On August 28, 2008, Deputy Attorney General Mark Filip announced changes to the Department of Justice's guidance to federal prosecutors for investigating and charging corporations with crimes. See United States Attorneys' Manual (U.S.A.M.), Chapter 9-28.000, "Principles of Federal Prosecution of Business Organizations." The most significant change is that federal prosecutors are no longer permitted to consider waiver of privilege and payment of employee attorneys' fees when evaluating whether - and to what extent - a corporation should receive credit for cooperation with a government investigation.

Brief Background

In 2003, then Deputy Attorney General Larry Thompson issued a memorandum outlining principles for federal prosecutors to follow when deciding whether to bring criminal charges against a corporation. One of the factors was whether a corporation had cooperated with the investigation. The Thompson Memo permitted prosecutors to consider whether the corporation agreed to waive the attorney-client and/or work-product privileges as a factor weighing in the corporation's favor. It also allowed prosecutors to consider a corporation's payment of attorneys' fees for employees as a factor weighing against the corporation.

In December 2006, then Deputy Attorney General Paul McNulty limited the reach of, and established internal agency controls on the Thompson Memo's guidance regarding consideration of waiver of privilege and payment of attorneys' fees. Click here to review the 2006 changes to the Department of Justice's Thompson Memorandum.

On August 28, 2008, Deputy Attorney General Mark Filip announced substantial changes to the McNulty Memo. On the same day, the Second Circuit Court of Appeals affirmed a district court decision dismissing indictments against several individuals because the government had deprived them of their right to counsel under the Sixth Amendment by causing their former employer to place conditions on the advancement of legal fees to them, capping and ultimately ending the fees. See United States v. Stein , No. 07-3042 (2d Cir. August 28, 2008).

Waiver of Privilege

In the corporate crime enforcement frenzy following the collapse of Enron, it had become increasingly common for federal prosecutors to ask a corporation to waive the attorney-client and/or work-product privileges in the course of an investigation. While the DOJ maintains that waiver of such privileges has never been a prerequisite for a corporation to receive full credit for cooperation, some have argued that under the Thompson Memo, and even the less onerous McNulty Memo, the DOJ was coercing business entities into waiving these privileges.

The Filip Memo prohibits federal prosecutors from seeking waiver of either type of privilege, although a corporation may still choose to do so. See U.S.A.M. § 9-28.710. The policy emphasizes that the government's focus has been and continues to be obtaining from the corporation the facts relevant to the investigation, not privileged materials.

The import of this new policy may be diluted by the specific authorization for federal prosecutors to seek all relevant factual information acquired through a corporation's internal investigation, including all factual information acquired through employee interviews. See U.S.A.M. § 9-28.710 n.3. This will lead to challenges in distinguishing privileged from non-privileged information, particularly in the context of interview memoranda where privileged and non-privileged information are often inextricably intertwined.

Payment of Employee Attorneys' Fees

Many corporations pay attorneys' fees for individual employees during a government investigation. Under the Thompson Memo, prosecutors could view advancement of attorneys' fees to "culpable employees" as non-cooperation by the corporation. In a change from past policies, the Filip Memo instructs that federal prosecutors "should not take into account whether a corporation is advancing or reimbursing attorneys' fees or providing counsel to employees, officers, or directors under investigation or indictment" (emphasis added) and "may not request that a corporation refrain from taking such action." SeeU.S.A.M. § 9-28.730. Whether prosecutors will view the permissive language on advancement of legal fees to employees as a mandate or a suggestion remains to be seen.


The revisions to the DOJ's corporate prosecution guidelines as set forth in the Filip Memo represent an important change in the Department's policies. They are, however, only internal DOJ policies which are subject to change at any time. Many continue to urge passage of Senate Bill 3217 , The Attorney-Client Privilege Protection Act of 2008, in order to give these changes the force of law, restore the sacrosanct nature of the attorney-client privilege, and end the culture of waiver created by past practices.Future conduct of line-level federal prosecutors will determine whether the policies articulated in the Filip Memo become reality and will likely influence how vigorously various groups push Senate Bill 3217.