Q&A

New DOJ Rules on Corporate Prosecution: What Do They Mean For CSOs?

The DOJ has recently revised its guidelines for prosecuting business organizations to assist prosecutors in deciding under what circumstances to bring corporate charges. Will these new rules make life tougher for CSOs?

By Joan Goodchild, Senior Editor

October 01, 2008 — CSO —

The Department of Justice recently announced new guidelines for prosecuting business organizations and incorporated them into the U. S. Attorney's Manual to assist prosecutors in deciding under what circumstances to bring corporate charges. The new principles state that eligibility for cooperation with benefits is not contingent on a client's waiving either attorney-client communications or attorney-work product.

Jonathan N. Halpern, a partner with Bracewell & Giuliani LLP in New York, recently spoke with CSO Senior Editor Joan Goodchild. Halpern, who spent 15 years as an Assistant U.S. Attorney with the U.S. Attorney's Office for the Southern District of New York, discussed what these new changes mean for CSOs and other corporate executives.

Perhaps the best place to start is to lay out what is new in these recently announced guidelines. Could you explain?
What happened most recently is the Department of Justice has put in place what's called new principles of federal prosecution of business organizations. These are included in the US Attorneys Manual. They are a whole series of considerations for prosecutors use to determine whether to bring charges against a corporate entity.

These new guidelines supersede what is known as the McNulty Memorandum, which was a memorandum that set forth principles to guide attorneys in 2006. Those guidelines were, in turn, to address the Thompson Memo, which was set forth in 2003. The Thompson Memo identified as a basis of cooperation issues of waiver, which were essential to whether a corporation was advancing legal fees or otherwise indemnifying employees that were viewed to be culpable. And another component of that perceived cooperation was whether corporations waived attorney-client privilege or attorney-work product material that otherwise would be protected. Those were factors a prosecutor could consider when decided whether a company was cooperating.

Now what's set forth is a whole series of factors for prosecutors to consider when determining whether to bring charges against a business. One of those factors, and there are many, is whether a corporation has cooperated. But with these new principles, the DOJ has explicitly said that waiver of attorney-client privilege or work-product materials should not be considered as basis for prosecution. In fact, there is a directive to prosecutors not to even request it.

This is a big difference from McNulty Memorandum which set up a dual-tier system that said: First we want the facts. So, if there are facts set up through interviews with company attorneys, and those facts can't be attained through non-privileged materials, we can access them through privileged materials. Now explicitly they say the government may not ask for that. Of course, corporations may always waive attorney-client privilege, but it is not going to be a factor when considering cooperation.