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Judge Lewis A. Kaplan’s recent opinion in the KPMG-related criminal case is to date the most significant judicial assault on the U.S. Department of Justice’s Thompson Memorandum. Yet for all its pioneering analysis, and just when you think a touchdown a sure thing, the opinion falls short of the goal line. The Thompson Memorandum, released by Deputy Attorney General Larry Thompson to U.S. attorney’s offices across the country on Jan. 20, 2003, states that cooperation with the government is premised in part upon whether an entity refuses to pay for the legal defense of its employees. Entities that refuse to pay are “cooperators.” Those who pay for their employees’ defense are threatened-sometimes implicitly and sometimes explicitly-with dire consequence for “non-cooperation.” See www.usdoj.gov/dag/cftf/business_organizations.pdf. Having witnessed the demise of Arthur Andersen after its indictment, KPMG understandably opted for “cooperation,” refusing to pay legal fees beyond that to which they were otherwise committed. Violation of constitutional rights The individual defendants moved for dismissal of the case as well an award of legal fees or, in the alternative, for payment of ongoing defense fees and expenses were the court to deny dismissal. After three days of hearings, Kaplan found the government’s position linking KPMG’s cooperation (and therefore eligibility for a deferred-prosecution agreement) with its refusal to pay legal fees to be violative of the individual defendants’ substantive due process rights, as well as their Sixth Amendment right to counsel. In so doing, Kaplan opined that prosecutorial imposition of economic punishment before any finding of guilty was an abuse of power. The judge then further observed that even if constitutional violations are found, dismissal is an extreme sanction to be imposed only when a lesser remedy cannot be fashioned. He then judicially crafted what he perceived to be an appropriate remedy-a civil lawsuit by the defendants against KPMG assigned to himself to decide whether KPMG would be required to pay the requested fees. Implied by the judge’s remedy was a thinly veiled notice to the government that it should not consider such payments by KPMG as indicia of noncooperation. Too little, too late But this structured judicial remedy simply does too little, too late. The government’s conduct prejudiced the defendants’ ability to make critical pretrial decisions, including what lawyer to hire; whether and on what terms the defendants might cooperate with the government or plea bargain; or other lawyering that might prevent an indictment. In short, denial of legal fees at this early stage when the individuals were grand jury “targets,” “subjects” or perhaps only witnesses, cannot be atoned for after the fact. One day prior to Kaplan’s opinion, the Supreme Court decided U.S. v. Gonzalez-Lopez, 126 S. Ct. 2557 (2006), involving, in a post-indictment context, the Sixth Amendment right to counsel. Building upon this opinion, Kaplan further opined that when a criminal defendant cannot be restored to the position that he or she otherwise would have occupied, the case should be dismissed. Yet in so opining, Kaplan failed to take into consideration the full panoply of pretrial lawyering forever lost when the government interferes with the attorney-client relationship, whether it is before or after formal charges are proffered. Gonzalez-Lopez speaks volumes as well about the “unquantifiable” and “indeterminate” damage that can and does occur in a pretrial setting when there is interference with the attorney-client relationship. As Justice Antonin Scalia, writing for the majority, cogently stated in Gonzalez-Lopez: “Different attorneys will pursue different strategies with regard to investigation and discovery [and] development of the theory of defense . . . .And the choice of attorney will affect whether and on what terms the defendant cooperates with the prosecution, plea bargains, or decides to go to trial.” Such tactical decisions are not unique to post-indictment situations. Indeed, as every defense counsel knows, the ability to avoid indictment entirely is far more beneficial to a client than post-indictment lawyering can ever be. Avoiding the stigma of indictment is clearly to be preferred to even an acquittal secured after a trial. Government should not intrude This is not to say that an individual must be provided counsel pre-indictment. But when an individual has sought, or is seeking, counsel in a pre-indictment setting, the government should not intrude upon that relation in any manner. If it does, there is the “unquantifiable” substantive due process violation resulting in “indeterminate” prejudice of which the Supreme Court so recently spoke. Any effort to draw a fine line between such pre- and post-indictment due process violations is merely structuring a distinction without a difference. So long as the systematic constitutional violations fostered by the Thompson Memorandum result in sanctions less severe than dismissal, the government will continue to foster such a process whether through the Thompson Memorandum or otherwise. The indictment of the defendants in the KPMG-related criminal case should have been dismissed. Clearly the demise of the Thompson Memorandum cannot come too soon. Stephen W. Grafman and William F. Boyer are members of Washington-based Sharp & Associates. Grafman formerly was an assistant U.S. attorney; Bayer formerly was a federal law clerk.

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