By James Hamilton, J.D., LL.M.
Against the backdrop of the bi-partisan Attorney-Client Privilege Protection Act, sponsored by Judiciary Committee Ranking Member Arlen Specter, DOJ asked for time to implement the changes to McNulty and review their operation after a ``reasonable amount of time’’ before legislation is pursued in this area. The House passed a companion bill (HR 3013) to the Specter bill last year.
Specifically, DOJ said it would make five substantive changes to the principles in the next few weeks. First, cooperation with an investigation will be measured by the extent to which a company discloses relevant facts about the misconduct and not by any waiver of its privileges. Second, federal prosecutors will not demand the disclosure of McNulty Category II information as a condition for cooperation credit. Category II information is non-factual attorney work product and core attorney-client privileged communications. But DOJ emphasized that attorney-client communications made in furtherance of a crime or fraud, or that relate to an advice-of-counsel defense, are excluded from the privilege by well-settled case law.
Third, federal prosecutors will not consider whether the company has advanced attorney fees to its employees in evaluating its cooperation. Fourth, federal prosecutors will not consider whether the company has entered into a joint defense agreement when evaluating corporate cooperation. The government may, however, request that a company refrain from disclosing to others sensitive information about the investigation that the government provides in confidence to the company, and may consider if the company has abided by this request. Fifth, federal prosecutors will not consider if the company has retained or sanctioned employees in evaluating cooperation. But, how and whether a company disciplines culpable employees may bear on the quality of its remedial measures or its compliance program.
In a response letter to DOJ, Senator Specter said that, given the lengthy delays and the potential prejudice involved in these matters, it is too much to ask for the legislative process to await a written revision of McNulty and then await a review of the implementation of a new memorandum for a ‘reasonable amount of time’ which could be very long.
While acknowledging that the revised memorandum will be more explicit, the senator described the revisions being readied as ``unsatisfactorily vague.’’ For example, while cooperation will be measured by the disclosure of facts and evidence and not the waiver of privilege, such facts and evidence may have been obtained from an individual who expected that the confidentiality of his or her disclosures of facts and evidence would be protected under the attorney-client privilege. Here, the senator cited the example of the employees in the case, In re Grand Jury Subpoena: Under Seal, 415 F.3d 333 (4th Cir. 2005), who were confused about confidentiality because the company’s counsel told them, “We can represent you as long as no conflict appears.”
Further, in his view, a reference excluding non-factual attorney work product still leaves a large undefined area where factual and non-factual attorney work product may overlap.
On the question of federal prosecutors not considering whether the corporation has entered into a joint defense agreement, Sen. Spector wants to know what relevance that factor has ever had and how often DOJ opposed such joint defense agreements in the past. Similarly, as to federal prosecutors not considering sanctions against employees, the senator wants to know what relevance that ever had and what the DOJ has done on that matter in past cases.
Issued in late, 2006, the McNulty Memo provides standards to guide federal prosecutors when they request disclosure of privileged information. The policy clarifies that attorney-client communications should only be sought in rare cases. Before prosecutors request protected legal advice, mental impressions and conclusions and legal determinations by counsel, they must take the requests to their U.S. Attorney, who must seek approval directly from the deputy attorney general. In order to support their request, prosecutors must meet a "legitimate needs" test for the information, including the likelihood that the privileged information will benefit the government's investigation and whether the information sought can be obtained in a timely and complete fashion by using alternative means that do not require waiver.