DOJ Seeks To Avoid Legislation By Adopting Revised Policies on Corporate Prosecutions

This post is from John F. Savarese of Wachtell, Lipton, Rosen & Katz.

Facing the prospect of Congressional legislation that would forbid federal prosecutors and civil enforcement lawyers from requesting any communications protected by the attorney-client privilege or work product doctrine, the Department of Justice has indicated that it will, yet again, revise its Principles of Federal Prosecution of Business Organizations (“Principles”). The current version of the Principles, known as the “McNulty Memo,” has been the subject of criticism since its issuance in December 2006 for not going far enough to guard against encroachments on the attorney-client privilege and work product doctrine.

On June 26, 2008, Senator Arlen Specter re-introduced the Attorney-Client Privilege Protection Act of 2008, which is a modified version of legislation that he had previously introduced. (See Year End Review: Current Regulatory and Enforcement Climate, January 2, 2007). Apparently in response to this legislation and the continuing criticism of the Principles, on July 9, 2008, the Deputy Attorney General, Mark Filip, wrote a letter to Senators Specter and Patrick Leahy, indicating that DOJ intended to make certain changes to the Principles in the coming weeks.

The Deputy Attorney General identified the following changes:

• Cooperation will be measured by the extent to which a corporation discloses
relevant facts and evidence, not its waiver of attorney-client privilege or work product;

• Federal prosecutors will not demand the disclosure of non-factual attorney work
product or core attorney-client communications as a condition for cooperation credit;

• Federal prosecutors will not take into consideration in evaluating cooperation whether a corporation has (i) advanced attorneys’ fees to its employees; (ii) entered into a joint defense or common-interest agreement; or (iii) retained or sanctioned employees involved in alleged wrongdoing.

There are at least two significant limitations to addressing the problem of government interference with the attorney-client privilege or work product doctrine through a revision of DOJ’s Principles. First, unlike the proposed Attorney-Client Privilege Protection Act, the Principles do not apply to the SEC or other federal regulators. Second, the Principles do not have the force of law, but would require corporations to rely on self-policing by DOJ.

If implemented, the new Principles will have a significant impact on how corporations respond to federal criminal investigations. But what must not be lost in considering these proposed changes is the continuing fundamental requirement that, under the Principles, corporations must cooperate with government investigations to help avoid indictment. Corporations will still need to be forthcoming with detailed and relevant factual information to be perceived as cooperative.

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