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The American Bar Association voted Tuesday to contest proposed new sentencing rules that reward wayward companies that surrender private legal documents to prosecutors. The rules will take effect in November, unless Congress intervenes. They were approved this past spring by the U.S. Sentencing Commission, among changes intended to crack down on corporate wrongdoing. The problem, the ABA’s policy-making body said, is that companies would have to give up the traditional guarantee that conversations and paperwork between lawyers and clients will remain secret. The revisions were in part a response to financial scandals, including the 2002 conviction of accounting firm Arthur Andersen for destroying and altering documents pertaining to troubled Enron Corp. Under the old system, companies convicted of crimes were eligible for leniency if they had internal programs to fight criminal wrongdoing and reported problems to the government. Prosecutors have argued that companies have a responsibility to do more. Houston attorney Allan Van Fleet told ABA leaders that employees who talk to company lawyers, believing the conversations will be kept private, would be the ones ultimately hurt by the rules intended to show a company is cooperating. “This is just plain bad policy,” said Van Fleet, a partner with law firm Vinson & Elkins, which represented Enron. The ABA approved a report that said attorney-client privilege encourages frank communication between attorneys and their clients. It also said any information revealed could be used in civil lawsuits against companies. “An incentive structure that dissuades companies from coming forward will hurt the government’s efforts to detect and prosecute criminal violations and eventually reduce compensation to victims,” the report said. Tuesday’s vote allows the 400,000-member ABA to lobby against the sentencing changes. The nonpartisan ABA’s policy positions are not law. Not all members supported the proposal, the final issue taken up during the ABA’s summer meeting in Atlanta. Washington attorney Judah Best said the changes do not require companies to waive privilege in every case to get leniency. He said the emphasis is on disclosing problems promptly, which is not too much to ask of company executives. Copyright 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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