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Legislation that would prohibit government prosecutors from pressuring companies to waive the attorney-client privilege was introduced Thursday in the House by Rep. Bobby Scott, D-Va.

The legislation comes as a response to new guidelines issued in December by Deputy Attorney General Paul McNulty of the Department of Justice to federal prosecutors conducting investigations into suspected corporate fraud and other financial crimes. McNulty issued the guidelines after mounting pressure from Congress to ease aggressive tactics used to obtain cooperation from targeted companies.

McNulty's guidance came in the wake of mounting criticism over a 2003 memorandum by then-Deputy Attorney General Larry Thompson spelling out factors federal prosecutors must consider when deciding to bring charges against corporations suspected of wrongdoing. One of the most controversial of Thompson's demands was a requirement that corporations, in order to prove their cooperation and receive more lenient treatment, waive the attorney-client privilege guaranteed by the Constitution and turn over findings of their internal investigations to the government. They also were required to stop paying attorney fees for employees under investigation and fire employees who refused to cooperate with investigations.

The so-called Thompson Memo was criticized by a wide range of organizations, including the American Bar Association, the U.S. Chamber of Commerce, the American Civil Liberties Union and former high-ranking Department of Justice officials.

The provision allowing prosecutors to demand that employees' legal fees be terminated was declared constitutional by a federal district court.

McNulty's subsequent guidance scaled back the more controversial aspects of the Thompson Memo and required prosecutors to obtain supervisors' approval before demanding that companies waive their client-attorney privilege.

But critics of the DOJ's practices say McNulty didn't go far enough to protect constitutional rights of companies and their employees.

"Instead of eliminating the improper department practice of requiring companies to waive their privileges in return for cooperation credit, [McNulty's guidelines] merely require high-level department approval before waiver requests can be made," American Bar Association president Karen Mathis said in a statement.

Caroline Fredrickson, director of the ACLU Washington Legislative Office, said the legislation is necessary "in order to protect against overzealous government investigations." She added that forcing organizations and their employees to give up their attorney-client privilege "is an assault on the constitutional right to have legal representation -- a bedrock principle of our legal system."

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