ALBANY, NY -- (Feb. 5, 2007) The New York State Bar Association (NYSBA) has submitted an amicus brief to the 2nd Circuit U.S. Court of Appeals calling on the Federal Government to end a policy of pressuring corporations to refuse payment of legal defense costs to current or former employees when facing corporate criminal investigation. The brief, which was filed in conjunction with The New York Council of Defense Lawyers (NYCDL) and the National Association of Criminal Defense Lawyers (NACDL), supports the ruling by the district court that the actions of the government vis-a-vis 17 employees of the accounting firm KPMG, who were facing indictment, were unconstitutional.

Attorneys working pro bono from the firm Cleary Gottlieb Steen & Hamilton, led by firm partner, Lewis J. Liman, took the lead in preparing and submitting the brief on behalf of the New York State Bar Association and the defense lawyer groups in response to an appeal by the United States Government of a ruling for KPMG in the case of U.S. v. Stein. Paul B. Bergman of New York City and Stephanie Martz of Washington, D.C. were co-counsel.

The brief warned that fundamental constitutional principles including the Fifth Amendment right to remain free from self-incrimination and the Sixth Amendment right to subject the prosecution's proof to adversarial testing by skilled counsel are at stake in this case. Mr. Alcott cited several practices by the federal government that violate essential safeguards and provide the government with an unfair advantage in prosecuting cases.

Among the most egregious practices, according to Mr. Alcott, is pressuring corporations to refuse to reimburse legal defense costs of current or former directors, officers, employees or agents who need legal counsel when facing corporate criminal investigation, as is the case with KPMG. He also pointed to instances where the government has demanded that businesses not provide documents to their employees' counsel and encourages organizations to discipline or fire workers, directors, officers or agents who seek to invoke their Fifth Amendment right against self-incrimination when facing such charges, as practices that "pose a threat to the right to counsel and the independence of the bar."

According to Mr. Alcott, "That people have a right to legal counsel and that government has no business interfering with that right are fundamental concepts of our legal system.

"It has been standard practice in the past for corporations to advance legal expenses to their employees under these circumstances. Until recently, these payments, which are generally required by law, contract or company policy, were not questioned. But under the doctrine articulated by the Justice Department's notorious Thompson Memorandum, prosecutors warn company officials that the government may consider such payments to be evidence that they are 'uncooperative.' It's improper for the government to take the position that if a company enables its employees to defend themselves, the company is more likely to be indicted."

The government's attempt to trample the constitutional right to mount a vigorous defense has been a key issue of the State Bar Association since the initial memo by then-Deputy Attorney General Larry Thompson was made public. The "Thompson memo" called for pressuring corporations to breach their obligation to indemnify employees, in effect seriously impeding the constitutional right to retain counsel.

According to Alcott, the State Bar will continue to press federal lawmakers to do all they can to put an end to these incursions.