Alert September 02, 2008

Department of Justice Revises Policies Governing Credit Given for Cooperation in Its Investigation and Prosecution of Business Organizations

The Department of Justice announced that it was making significant revisions to its policies regarding credit given for cooperation provided to the Department of Justice (the “DOJ”) in its investigation and prosecution of corporate crimes.  The revisions affect the treatment of (1) the waiver of attorney-client privilege and work product protection, (2) advancement of employees’ attorneys’ expenses, (3) joint defense agreements and (4) the sanctioning or retention of culpable employees.

Attorney-Client Privilege/Work Product.  Under the revised policies, credit for cooperation with federal prosecutors will not depend on a corporation’s waiver of attorney-client privilege or work product protection, but instead on the disclosure of relevant facts.  Under former guidance in this area, federal prosecutors could request disclosure of non-factual attorney-client privileged communications and work product.  Under the revised policies, federal prosecutors may not do so, subject to the following exceptions:  prosecutors may ask for (a) disclosure of communications supporting an advice-of-counsel defense, and (b) any communications between a corporation and corporate counsel that are made in furtherance of a crime or fraud.  Corporations that do not disclose relevant facts typically may not receive credit for cooperation. 

Advancement of Attorneys’ Fees.  The revised policies also instruct prosecutors not to consider a corporation’s advancement of attorneys’ fees to employees when evaluating the corporation’s cooperation, although a corporation’s payment of or advance of attorneys’ fees to its employees will be relevant in the rare situation where it, combined with other circumstances would rise to the level of criminal obstruction of justice. 

Joint Defense Agreement.  The revised policies indicate that mere participation in a joint defense agreement will not render a corporation ineligible for cooperation credit; however, the government may ask that a corporation refrain from disclosing information that it has received from the government to third parties. 

Sanctioning/Reforming Culpable Employees.  The revised policies do not permit prosecutors to consider whether a corporation has sanctioned or retained culpable employees in evaluating the corporation’s degree of cooperation.  Prosecutors may only consider whether a corporation has disciplined employees that the corporation identifies as culpable, and only for the purpose of evaluating the corporation’s remedial measures or compliance program.

In his remarks announcing the revised guidelines, US Deputy Attorney General Mark Filip stressed that “[n]o corporation is obligated to cooperate or to seek cooperation credit by disclosing information to the government.  Refusal by a corporation to cooperate, just like refusal by an individual to cooperate, is not evidence of guilt.  Put differently , if a business decides not to cooperate, that does not, in itself, support or require the filing of charges.  It simply means that the corporation will not be entitled to mitigating credit for cooperation, which might well be germane when a corporation otherwise could be properly prosecuted.”  Mr. Filip indicated that the revised policies were the result of “lessons learned from our prosecuting, as well as comments from others in the criminal justice system, the judiciary (see the next story in this edition), and the broader legal community.  The revised guidelines will be reflected in the United States Attorneys Manual, which is binding on all federal prosecutors in the Department of Justice.  The revised guidelines were effective immediately upon their announcement.