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The Champion

January /February 2007 , Page 54 

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Issues in the Advancement of Legal Expenses

By Kenneth M. Breen,Thomas R. Fallati

Read more White-Collar Crime columns.

Issues in the Advancement of Legal Expenses

When corporate investigations begin, directors, officers and employees are potential subjects and witnesses who typically need separate counsel. Until recently, many companies refrained from advancing legal expenses for such individuals for fear of running afoul of the U.S. Department of Justice’s “Thompson Memo.” The memo permitted prosecutors, when assessing whether to bring charges against a company, to consider the company’s discretionary advancement of legal expenses to individuals perceived to be wrongdoers. The newly released “McNulty Memo” sets aside this policy and largely bars prosecutors from considering a company’s decision to advance fees in assessing a company’s cooperation with the government.

While the McNulty Memo removes a significant obstacle to the advancement of legal expenses, advancement presents a number of difficult issues for corporate and individual counsel. Even when such advancement is

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