In recent years, the Department of Justice has taken the position that to receive credit for making a voluntary disclosure of wrongdoing a corporation must disclose information and/or documents within the attorney-client privilege and/or work product and avoid other protective activity. This controversial stance has been criticized by the bar and by members of Congress. In August 2008, DOJ formally reversed this policy by revising the United States Attorneys' Manual (USAM).1
The revised USAM makes explicit that DOJ will not require a corporation — as a condition of obtaining credit as a voluntary discloser — (a) to waive the attorney-client privilege or the protections of the work product doctrine; (b) to disclose non-factual portions of attorney client communications and work product; (c) to refrain from advancing or reimbursing attorneys fees to employees, officers or directors involved in the matter; or (d) to refrain from entering into joint defense agreements. Further, the USAM establishes a procedure for complaints if U.S. attorneys fail to abide by these principles.
No required waiver of attorney-client and work product protections. The USAM now makes the point that DOJ recognizes the "extremely important function" of the attorney-client privilege and work product doctrine, and states that waiver of these protections has never been a prerequisite under the DOJ prosecution guidelines for a corporation to be viewed as cooperative. § 9-28.710.
What DOJ expects from voluntary disclosers is disclosure of facts, not non-factual or "core" attorney-client or work product communications. The USAM now provides,
[W]hile a corporation remains free to convey non-factual or "core" attorney-client communications or work product — if and only if the corporation voluntarily chooses to do so — prosecutors should not ask for such waivers and are directed not to do so. The critical factor is whether the corporation has provided the facts about the events." § 9-28.710.
The USAM as revised states that in investigating corporate misconduct, the government seeks the relevant facts (e.g., how and when did the alleged misconduct occur, who promoted or approved it, and who was responsible for committing it). A corporation must disclose this information to be entitled to credit. If the information is gathered through an internal investigation conducted by counsel, the corporation need not produce protected notes or memoranda generated by the attorneys' interviews. But the corporation does need to produce the relevant factual information — including factual information learned only through attorney interviews — as well as non-privileged information. § 9-28.720 & n.3. Other attorney-client communications, such as legal advice to the corporation, independent of fact gathering and made for purposes of seeking or providing legal advice, are not required to be disclosed (except possibly in connection with an advice-of-counsel defense or communications in furtherance of a crime). § 9-28.720 & n.5.
Corporate disclosers may not be required to refrain from providing counsel or attorneys fees to those under investigation or indictment. The USAM now provides that "prosecutors should not take into account whether a corporation is advancing or reimbursing attorneys' fees or providing counsel to employees, officers or directors under investigation or indictment … [and] may not request that a corporation refrain from taking such action." (On the other hand, the USAM notes that if such activity were used to obstruct justice, such activity would not be protected). § 9-28.730.
Corporate disclosers may not be required to refrain from participating in a joint defense agreement. The USAM now provides that the mere participation by a corporation in a joint defense agreement does not render the corporation ineligible to receive cooperation credit, and prosecutors may not request that a corporation refrain from entering into such agreements. On the other hand, it notes that a corporation may wish to avoid putting itself into the position of being disabled by such an agreement from providing relevant facts to the government, thereby limiting its ability to seek cooperation credit. Further, the USAM notes that it may be appropriate on occasion for the government to consider whether the corporation has shared with others certain types of sensitive information about the investigation which the government has provided to the corporation. § 9-28.730.
Identified officials to whom attorneys may complain. In § 9-28.760, the USAM identifies DOJ officials whom counsel for corporations may consult if counsel believes that U.S. Attorneys are violating these provisions.
This revised DOJ position will create a considerably better environment for corporations and their counsel considering voluntary disclosures to DOJ.
About Buchanan's Securities Litigation Practice Group
The attorneys in our group have wide experience in representing corporations, their officers and directors in SEC enforcement proceedings, hostile takeover litigation, shareholder class and derivative actions, and SEC and FINRA investigations. We have represented professional service firms, including commercial banks, underwriters, accounting firms and brokerages, in actions related to the federal securities acts, broker/dealer consumer actions, insider trading allegations, and all manner of securities arbitrations overseen by FINRA and other SROs. Contact:
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1 Copies of Section 9-28.000 of the Manual, "Principles of Federal Prosecution of Business Organizations, may be found on the internet at http://www.usdoj.gov/opa/documents/corp-charging-guidelines.pdf or at http://www.usdoj.gov/usao/eousa/foia_reading_room/usam/title9/28mcrm.htm. The particular sections covering the issues discussed in the text are 9-28.710 through 9-28.730, and 9-28.760.