The Attorney-Client Privilege Protection Act: the prospect of congressional intervention into the Department of Justice's corporate charging policy.

• Author: Gilman, Andrew

Introduction I. The Corporate Attorney-Client Privilege and White-Collar Investigations A. The Origin and Mechanics of the Corporate Attorney-Client Privilege B. The Mechanics and Implications of Waiving the Attorney-Client Privilege and Work-product Protections C. The Department of Justice Corporate Charging Policies: From the Holder to McNulty Memos and Beyond 1. An Overview of the DOJ Corporate Charging Polices 2. The McNulty Memo 3. The Revised DOJ Guidelines D. The Privilege Protection Act 1. The Privilege Protection Act of 2007 2. The Privilege Protection Act of 2008 II. Evaluating White-Collar Investigations under the Attorney-Client Privilege Protection Act: What Might Specter's Bill Accomplish? A. How the Privilege Protection Act Might Affect the Logistics of White-Collar Investigations 1. The Argument Against the Act's Implementation a. The Privilege Protection Act May Increase Inefficiency in white-Collar Prosecutions b. The Privilege Protection Act May Decrease a Corporation's Willingness to Cooperate with the Government and Minimize the Deterrent Effect of White-Collar Prosecutions c. The Privilege Protection Act May Chill Communications Between Prosecutors and Defense Counsels, and Open the Door to Prosecutorial Liability d. A Legislative Solution Might Unduly Hamper Prosecutorial Discretion 2. The Argument for the Act's Implementation. a. The Government May Conduct Effective White-Collar Investigations Without the Aid of Privilege Waiver b. A Corporation May Sufficiently Cooperate Without Waiving Its Privilege c. The Privilege Protection Act Is Consonant with Other Legislative Restraints on Prosecutorial Conduct B. How the Privilege Protection Act Will Affect Waivers in White-Collar Investigations 1. Supporters of the Privilege Protection Act Claim that the Act Will Bolster the Privilege and Remedy the "Culture of Waiver" that Pervades white-Collar Investigations 2. Detractors Argue that the Privilege Protection Act Will not Prevent Privilege Waivers from Serving as a Mainstay of White-Collar Investigations III. The Potential Ramifications of the Attorney-Client Privilege Protection Act Weigh Against Its Passage into Law A. Why the Senate Should not Pass the Privilege Protection Act in Its Current Form B. The Revised DOJ Guidelines: Corporate Cooperation as a Best Practice C. A Second Look at Selective Waiver Conclusion INTRODUCTION

Cooperation in a criminal investigation often involves a degree of coercion. Severe consequences might befall the subject of an investigation who refuses to cooperate or strike a deal with prosecutors. The subject may have little strategic choice in the matter, but nevertheless, such cooperation remains voluntary, assuming that the state actor abides by constitutional restraints. With the waiver of rights cooperation entails--notably the Fifth Amendment right against self-incrimination and the Sixth Amendment right to trial by jury--comes the age-old carrot of prosecutorial and judicial leniency. (1) The criminal justice system mass-produces this trade-off on a daily basis. When a corporation becomes the cooperator, some things do change; however, many stay the same. Corporate liability changes the format of a prosecution inasmuch as the entity exists as an amalgam of its agents' actions, but retains its rights just as an "individual" defendant. (2) As its interest demands, a corporation may waive its rights, including its attorney-client privilege, just as millions of other criminal defendants do to secure leniency. Corporate privilege waivers, however, have generated exceptional controversy despite the widespread nature of analogous waivers in the justice system. (3) This controversy stems in large part from recent Department of Justice ("DOJ") corporate charging policies that directed prosecutors to consider privilege waivers in evaluating corporate cooperation. These policies, some argue, leave corporations little choice but to waive their attorney-client privilege. (4) Those who oppose waiver practices are powerful and loud enough that Congress is now contemplating the passage of the Attorney-Client Privilege Protection Act: a bill that would prohibit prosecutors from requesting or considering waiver of the corporate attorney-client and work-product protections as a measure of cooperation. (5) Despite the DOJ's revision of its corporate charging policy in an effort to appease critics and prevent congressional intervention, supporters of the Privilege Protection Act continue to argue for the Act's passage into law. Against the backdrop of this struggle between Congress and the DO J, this Note critically examines the Privilege Protection Act, and provides reasonable alternatives to the Act's implementation.

