisions made before anyone sits down with SEC staff. Call us at 212-300-5196 if your facing an SEC investigation, document request, or subpoena. Before you make disclosures you cant take back.

The work product doctrine has limits. Understanding those limits before you cooperate is the only way to protect yourself.