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The memorandum issued by Deputy U.S. Attorney General Paul J. McNulty last Dec. 12 to replace the infamous Thompson Memorandum has drawn mixed reviews. (The McNulty Memorandum is available at www.usdoj.gov/dag/speech/ 2006/mcnulty_memo.pdf.). The American Bar Association thinks the memorandum has not gone far enough in curbing demands for waivers of the attorney-client privilege. Professor John Coffee of Columbia Law School thinks it has gone too far. Senate Judiciary Committee Chairman Patrick J. Leahy, D-Vt., said he would monitor actual conduct under the new memorandum. In January, Senator Arlen Specter, the ranking minority member of the committee, reintroduced his proposed Attorney-Client Privilege Protection Act, which he says is still needed. Andrew Weissmann and Ana R. Bugan gave praise and criticism a few weeks ago in these pages. Nearly all the comments on the new memorandum have focused on its provisions covering requests for waivers of the attorney-client privilege and on the significance, for purposes of assessing corporate “cooperation,” attached to corporate advancement of attorney fees for current and former employees. In part VII of the memorandum, on “The Value of Cooperation,” however, there is another important section that merits more attention that it has received: the one under the heading “3. Shielding Culpable Employees and Agents.” Help to employees ‘shielding the culpable?’ That heading, itself, tells most of the story. The Department of Justice (DOJ) still asserts the power to declare employees and agents “culpable” and to hold against a corporation any “promise of support to culpable agents and employees,” apart from advancement of attorney fees pursuant to statute, bylaw or contract. Even customary forms of assistance to employees to enable them to assess their situation and defend themselves as our legal tradition and values contemplate is characterized as “[s]hielding” the “culpable.” Of course, it is part of a prosecutor’s job to decide whether individuals can be proved culpable beyond a reasonable doubt, in order to decide whom and what to charge. It does not follow, however, that it is appropriate for a prosecutor to demand or expect that others will treat an individual as culpable simply because a prosecutor has decided to do so. In most circumstances, the prosecutor’s determination of culpability is based on incomplete information. The prosecutor ordinarily does not have the “culpable” employee’s version of events or that of other individuals who have not answered the prosecutor’s questions. The prosecutor has not heard cross-examination of the witnesses, and may not have heard alternative interpretations of the documents the prosecutor is relying on to support the determination of culpability; and the prosecutor may not know of witnesses the “culpable” employee may call, or documents the employee may adduce. Most fundamentally, in our society, final determinations of culpability-the kind that corporations and others may fairly be expected to act on-are made after indictment or information and trial or plea, not before. Final determinations of culpability are made by courts after the accused has received due process of law, not by prosecutors after a one-sided investigation. The McNulty Memorandum’s unexamined use of the category of “culpable employees and agents” is contrary to the central tenets of our criminal justice system. The memorandum provides that “retaining [culpable] employees without sanction for their misconduct or through providing information to the employees about the government’s investigation pursuant to a joint defense agreement, may be considered by the prosecutor in weighing the extent and value of a corporation’s cooperation.” This passage is problematic on several grounds. Whether a corporation retains a “culpable” employee without sanction has nothing to do with cooperation, unless it is DOJ’s position that cooperation includes trying to impoverish targeted individuals and thereby reduce their ability to defend themselves. One would expect the “sanction” for the kinds of “misconduct” that attract the interest of federal prosecutors to be dismissal or suspension from employment. For a corporation to impose such a sanction, the corporation normally should have sufficient evidence and should provide the employee at least some minimal opportunity to respond to that evidence. Yet prosecutors usually urge corporations not to disclose incriminating evidence to targeted individuals. The McNulty Memorandum thus apparently contemplates summary dismissals from employment on grounds of “misconduct,” but such actions would be unfair. Normally, a corporation under criminal investigation conducts its own investigation for its own business purposes; and the results of that investigation may lead it to discipline employees it determines have not served the corporation properly. Such disciplinary actions, if any, are not part of cooperation with prosecutors, but rather part of the corporation’s remedial actions to enhance its efforts to comply with law and its own standards of conduct, and to assure its various constituencies that it will function properly henceforth. Legitimate prosecutorial interest in a corporation’s disciplining of its employees relates not to whether the corporation is cooperating but to whether it is self-reforming, so that an indictment is not needed to teach it a lesson. Because corporate self-reform can take many forms besides employee discipline, however, prosecutorial judgment as to whether a corporation is reforming on its own should take into account the full range of the corporation’s remedial efforts, as the memorandum acknowledges in part IX on restitution and remediation. The memorandum does not address whether a prosecutor may weigh against a corporation its refusal to discipline an employee for refusing to answer the prosecutor’s questions, in an interview or before a grand jury. Prosecutorial pressure on an employer to impose discipline on that ground arguably violates the Fifth Amendment. Prosecutorial attempts to restrict the flow of “information . . . about the government’s investigation” from a corporation to individuals, including individuals the prosecutors view as “culpable,” are very troubling to the extent they go beyond justified concerns about flight or obstruction. A corporate criminal investigation typically involves production by a corporation to the prosecutors of large volumes of documents. Typically, access to those documents is critical for employees under investigation to make intelligent decisions about the courses they will take in the investigation. Typically, the documents that employees need to see are unprivileged. And, until the Thompson Memorandum, it was customary for corporations to make them available to lawyers representing employees. In a speech that accompanied the issuance of his new memorandum, Deputy Attorney General McNulty said: “As prosecutors, we are committed to the fair administration of justice and equal treatment under the law.” The speech is available at www.usdoj.gov/dag/speech/ 2006/dag_speech_061212.htm. Except where there is a justified concern about flight or obstruction, the “fair administration of justice” requires that prosecutors not pressure corporations with the threat of indictment if they give individuals who are subjects or targets in the investigation access to the central documents in the case. Using such a threat of indictment to keep individual subjects and targets ignorant of the evidence provided by their employer is unfair. An unanswered question on unprivileged information As stated in the memorandum, the restriction on provision of information is limited to provision “pursuant to a joint defense agreement.” Joint defense agreements exist to preserve the attorney-client privilege. If a corporation seeks to provide unprivileged information to an employee, it can do so without, or outside of, a joint defense agreement. It is unclear whether the memorandum intends to permit a prosecutor to hold against a corporation such provision of unprivileged information, unprotected by any joint defense agreement. If the reference to joint defense agreements is intended to limit the restriction on disclosure to “culpable” employees to information protected by the corporation’s attorney-client privilege, it is difficult to see much point in the restriction. Facts, in contrast to communications, commonly are not privileged (exception: where a party’s knowledge of a fact could have come only from a privileged communication, so that disclosure of the fact is disclosure of the communication). A corporation could learn facts not only in a privileged communication involving its lawyer but also in an unprivileged communication not involving a lawyer. So, commonly, a corporation could disclose facts to an employee without the privilege being implicated. Where employee A seeks information the corporation learned in a privileged communication between employee B and corporate counsel, A (or, more likely, A’s lawyer) has the alternative of seeking the information directly from B (or, more likely, B’s lawyer). As a practical matter, prosecutors cannot stop such communications between individuals (and their lawyers) by pressuring corporations. So, if the memorandum’s threat is limited to a corporation’s disclosure of privileged information, it serves little or no purpose. For these reasons, clarification of DOJ’s instructions to prosecutors about flows of information from corporations to “culpable” employees is needed-or, better still, DOJ should withdraw the threat to hold against a corporation its provision of information about the government’s investigation to a current or former employee that the prosecutor considers “culpable.” Richard Cooper is a partner at Williams & Connolly in Washington. He can be reached via e-mail at [email protected].

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