Department Of Justice Announces Changes To Thompson Memorandum Guidelines For Corporate Prosecutions

On December 12, 2006, Deputy Attorney General Paul McNulty announced changes to the Department of Justice's Thompson Memorandum which provides guidance to federal prosecutors for investigating and charging corporations with crimes. The McNulty Memorandum does not create or remove tools available to federal prosecutors for corporate investigations, but clarifies the circumstances under which these tools may be used and adopts procedural guidelines. The most significant changes are in three areas:

• Waiver of attorney-client privilege. In the context of a corporate investigation, the attorney-client privilege protects from disclosure communications between a lawyer and individual employees. The Thompson Memorandum cites waiver of this privilege as a factor that may be considered in evaluating the corporation's cooperation with the government's investigation.Under the McNulty Memorandum, waiver of the attorney-client privilege is to be sought only in rare cases where a federal prosecutor can demonstrate a "legitimate need" for the privileged information.Requests to seek the waiver must be submitted to and approved by Deputy Attorney General McNulty. Thus, the ultimate decision-maker with respect to a request for waiver of the attorney-client privilege is now the Deputy Attorney General in Washington, D.C., rather than the U.S. Attorney in the district where the investigation is pending.
• Waiver of attorney work-product privilege. In the context of a corporate investigation, the work-product privilege protects from disclosure facts obtained by a lawyer in the course of conducting the investigation. The Thompson Memorandum cites waiver of this privilege as a factor that may be considered in evaluating the corporation's cooperation with the government's investigation. Under the McNulty Memorandum, a request for waiver of the attorney work-product privilege must be submitted to the corporation in writing and only after the assistant U.S. Attorney has obtained written approval from the U.S. Attorney. Thus, the power to request waiver of the attorney work-product privilege remains with the U.S. Attorney's Office in the district where the investigation is pending. The ultimate decision-maker with respect to whether such a request will be made, however, is the U.S. Attorney rather than the line-level assistant U.S. Attorney.
• Advancement of attorneys' fees to individual employees. Many corporations have policies that require the corporation to pay attorneys' fees for individual employees who need representation during a corporate investigation. The Thompson Memorandum cites the advancement of attorneys' fees to "culpable employees and agents" as a factor that may be considered in evaluating the extent and value of the corporation's cooperation. Under the McNulty Memorandum, federal prosecutors are generally prohibited from considering the advancement of attorneys' fees for this purpose. In what Deputy Attorney McNulty describes as "extremely rare cases" where the corporation appears to be impeding the government's investigation, however, the advancement of attorneys' fees may be considered as a factor.

In summary, the revisions to the DOJ's corporate prosecution guidelines as articulated in the McNulty Memorandum create internal oversight and controls for the DOJ to police itself with respect to the powers it uses when investigating corporations and determining whether to file criminal charges. It remains to be seen whether this proactive measure will prevent Congressional intervention. Legislation proposed by Senator Arlen Specter would curtail the government's powers in the context of corporate investigations, including prohibiting federal prosecutors from seeking waiver of the attorney-client privilege under any circumstance.