Earlier today, U.S. Deputy Attorney General Paul J. McNulty announced that the U.S. Department of Justice ("DOJ") has revised its corporate charging guidelines for federal prosecutors throughout the country. The new "McNulty Memorandum" (http://www.nacdl.org/public.nsf/whitecollar/wcnews061/$FILE/McNulty.pdf) supersedes and replaces the much- criticized "Thompson Memorandum," issued in January 2003 by then Deputy Attorney General Larry D. Thompson.
Although the McNulty Memorandum continues to require federal prosecutors to consider the Thompson Memorandum’s nine "factors" when deciding whether to charge a corporation with a criminal offense, it modifies existing DOJ policy in the two areas for which the Thompson Memorandum drew the most criticism.
Privilege Waivers
The McNulty Memorandum adds new restrictions for prosecutors seeking privileged information from companies. Pursuant to the revised policy, prosecutors must establish a "legitimate need" for such information and then seek approval (as discussed below) before they may request it from a company. The McNulty Memorandum provides that "[a] legitimate need for the information is not established by concluding it is merely desirable or convenient to obtain privileged information," and requires "a careful balancing" of the following considerations:
- "the likelihood and degree to which the privileged information will benefit the government’s investigation;
- "whether the information sought can be obtained in a timely and complete fashion by using alternative means that do not require waiver;
- "the completeness of the voluntary disclosure already provided; and
- "the collateral consequences to a corporation of a waiver."
Once a "legitimate need" is established, prosecutors must "seek the least intrusive waiver necessary to conduct a complete and thorough investigation," and must comply with the following approval requirements before they may request waivers of attorney-client privilege and work product protections from corporations in criminal investigations:
- When prosecutors seek a company’s privileged attorney-client communications or legal advice (referred to in the memorandum as "Category II information"), their U.S. Attorney must obtain written approval from the Deputy Attorney General. The memorandum cautions "that Category II information should only be sought in rare circumstances." If a corporation chooses not to provide attorney-client communications, prosecutors are directed not to consider that declination against the corporation in their charging decisions.
- With respect to "Category I information"—privileged factual information from a company (e.g., facts uncovered in a company’s internal investigation)—prosecutors must seek the approval of their U.S. Attorney, who must consult with the Assistant Attorney General of the Criminal Division before approving the request. A corporation’s response to the government’s request for Category I information "may be considered in determining whether a corporation has cooperated in the government’s investigation."
Senator Arlen Specter recently proposed a bill in the U.S. Senate that would place even greater restrictions on federal prosecutors. The Attorney Client Privilege Protection Act of 2006 (http://lawprofessors.typepad.com/whitecollarcrime_blog/files/attorneyclient_privilege_ protection_act_12_6_06_hen06g74_xml.pdf) states expressly that "[i]n any Federal investigation or criminal or civil enforcement matter, an agent or attorney of the United States shall not . . . demand, request, or condition treatment on the disclosure by an organization, or person affiliated with that organization, of any communication protected by the attorney-client privilege or any attorney work product . . . ."
Advancement of Attorneys’ Fees to Employees
The McNulty Memorandum also instructs prosecutors that, except in "extremely rare cases," they may not consider a corporation’s advancement of attorneys’ fees to employees when making a charging decision. A corporation’s advancement of fees to employees may be considered only when the advancement, when "considered with many other telling facts," is shown to be intended to impede the government’s investigation. Even then, approval must be obtained from the Deputy Attorney General before prosecutors may consider this factor in their charging decisions.
Senator Specter’s proposed legislation would prohibit prosecutors from considering as a charging factor the corporation’s "provision of counsel to, or contribution to the legal defense fees or expenses of, an employee of that organization."
Members of Stoel Rives’ White Collar Crime and Regulatory Enforcement Group: