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The U.S. Department of Justice is feeling the heat over the Thompson Memo-Deputy Attorney General Paul McNulty made that clear during a recent Senate hearing. The memo lays out the department’s internal guidelines on bringing criminal charges against corporations. Business advocates and legal experts have sharply criticized Justice for using the memo to pressure corporate defendants to waive their attorney-client privilege. Speaking before the Senate Judiciary Committee in September, McNulty said, “I’ve got the [Senate Judiciary] chairman and ranking chairman upset; former department attorneys general and other officials [are] complaining. Everyone is complaining,” But McNulty added, “I believe the perception of how this works is different from the reality. I really don’t see this as the kind of coercive practice that is being described by groups.” Senate Judiciary Chairman Arlen Specter (R-Pennsylvania) and ranking minority leader Patrick Leahy (D-Vermont), both former prosecutors, questioned McNulty and a panel of critics about the Thompson Memo. The memo tells federal prosecutors to consider nine factors in determining whether to charge a corporation for criminal wrongdoing. One of those factors is whether the corporation has cooperated in the investigation. In assessing cooperation, the memo says, prosecutors can consider whether the corporation waived attorney-client and work-product protections. But at the hearing, McNulty insisted that whether a company waives its privilege is “just one part of one factor” in determining whether it should face criminal charges. “It’s not an investigative issue; it’s a charging issue. If [the company] has cooperated, which they almost always do, that’s when the [question] � do you have an internal investigation report? � comes up.” Internal investigation reports, usually written by a company’s outside lawyers, are commonly requested in a government probe. Specter countered, “As I read [the Thompson Memo], I think it is coercive and may even rise to the level of being a bludgeon. I would ask you to reconsider the policy.” Edwin Meese III, an attorney general in the Reagan administration, told the senators that the Thompson Memo should be amended to eliminate any reference to waiver of attorney-client privilege and work-product protections in a charging decision. “In the same manner and same context, all references in the memorandum to a company’s payment of its employee’s legal fees should be eliminated,” he said. (The fee issue has recently emerged as a second concern for Justice’s critics. This summer a federal judge found that the government had pressured KPMG LLP to stop paying the legal fees of several indicted former employees.) Meese also recommended that the Justice Department’s written policies should explicitly state that requests for waiver will only be approved in exceptional circumstances. These requests should be approved only at the national level, and the department should publish its procedures on waivers, as well as collect and publish statistics on how often waivers are requested, how often businesses agree to such requests, and how often businesses waive even without a request from prosecutors. Former Enron Corp. prosecutor Andrew Weissmann, now a partner at Jenner & Block, also urged the committee to consider revising the standard for indictment of a corporation for the acts of its employees. He suggested a higher criminal standard tying the acts of the employee more closely to the corporation than is currently used. At the hearing Specter said that his committee had several options. It could recommend that the Justice Department change the Thompson memo; it could wait to see how the waiver and fee issues are resolved in the KPMG case; or it could propose legislation. Two days later Specter announced his personal choice at a D.C. conference. According to a press release from the Association of Corporate Counsel, the senator said that he would introduce legislation that would prohibit prosectuors from considering privilege waiver in determining whether to charge a company. Specter said his bill would also bar Justice lawyers from looking at whether a business had continued to pay the legal fees of indicted employees. � Marcia Coyle

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