Corporate Counsel
The Metropolitan
®
www.metrocorpcounsel.com
Volume 15, No. 1
© 2007 The Metropolitan Corporate Counsel, Inc.
January 2007
DOJ’s Past Policies Undermined Corporate
Compliance Efforts; The McNulty Memo
Is Not The Solution
The Editor interviews Michael S. Greco,
Partner in the Boston office of K&L Gates.
Editor’s Note: Mr. Greco is a business litigator concerned about the DOJ’s coerced
waiver policy since the Thompson Memorandum was first issued. The opinions
expressed below are his own and do not
reflect the views of any association or organization.
Editor: Would you comment on the
DOJ’s “culture of waiver” reflected in
the DOJ’s Thompson Memorandum
Greco: The Thompson Memorandum
encouraged prosecutors to pressure organizations to waive their attorney-client privilege and work product protections as a
condition for receiving “cooperation credit”
and avoiding charges for any illegal acts by
employees as revealed in criminal investigations. It created a dangerous “culture of
waiver” harmful in a number of respects.
While the written policy stated that
waiver was not mandatory and should not
be required in every situation, and while the
DOJ disingenuously maintained that waiver
was not coercive because defendants “voluntarily” waived their rights, the reality is
that prosecutors routinely coerced companies to waive rights in return for cooperation credit. A “culture of waiver” was
confirmed by a survey of more than 1,200
corporate counsel conducted by groups
including the Association of Corporate
Counsel and the National Association of
Criminal Defense Lawyers.
What kinds of harms have been
reported? Foremost, the policy eroded the
bedrock protections of the attorney-client
privilege and work product doctrine. It discouraged companies from consulting with
lawyers and impeded the lawyer’s ability
and ethical obligation
to effectively counsel
compliance with the
law. It undermined
companies’ internal
compliance programs
by discouraging internal investigations
designed to quickly
Michael S.
detect and remedy
Greco
misconduct.
The
waiver policy thus
undermined, rather than enhanced, compliance with the law.
The waiver policy also violated employees’ constitutional and other legal rights,
including the right to effective legal counsel, by pressuring employers to punish
employees during investigations. Prosecutors denied cooperation credit to companies
assisting or supporting “culpable employees and agents” by paying for their legal
representation, or participating in a joint
defense, or sharing relevant information
with them, or declining to fire or sanction
them for exercising Fifth Amendment
rights in response to government demands.
By forcing companies to treat employees as “culpable” – and firing them or failing to assist with their legal defenses – prior
to guilt being established by due process,
the Department’s policy eviscerated the
hallowed “presumption of innocence” principle. And by pressuring companies not to
help employees obtain legal counsel or factual information needed to defend themselves, the policy violated employees’
fundamental legal rights, including the right
to counsel under the Sixth Amendment, as
Judge Kaplan ruled in the KPMG case.
For these reasons, among others, the DOJ
waiver policy articulated in the Thompson
Memorandum was misguided, dangerous
and harmful to our justice system.
Editor: How widespread are the concerns
raised by the Thompson Memo?
Greco: For four years now DOJ has been
implored by the organized bar and a remarkable coalition of organizations with vastly
differing ideological missions such as the
U.S. Chamber of Commerce, the ACLU, the
Association of Corporate Counsel, the
National Association of Criminal Defense
Lawyers, and numerous others, to revoke
the waiver policy. In an extraordinary letter
sent to Attorney General Gonzales on September 5, twelve former DOJ officials,
including two former Attorneys General,
Griffin Bell and my law partner Dick
Thornburgh; three former Deputy Attorneys
General; four Solicitors General, including
Kenneth Starr and Theodore Olson, and
other experienced and respected former
leaders of the Justice Department forcefully
urged DOJ to revoke the waiver policy. The
U.S. Sentencing Commission, in the face of
such universal opposition to the policy, prudently and unanimously eliminated it from
the Sentencing Guidelines.
Editor: The McNulty Memorandum,
issued by the Justice Department on
December 12, 2006, replaces the Thompson Memorandum and provides a new
policy approach to the issues covered in
the Thompson Memo. What is its significance?
Greco: The significance of the McNulty
Memorandum is not that it fixes the problem, but that DOJ has finally admitted that
it has created a dangerous problem needing
to be fixed.
Unfortunately, the DOJ policy as set
forth in the McNulty Memorandum is not
“new” – it continues virtually all of the cor-
Please email the interviewee at mgreco@klng.com with questions about this interview.
Volume 15, No. 1
© 2007 The Metropolitan Corporate Counsel, Inc.
rosive Thompson Memorandum policy provisions. While the statements of Deputy
Attorney General Paul McNulty are welcome, the announced new procedures for
administering the waiver policy fall far
short of what must be done to prevent harm
to the attorney/client privilege and to prevent further abuse of constitutional and
legal rights of persons investigated. The
policy continues to provide little protection
for facts gathered by a corporation’s counsel. And although the McNulty Memorandum makes it slightly harder for line
prosecutors to obtain waivers to get “core”
attorney-client and work product materials
– such as notes reflecting attorney impressions, conclusions and advice – a prosecutor merely needs approval of a higher-up in
DOJ. Thus, the McNulty Memo just moves
the authority to review a decision to seek
waiver to a higher level within the Department, and still allows prosecutors to coerce
corporate defendants into waiving the privilege and work product protections. The
McNulty Memorandum creates, in effect,
an “attorney-client privilege waiver czar” in
the DOJ to administer the policy. A czar is
not the solution to the problem. We do not
need to repose that immense governmental
power in one individual or one group in
DOJ. What we also do not need is the
waiver policy itself.
