Protecting Privileges in Fraud Examinations

True or false: An attorney hires a fraud examiner to investigate the facts necessary for the attorney to give legal advice to a client – thus, the fraud examiner has legally protected confidential communications with the attorney but not with the client. Not sure of the answer? Then this article is for you. (The answer is false.) 

Electronic Data Systems (EDS) learned a hard lesson when it investigated an employee on suspicion of expense account fraud. An investigation revealed the employee had stolen thousands of dollars from EDS.¹ During an interview, the employee said she had learned many of her fraud techniques from another employee, Frederick Steingraber. EDS’s in-house counsel then retained outside counsel and investigators to perform an independent analysis and write a report. Ultimately, Steingraber was terminated and EDS filed a lawsuit against him seeking to recover the amounts misappropriated.