Under pressure to catch the crooks: the impact of corporate privilege waivers on the adversarial system.

• Author: Silbert, Earl J.

Our criminal justice system is, at its core, an adversarial system. "The very premise of our adversary system of criminal justice is that partisan advocacy on both sides of a case will best promote the ultimate objective that the guilty be convicted and the innocent go free." (1) Each side in this adversarial process has, through the Constitution, statutes, rules of procedure and case law, certain powers and rights that allow it to implement and promote its advocacy interests for the fair administration of justice. The government, for example, has certain necessary powers such as grand jury subpoenas for documents and testimony, electronic surveillance, and search warrants. These powers ensure that the government can adequately and effectively investigate wrongdoing and prosecute culpable parties. Individuals also have certain fundamental rights that help them to defend themselves when they are the focus of the government's investigation. These rights include the Fourth Amendment right against unreasonable searches and seizures, the Fifth Amendment protection against self incrimination, and the Sixth Amendment right to counsel. Basic to the protection of these rights is the right to converse freely and frankly with counsel. For defendants in criminal cases and investigations, either corporations or individuals, the ability to engage in forthright and uninhibited exchanges with counsel is fundamental to their capacity to exercise and protect their constitutional and other basic rights.

The Department of Justice's current policy of seeking and encouraging waivers of the attorney client and work product privileges from corporations, however, places them in an untenable position. Corporations are forced to choose between the constitutional and other rights they and their employees are afforded in order to protect their interests during a criminal investigation and to prevent the often devastating impact that comes with being named in a criminal indictment. The external governmental pressure placed on corporations to waive their rights and relinquish the privileged nature of their relationship with counsel undermines the very basis of the adversarial process: the ability of one of the adversaries to receive the benefit of counsel's confidential legal advice and work product.

The attorney client privilege is the oldest evidentiary privilege in the common law. The privilege protects confidential communications between an attorney and his client and exists "to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice." (2) Confidential communications between attorney and client receive special protection because society recognizes "that sound legal advice or advocacy serves public ends and that such advice or advocacy depends upon the lawyer's being fully informed by the client." (3) "[T]he privilege exists to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice." (4)

On June 16, 1999, the then Deputy Attorney General of the Department of Justice issued a memorandum regarding bringing criminal charges against corporations. The purpose of the memorandum, which became known as the Holder Memo, was to provide "guidance as to what factors should generally inform a prosecutor in making the decision whether to charge a corporation in a particular case." (5) The memo specifically listed nine factors prosecutors should consider, including: (1) "the nature and seriousness of the offense;" (2) "the pervasiveness of wrongdoing;" (3) the "history of similar conduct" by the corporation; (4) "the corporation's timely and voluntary disclosure of wrongdoing and its willingness to cooperate in the investigation of its agents, including, if necessary, the waiver of the attorney client and work product privileges;" (5) the "adequacy of corporation's compliance program;" (6) any "remedial actions" taken by the corporation; (7) any "collateral consequences" of the corporation's conduct; and (8) "the adequacy of non-criminal remedies" that might be appropriate. (6)

The memo presented the Department's initial position statement that a "corporation's timely and voluntary disclosure of wrongdoing and its willingness to cooperate with the government's investigation may be relevant factors" in determining whether to charge the corporation with a crime. (7) In assessing the corporation's willingness to cooperate with a government investigation, the government can consider "the completeness of its disclosure including, if necessary, a waiver of the attorney-client and work product protections, both with respect to its internal investigation and with respect to communications between specific officers, directors, and employees and counsel." (8) The purpose of such waivers, according to the Holder Memo, is to "permit the government to obtain statements of possible witnesses, subjects, and targets, without having to negotiate individual cooperation or immunity agreements. In addition, they are often critical in enabling the government to evaluate the completeness of a corporation's voluntary disclosure and cooperation." (9)

Approximately three years later, on January 20, 2003, the then Deputy Attorney General issued a subsequent memorandum regarding Principles of Federal Prosecution of Business Organizations. After three years of experience working with the factors outlined in the prior Holder Memo, the main focus of the revisions in the updated memo, now identified as the Thompson Memo, was an "increased emphasis on and scrutiny of the authenticity of a corporation's cooperation." (10) The Department maintained that "[t]oo often business organizations, while purporting to cooperate with a Department investigation, in fact take steps to impede the quick and effective exposure of the complete scope of wrongdoing under investigation. The revisions make clear that such conduct should weigh in favor of corporate prosecution." (11)

A Department of Justice official subsequently explained the new standard for cooperation, explicitly stating that, "for a corporation to get credit for cooperation, it must help the Government catch the crooks." (12) Compliance no longer means simply complying with subpoenas. Rather, "[w]hen misconduct is discovered, the Department expects corporations to self-report to law enforcement, including any regulators, to investigate the misconduct, to discipline any wrongdoers, and to cooperate fully with government investigations." (13) Prosecutors, according to the Department, "are generally seeking the facts: what happened, who did, how they did it." (14)

If a "critical" witness refuses to consent to a Government interview, and, therefore, hinders the government's attempt to gather information, "the Government may turn to the corporation and seek the information imparted when those particular employees were interviewed." (15)

Moreover, the Department expects that a corporation demonstrate to its employees "the premium it puts on obtaining full information about misconduct of any kind and reporting wrongdoing to the authorities...." (16) In order to achieve this end, the Department explained that corporations should avoid joint defense agreements that prevent it from making full disclosures about criminal activity and should not tolerate employees refusing to be interviewed. (17) The Department, completely disregarding an employee's essential Fifth Amendment right when being interviewed by an 'agent' of the Government, explained that a corporation that does not fire an employee who refuses to be interviewed is not "acting in its shareholders' interests." (18) "The message has to be sent," explained the Department, "that disclosure of misconduct will be rewarded, and failure to disclose will be punished." (19)

In sum, the Department now contends that "there is nothing wrong" with the Government using the waiver of the privilege "to piggy-back on the investigation conducted by the corporation." (20) Corporations conduct internal investigations that cost millions of dollars, investigations that "[f]ederal prosecutors don't have funds for ... and would be unable to replicate...." (21) Apparently, because a corporation is already spending those millions of dollars, if it "wants to earn leniency in the [Government's] charging decision ... it will have to figure out a way to tell the Government what it knows about the misconduct and to help us catch the wrongdoers." (22)

The Department of Justice's position is, perhaps, best summarized by remarks made by the then Assistant Attorney General for the Criminal Division to the Association of Certified Fraud Examiners Mid-South Chapter on September 2, 2004:

The message we're sending to corporate America [regarding cooperation] is twofold: Number one, you'll get a lot of credit if you cooperate, and that credit will sometimes make the difference between life and death for a corporation. Number two, if you want to ensure that credit, your cooperation needs to be authentic: you have to get all the way on board and do your best to assist the government. (23) Thus, the choice between "life and death" for today's corporation often means becoming the government's agent in the criminal process and, consequently, stripping that process of its adversarial nature and surrendering privileges and rights guaranteed under the Constitution.

The Department's position on waiver of the attorney client and work product privileges is poor policy. It is poor policy for one party to the adversarial process, the government, with its vast array of powers, to coerce its corporate adversary to surrender the means (attorney client and work product privileges) by which it exercises all its constitutional and other rights. Waivers of the attorney client and work product...