The real solution is immediate revocation of the waiver policy, as the U.S. Sentencing Commission has done. For two
centuries prior to issuance of the Thompson
Memo, and now the McNulty Memo, prosecutors did their jobs effectively without
violating constitutional rights. Why is it not
now possible for prosecutors to perform
their duties without violating bedrock principles such as the attorney-client privilege
and work product doctrine, without denying
due process, and without violating constitutional and legal rights of American citizens?
The McNulty Memo unwisely continues
to impede the ability – and constitutional
right – of corporate leaders to obtain legal
guidance needed effectively to comply with
the law. In a cooperation plea agreement,
the McNulty Memo still leaves prosecutors
free to seek broad waivers of the privilege
and legal rights.
Nor does the “new” policy adequately
protect employees’ rights. Although the policy states that only in “extremely rare”
cases would the advancement of attorney’s
fees to an employee be considered a failure
to cooperate, prosecutors are allowed to
force companies to take punitive actions
against employees even before any guilt has
been established, in return for cooperation
credit.
Editor: Do you believe that focusing
approval on one individual who says he
would only seek a waiver in rare
instances would in fact reduce the number of requests for waivers?
Greco: It may reduce the number of
requests, but that is not the point. While the
McNulty procedures may lessen the frequency by which DOJ lawyers request privilege waivers, which had become routine
under the Thompson Memorandum, a less
frequent violation of these crucial rights is
unacceptable. The McNulty procedures
effectively preserve DOJ’s power to seek
these waivers – exactly the power that DOJ
should abandon, preferably voluntarily or
by Congressional action. And if the
McNulty Memorandum was designed to
create in Congress comfort with DOJ’s new
pledge that waivers will be requested
(coerced) less frequently, Congress should
not be lulled into allowing DOJ to continue
to exercise this immense coercive power.
Indeed, accepting DOJ’s new “trust us”
pledge should sound uncomfortably familiar. When the Thompson Memo was issued,
DOJ assured everyone that prosecutors’
judgment on seeking privilege waivers
could be trusted because they would only
seek waiver in rare instances. That did not
turn out to be true. Having the decision now
rest on the judgment of one ultimate decisionmaker in the DOJ may provide less frequent and more uniform application of the
policy, but it leaves in place a waiver policy
that now is almost universally scorned and
that must be eliminated.
Editor: How have the policies expressed
by the Thompson Memo and McNulty
Memo inhibited the ability of counsel to
represent corporate clients?
Greco: Both outside and inside counsel
have been inhibited, as well as marginalized, by the DOJ’s policy of coerced
waivers. Prior to the Thompson/McNulty
Memoranda forced waiver policy, corporate
clients without hesitation could consult
counsel for needed advice when mistakes or
wrongdoing – negligent or intentional –
were discovered. Consistent with the Sixth
Amendment guarantee, clients were able to
seek counsel’s advice on what steps to take
to bring the company back into compliance
with the law.
That process – and the role of counsel –
have been seriously undermined by the
waiver policy because clients now routinely
withhold information from counsel, and are
not maintaining records (whether inculpatory or exculpatory) in fear that information
may have to be turned over to the prosecu-
January 2007
tor. Clients thus are left to substitute their
own judgment for that of independent counsel. Counsel no longer is given all the information needed to provide informed legal
representation. If a corporation has conducted an internal investigation, the prosecutor seeks to force a waiver to obtain the
report. In some instances, corporations have
been required to conduct an internal investigation, paid by the company, with the understanding that the report will be turned over
to the prosecutor.
Counsel retained to conduct the investigation is placed in an ethical dilemma when
instructed not to inform employees who are
interviewed that the information provided
and statements made (including incriminatory) may be turned over to prosecutors, in
violation of the employee’s legal rights. The
process thus has a chilling effect on executives who need the advice of fully informed
counsel, prevents lawyers from doing what
is ethically required of counsel, and violates
the rights of unsuspecting employees. In
effect, the DOJ’s waiver policy drives a
wedge between counsel and client, and violates the client’s Sixth Amendment right to
effective assistance of counsel. In addition,
the client’s Fifth Amendment rights are
being abridged because the waiver policy
requires the client’s (and employee’s) selfincrimination in cooperating to help prove
the prosecutor’s case. Prior to the Thompson/ McNulty Memos, the burden was on
the government to prove guilt without the
aid of coerced waiver of the attorney-client
privilege or disregard of Fifth Amendment
rights. Elimination of the waiver policy
would restore that time-honored principle of
our justice system.
Editor: Now that the McNulty Memorandum has been issued, what is to be done?
Are there legislative efforts to correct the
situation?
Greco: On December 7, Senator Arlen
Specter filed legislation that essentially calls
for the elimination of DOJ’s waiver policy.
The McNulty Memorandum, issued on
December 12, signals that DOJ intends not
to abandon its waiver policy voluntarily.
While the Memorandum concedes that a
serious problem has resulted from DOJ’s
waiver policy – a growing cancer spreading
in the justice system – it offers only a bandaid solution when drastic surgery is needed.
The Specter bill provides the surgical solution and that is why it should be enacted
without delay by the new Congress. Unless
checked now, denial of the privilege’s protection today to some will lead to its denial
tomorrow for all Americans.