On August 28, 2008 the Department of Justice (DOJ) issued revised guidelines that govern the investigation and prosecution of corporate crimes. Among other things, the revised guidelines prohibit federal prosecutors from requesting that corporations disclose attorney-client privileged information or work product, or from considering whether a corporation has waived its privilege when evaluating the corporation's level of cooperation. As part of DOJ's policy, corporations are given credit based on their cooperation during the course of an investigation. Prior to the adoption of the revised guidelines, many argued that prosecutors had coerced corporations into waiving attorney-client privilege and work product protection in exchange for this cooperation credit and that these waivers could have prevented candid communications between corporations and their legal counsel. In addition, under certain circumstances the previous guidelines allowed federal prosecutors to request that a corporation disclose attorney-client privileged communications and work product.
The revised guidelines make clear that "[e]ligibility for cooperation credit is not predicated upon the waiver of attorney-client privilege or work-product protection." Instead, corporations will receive cooperation credit for providing relevant factual information as well as relevant non-privileged evidence such as accounting and business records or communications between non-attorney employees. In addition, the revised guidelines prohibit prosecutors from requesting attorney-client privileged information, with two well-recognized exceptions. Specifically, prosecutors may continue to request the disclosure of any communications that were made in furtherance of a crime or fraud, as well as of any communications supporting an asserted "advice-of-counsel" defense.
The revised guidelines also instruct prosecutors not to consider whether a corporation has advanced attorneys' fees to its employees, officers or directors when evaluating the corporation's level of cooperation. Previously, prosecutors were able to consider these advances as a negative when deciding whether to grant the corporation credit for its cooperation. The revised guidelines also provide that prosecutors may not consider whether the corporation has disciplined or terminated employees, or whether the corporation has entered into a joint defense agreement, when determining whether to grant cooperation credit.
While the guidelines previously were set forth only in a memorandum, the revised guidelines will be included in the United States Attorneys' Manual and will be binding on all federal prosecutors within DOJ. However, the new guidelines will not affect state prosecutors or federal agencies other than DOJ that may pressure corporations to waive attorney-client privilege including the Securities and Exchange Commission, the Department of Housing and Urban Development, the Environmental Protection Agency or the Department of Commerce.
In June of this year, Sen. Arlen Specter, R-Pa., introduced legislation (S.3217) to address the concerns he and many organizations had about DOJ's controversial policies on privilege waivers. He and many critics felt the only way to remove DOJ's heavy-handed policy of pressing corporations to waive their privileges under the attorney-client and work-product doctrines in exchange for not being prosecuted was to pass new legislation. The timing of DOJ's new policy announcement has no doubt been orchestrated to defer any decision on Sen. Specter's pending legislation on this subject.
Sen. Specter prefers a legislative fix to the problem over a DOJ policy change. In the senator's view, legislation is preferable because it is more permanent than agency policies and would require DOJ to follow the law regardless of administration changes. The Senate Judiciary Committee is reviewing DOJ's memorandum on the revised guidelines.
What corporations can count on - for the moment - is that they can resist pressures from DOJ to waive these legal privileges without the risk that in doing so, they will expose their companies to greater risk of criminal prosecution. Further, corporations can continue to enter into joint defense agreements and to advance legal fees to current or former employees in connection with DOJ investigations.
We advise our clients to proceed with caution, however, because DOJ guidelines provide no guarantees. First, companies need to bear in mind that violations by DOJ of its own guidelines cannot be asserted as a defense against prosecution. In DOJ's own words, "These Principles provide only internal Department of Justice guidance. They are not intended to, do not, and may not be relied upon to create any rights, substantive or procedural, enforceable at law by any party in any matter civil or criminal. Nor are any limitations hereby placed on otherwise lawful litigative prerogatives of the Department of Justice." Second, guidelines in effect today may not be in effect tomorrow. DOJ has revised its policy many times in the past and, absent legislation, is free to do so again at any time. Thus, while this is a positive and important development, many believe that until the rules stated in these guidelines are enacted into law, corporations and their officers and directors must remain wary of potential attacks on their attorney-client privilege and work-product doctrine protections.