When AOL Time Warner Inc. had lawyers question one of its executives in 2001 about a business deal gone bad, he figured the company would keep the conversations confidential.

He was wrong.

Facing subpoenas related to securities fraud, the company -- now Time Warner Inc. -- last year agreed to turn over notes from the talks to the US Justice Department. The transcripts could eventually land the former AOL executive, Kent Wakeford, in jail.

Wakeford's predicament is not unique. Some lawyers say companies eager to settle litigation with federal prosecutors are increasingly willing to bargain away employees' constitutional rights to save their businesses. They blame federal prosecutors for demanding that companies waive attorney-client privileges.

''It puts the employees in an impossible position," said Barbara Bergman, a University of New Mexico law professor. ''They're told they have to cooperate or get fired."

Bergman is active in the National Association of Criminal Defense Lawyers, which along with the American Civil Liberties Union, the American Bar Association, and the US Chamber of Commerce last month criticized the Justice Department's practices. They cited a 2003 department policy that says companies involved in litigation with the government should be treated more leniently if they agree to cooperate in future investigations -- including those into allegations of wrongdoing by individual employees.

Following the complaints, Robert McCallum Jr., acting deputy attorney general, told US attorneys in an Oct. 21 memo to make sure prosecutors use discretion if they seek a waiver of attorney-client privileges or other concessions when negotiating corporate settlements.

The alliance of critics comes at a time when it is not unusual for a company to pay hundreds of millions of dollars to settle allegations of corporate wrongdoing. Two recent federal deals, with accounting firm KPMG and with Swiss drug maker Serono SA, amounted to more than $1 billion in payments.

Companies face strong economic incentives to settle charges rather than gamble on the outcome of a jury trial: a conviction can prevent them from obtaining lucrative government business.

''That means they're not just faced with an indictment, it's a potential death sentence, and they'll have to do what's necessary to end the matter," said Harvey Silverglate, a well-known Boston defense lawyer. He cited the case of TAP Pharmaceuticals, which paid a record $885 million fine in 2001 to end an investigation by federal prosecutors in Boston into the marketing of its cancer and antacid drugs, even though a jury later acquitted eight TAP employees of similar charges.

Silverglate said he sees a similar dynamic playing out in the government's handling of its case against Serono, Europe's largest biotechnology company.

On Oct. 17, prosecutors said a Serono unit agreed to pay $704 million and plead guilty to two charges stemming from its marketing of Serostim, a treatment for AIDS wasting. But the settlement does not affect charges the government filed against four former Serono executives it contends ran some of the illegal marketing operations, which allegedly included kickbacks to doctors who prescribed the drug.

The cases are ongoing and attorneys for several of the former executives said their clients deny wrongdoing.

''It's clear the company has worked out a deal and cut them loose," said Evan Slavitt, a former prosecutor who represents a fifth former Serono employee who has agreed to plead guilty in the case. ''Based on experience, they [current Serono executives] will give full cooperation in putting these people away," he said.

Mark A. Berman, an attorney for Mary Stewart, a former Serono vice president for sales who was charged with helping provide kickbacks in the form of free trips to a medical conference in Cannes, France, said the settlement won't hurt her defense because Stewart did not do anything wrong. But Berman added, ''It's no secret that the company has been trying to resolve this matter for some time for its own business reasons."

Serono general counsel Thomas Gunning said the agreement the company struck was a ''standard" one in such cases.

In the AOL case, the company in 2004 settled charges that it assisted in securities fraud committed by software maker PurchasePro, an AOL affiliate.

To end the case, the company agreed to cooperate with future probes. According to court documents, when AOL sent lawyers to question Wakeford about PurchasePro, he assumed the attorneys also represented him. But several courts have ruled the attorney-client privilege belonged to AOL alone in the case.

A Time Warner spokesman didn't respond to questions. Wakeford's lawyer in Washington, Hank Asbill, said he hopes to prevent the company from revealing the information, if it hasn't done so already. ''My case is a small example of the pressure employees can come under," Asbill said.

Ross Kerber can be reached at kerber@globe.com.