Transcript DOJ CORPORATE CRIME POLICIES: Will the “MeNulty Memo

TO WAIVE OR NOT TO WAIVE:
A WORD FROM COUNSEL WHO HAS
BEEN ON BOTH SIDES
Roscoe C. Howard, Jr.
Troutman Sanders LLP
401 9th Street, NW, Suite 1000
Washington, DC 20004
Phone: 202-274-2960 – Fax: 202-654-5665
[email protected]
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DOJ CORPORATE CRIME POLICIES
UNDER THE THOMPSON MEMO
• No prohibition against a prosecutor requesting a
waiver
• Govt. has every incentive to make that request
• Maximum Pressure
• Hobson’s Choice faced by company’s officers
and directors
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THOMPSON MEMO EFFECT
• Routine request of waivers may have interfered
with the truth and completeness of a subject’s
internal investigation
– Interviewees may withhold full information
knowing that what they say may be shared
with prosecutors
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MCNULTY MEMO REACTION
• Issued after 3 yrs of widespread criticism from
business community
• Judiciary
• Congress
• Removal of reference in U.S. Sentencing
Guidelines
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MCNULTY MEMO PROVISIONS
1) A request for waiver will be approved only
where there is a legitimate need
– There is no alternative source
– Information will benefit government’s
investigation
– Completeness of voluntary disclosure
– Evaluation of collateral consequences of
corporate waiver
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MCNULTY MEMO PROVISIONS–
2) The Asst. Attorney General or the Deputy
Attorney General must review and issue any
approvals
3) The process must be documented
4) Written notice to subject if a waiver
request is approved
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WAIVER REQUESTS
• Should not be routine/only in rare circumstances
• Most sensitive materials
• Not available through non-privileged means
• Must take preliminary investigative steps
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MCNULTY MEMO (FALSE) PROMISES
• Restrictions may level playing field for corporate
defense attorneys
• Client and counsel can make an informed
judgment whether client’s interest is served by
waiver, while prosecutor goes through the steps
• Fewer requests for waivers made
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NOTHING HAS CHANGED
• McNulty Memo fails to address the government’s
“culture of waiver”
• Government evaluation of cooperation is still
linked with waiver of the privilege
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THE WAIVER LINK
• Government reserves the right to penalize
companies that decline to produce “factual
information” that may or may not be privileged
(“Category I”)
• Government rewards those companies that
voluntarily produce information under Category I
or attorney-client communications or attorney
work product (“Category II”)
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CATEGORY I v. CATEGORY II
• Distinctions without a difference
– Internal Reports
– Reports to Audit Committees
– Necessarily have information from both
categories
• In reality, the government doesn’t recognize
these categories when asking for waivers
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ADVANCEMENT OF ATTORNEYS’ FEES
MAY STILL BE PROBLEMATIC
• Generally, government cannot use advancement
of attorney’s fees to evaluate cooperation
• The exception is found in footnote 3: “In
extremely rare cases, the advancement of
attorneys’ fees may be taken into account when
the totality of the circumstances show that it was
intended to impede a criminal investigation.”
– “extremely rare cases” is not defined
– Type of evidence to show an intent to impede
is unknown
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OTHER FACTORS IN WEIGHING
COOPERATION
• Retention of employees without sanctions
• Providing information to employees about the
investigation pursuant to a Joint Defense
Agreement
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EFFECT OF MCNULTY MEMO
• DOJ is no longer restricting its waiver requests
to merely factual information
• McNulty Memo formalizes procedures for
penetrating attorney-client communications and
attorney opinion work product
– Result - further erosion of these protections
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INIDICTMENT AS DETERRENCE?
Part II of Memo states:
“[A]n indictment often provides a unique
opportunity for deterrence on a massive scale. In
addition, a corporate indictment may result in
specific deterrence by changing the culture of
the indicted corporation and behavior of its
employees.”
• Scary Proposition
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IN PRACTICE
• Prosecutors will still call for requests for waivers
at the outset of investigations – they will go
through the process early
• Companies facing indictment want the benefit of
waiver to appear as cooperative as possible
• Companies will feel coerced to waive without
prosecutor’s explicit request
• May or may not reduce formal demands for
waiver
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IMPACT OF THE POLICIES
• The weakened attorney-client privilege and work
product protection may discourage company
employees from consulting with company
counsel
• Singleton (S.D. Tex. 2006) – employee charged
with obstruction for false statements in internal
investigation knowing they were going to federal
officials
• Thus, DOJ’s policies still impede the efficacy of
internal compliance programs
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CONSIDERATION
• Resist the temptation to offer automatically a
waiver of privilege
• Consider whether it is in the best interest of the
client that the waiver be delayed or withheld
altogether
• Counsel retains written reports/provides client
oral summaries
– Reduces governments opportunity to exert pressure
to request waiver
– Client controls when and how to make written
information available to the government
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CONSIDERATION
• Age old problem - benefits of voluntary
waiver remain
– corporations will always consider it and
– government will always press for it, whether
implicitly or explicitly
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