Corporate fraud has and will continue to capture national attention. Following the turn of the millennium, billion-dollar frauds at Enron, Adelphia, and WorldCom shocked the markets, wiped out pensions, and sparked a focus at the highest levels of government on prosecuting white-collar crime. (6) In the wake of these startling crimes, President Bush created the Department of Justice's Corporate Fraud Task Force ("Task Force") on July 9, 2002. (7) More of an affiliation of existing prosecutorial and investigative bodies than a new governmental organization, (8) the Task Force focused on aggressively rooting out corporate fraud throughout the country. (9) At the Task Force's fifth year anniversary event on July 17, 2007, former Attorney General Alberto Gonzales extolled the Task Force for "obtain[ing] more than 1,200 convictions, including 214 corporate chief executives or presidents," and "hundreds of millions of dollars in fines and restitution to investors." (10) In that same speech, however, the former Attorney General failed to mention any of the Task Force's significant setbacks, namely a number of acquittals, mistrials, and convictions overturned on appeal. (11) From the perspective of some scholars, bar organizations, and former prosecutors, the Department of Justice ("DOJ") arrived at these high conviction numbers through legally and ethically questionable means. (12) By contrast, the former Attorney General and the DOJ would maintain that these numbers signify the effectiveness of the DOJ corporate charging policy in reigning in corporate criminal conduct in a time of vast indiscretion.

Much of the debate surrounding recent white-collar prosecutions centers on the practice of government-compelled waivers of the corporate attorney-client privilege and work-product protections. Beginning with the Holder Memorandum ("the Holder Memo") in 1999 and through the McNulty Memorandum ("the McNulty Memo") in 2006, the DOJ could request and consider a corporation's willingness to waive its attorney-client privilege in determining whether a corporation sufficiently cooperated in an investigation and should be spared a criminal charge. (13) On August 28, 2008, the DOJ issued new corporate charging guidelines that deemphasized the role of privilege waivers in evaluating cooperation, but nevertheless directed prosecutors to consider a corporation's disclosure of the relevant facts (privileged or not) in their consideration of corporate liability. (14) Since corporate indictments carry tremendous costs, corporations are understandbly eager to cooperate by any means possible. (15) Thus, corporations often are compelled to waive their privilege in order to receive cooperation credit from the government, or rather simply to dissuade the government from prosecuting the corporate entity. (16)

Critics of such practices cite a "culture of waiver" and the erosion of the attorney-client privilege these memoranda engendered, and that likely will continue even under the DOJ's revised corporate charging guidelines. (17) In particular, critics claim that the erosion of the privilege hampers employees' willingness to consult with corporate counsel, and thus eliminates an early restraint on illegal conduct. (18) Additionally, the prevalence of privilege waivers likely increases the potential for increased civil liability, since it provides discoverable fodder for civil plaintiffs. (19)

In contrast, those who favor current DOJ corporate charging policies that permit prosecutors to consider waiver of the corporate attorney-client privilege cite the increased efficiency and effectiveness of white-collar prosecutions following such waivers. (20) They further argue that aggressive enforcement deters corporate fraud, and thus protects market integrity for private and public investors. (21) Moreover, the nature of the corporate privilege causes the very infirmities that critics claim the DOJ memos create. (22) A corporation may still waive privileges as it deems fit, particularly where waiver might permit the corporation to weather a criminal investigation. Thus, the corporate privilege, as the Supreme Court formalized in Up john v. United States, (23) provides little protection to employees in the first place. Any expectations otherwise might very well lack a reasonable basis.

Despite the DOJ's issuance of revised guidelines, Congress remains on the brink of further altering the current corporate charging policy. Senator Arlen Specter originally introduced the Attorney-Client Privilege Protection Act ("Privilege Protection Act") on December 8, 2006, to end the practice of privilege waiver under recent DOJ regimes. (24) On November 13, 2007, the House passed its version of the Privilege Protection Act with only slight modification to the version pending before the Senate. (25) Recently, Senator Specter introduced a slightly revised version of the Attorney-Client Privilege Protection Act on June 26, 2008. (26) On July 9, 2008, Attorney General Michael Mukasey appeared before the Senate Judiciary Committee and announced that the DOJ planned to make adjustments to the McNulty Memo, specifically stating "[we] will no longer measure cooperation by waiver of the attorney-client...