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The memorandum that bears his name is working, Deputy Attorney General Paul McNulty said last week. That was the message that the Justice Department’s No. 2 official delivered at an April 17 D.C. Bar panel on corporate-fraud prosecutions and attorney-client privilege waivers, hosted by Crowell & Moring. Caught in the storm of criticism surrounding the Justice Department’s firing of eight U.S. attorneys, McNulty made a rare public appearance to highlight the DOJ’s new approach to prosecuting corporate fraud. McNulty took no questions after his 20-minute speech and left almost immediately after delivering his remarks. In a brief interview with Legal Times before he left, McNulty acknowledged that the congressional furor over the U.S. attorney scandal has made it more difficult to get Justice’s message about its corporate-fraud policies across to lawmakers. But he was tight-lipped about a news report last week suggesting he was looking for a job in the private sector. Asked if he was looking for a new job, McNulty responded, “I can’t answer that.” When asked if he planned to stay at Justice for the final 21 months of the Bush administration, McNulty said with a smile, “I think I better limit my comments to the [corporate-fraud policy].” Responding to complaints from business and legal groups, McNulty issued a memorandum in December outlining new procedures restricting how prosecutors can ask companies to waive attorney-client and work-product privileges in major fraud investigations. “Critics can no longer say federal prosecutors request waiver without cause or without limitation,” McNulty said at the bar panel. “The memo is accomplishing its purpose.” The new guidance instructs prosecutors in the field to get approval from the head of Justice’s Criminal Division in Washington before requesting that companies turn over the results of privileged internal investigations. Previously, U.S. Attorney’s Offices across the country could use their own discretion when requesting waivers from corporations. Since the McNulty memo was issued a little more than four months ago, Justice has received just six such requests and has approved five of them, McNulty said. For other types of privileged material, such as the advice from a company’s lawyers to its executives, prosecutors need the approval of McNulty himself. So far, the deputy attorney general says, he’s received no such requests for that type of waiver. That, said McNulty, shows that prosecutors haven’t been requesting waivers as often as the department’s critics suggest. McNulty’s comments were questioned by panelists speaking before a luncheon crowd of roughly 100 lawyers at Crowell’s offices. The McNulty memo, a revision of an earlier policy written by then-Deputy Attorney General Larry Thompson (known as the Thompson memo), has proved to be “too little, too late,” said Susan Hackett, a lawyer for the Association of Corporate Counsel. “The culture of waiver already exists.” Thomas Hanusik, a white-collar criminal-defense lawyer for Crowell who left the Justice Department’s Fraud Section last year, said he had firsthand experience with the subtle ways in which prosecutors have been asking for waivers since the McNulty memo was issued. In one corporate-fraud case, Hanusik said, rather than formally request his client waive the privilege, a prosecutor posed the question as a hypothetical. “If I asked, what would the response [to a waiver request] be?” Hanusik said the prosecutor asked him. Stephanie Middleton, chief civil counsel to the Senate Judiciary Committee, said the McNulty memo hasn’t alleviated concerns. Because Justice policy still allows prosecutors to weigh whether companies waive their privilege in deciding whether to bring an indictment, companies choose not to waive at their own peril. An indictment can be fatal for a company, as was the case for accounting giant Arthur Andersen, which collapsed after being indicted in 2002. The Senate Judiciary Committee briefly considered a bill last year that would have banned any branch of the federal government from demanding that companies or individuals waive their attorney-client privilege or from using such waiver as a factor in judging whether cooperation was being provided in a federal investigation. But so far, the committee’s chairman, Vermont Democrat Patrick Leahy, has refrained from supporting the bill this session, saying he wants to give McNulty’s changes a chance.
Jason McLure can be contacted at [email protected].

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