On December 12, 2006, Deputy Attorney General ("DAG") Paul J. McNulty distributed new guidance regarding the use of attorney-client privilege waivers in U.S. Department of Justice corporate investigations (hereinafter “McNulty Memo” or “Memo”). DAG McNulty remarked that his memo “amplified the limited circumstances under which prosecutors may ask for waivers of the privilege.” This sentiment, however, has not been shared throughout the legal and business community. Moreover, the new guidance in the McNulty Memo does little to alleviate the practical problems faced by companies and their legal counsel in deciding how best to investigate and take possible corrective action under circumstances where they may be requested by the government to waive attorney-client and work-product privileges with respect to such matters.


In 2003, then-DAG, Larry D. Thompson, issued charging guidelines to DOJ prosecutors, including attorneyclient waiver policy that has since been termed the "Thompson Memo." In effect, the Thompson Memo advised federal prosecutors considering whether to charge a corporation to consider whether the company had cooperated in their investigation and, in particular, whether the company had waived the attorney-client and/or work-product privileges with respect to reports and other documents. Failure to waive the privileges could lead to indictment, additional charges, and/or lack of credit under the sentencing guidelines regardless of other forms of cooperation extended by the company. As a result, many companies have indicated that they felt compelled to waive the attorney-client and work-product protections. Many organizations and legal counsel have been concerned that the specter of waiving these privileges discouraged open and candid communications among employees, officers and directors with the company’s counsel. These factors may prompt company officials not to seek legal advice and not to take early corrective action to avoid or mitigate potential legal violations.

The McNulty Memo

The McNulty Memo attempts to limit the circumstances under which prosecutors are to seek waivers of privilege by authorizing prosecutors to seek such information only where a “legitimate need” exists, as reviewed and approved by the DAG. The Memo further provides that the “legitimate need” review includes the use of a four-part test:

  • 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 other means of acquiring the information;
  • The completeness of the voluntary disclosure already provided; and
  • The collateral consequences to the corporation in requesting the waiver.

The McNulty Memo further provides that even if a request is made for privileged information, and the DAG approves the request, a corporation may continue to withhold the information and the prosecutors may not view such action negatively in making their charging decision.

Although this seems to narrow significantly the circumstances in which prosecutors may properly request waivers of privilege, McNulty has also stated that “this is not to say that if the corporation decides to give [the Department] the information, we will not consider it favorably.” Accordingly, it is difficult to assess the extent to which the McNulty Memo will result in any real change with respect to the determinations that companies and their lawyers must address in deciding how best to deal with a pending or potential government investigation. In effect, the McNulty Memo may simply recast a company's refusal to disclose privileged information from being a negative factor in a charging decision, to such disclosures being a positive factor in averting indictment. This distinction may have little practical change with respect to the disincentive employees and officers may perceive to providing complete and candid information to a company's counsel.

American Bar Association President, Karen J. Mathis, spoke out on the McNulty Memo on December 13, 2006 calling the Memo a “modest improvement” and stating that the changes to attorney-client waiver policy did not go far enough to quell the erosion of the fundamental privilege; instead, calling for a complete elimination of the practice.

Legislative Action

Prior to the release of the McNulty Memo, on December 7, 2006, Senator Arlen Specter (R-PA), the outgoing chairman of the Senate Judiciary Committee, introduced legislation that would prohibit prosecutors from conditioning treatment of an organization or making a civil or criminal charging decision based on a valid assertion of the attorney-client and attorney work-product privileges. Senator Specter’s bill was introduced on the eve of adjournment of the 109th Congress and was not otherwise acted upon. Senator Specter has not publicly commented thus far as to whether he intends to reintroduce his legislation before the 110th Congress. Incoming chair of the Senate Judiciary Committee, Patrick Leahy (D-VT), has stated that he welcomes the new guidance of the McNulty Memo, but remains concerned that the Department’s prosecutors may still aggressively press a corporation’s waiver of the attorney-client and/or attorney work-product privileges.

Practitioner Tips

Despite the new guidance contained in the McNulty Memo, prosecutors may remain just as likely to seek waivers of the attorney-client and attorney work-product privileges, albeit that such requests will be articulated in a more positive fashion, whereby the disclosure of such privileged information may avert indictment. Accordingly, practitioners and corporations should consider the following:

  • In conducting internal investigations, companies should consider that the government may ask for copies of any investigation reports, witness statements, and related documents.
  • If the company wishes to cooperate fully with the government's investigation, but also wants to avoid disclosing internal legal advice and other attorney work-product, take reasonable steps, such as those outlined below, to ensure that documents such as investigation reports and witness statements do not include any privileged material. Preparing documents in this fashion may enable the company to provide the government the facts it needs to complete its investigation while avoiding the prosecutor perceiving that she or he has a "legitimate need" to request privileged material.
  • Include only information that is "factual" in nature in such documents, and consider not reducing initial observations and information to writing until after key facts can be confirmed.
  • Avoid including attorney impressions, conclusions, or legal advice in such documents.
  • The government is unlikely to waive prosecution or adverse administrative action in exchange for privileged information where the facts appear to establish a violation. This factor favors not waiving the attorney-client and work-product privileges so that the company's legal advice and strategies remain confidential throughout the course of any investigation as well as any ensuing judicial or administrative proceedings.