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Issues in the Advancement of Legal Expenses
By Kenneth M. Breen,Thomas R. Fallati
White-Collar Crime columns.
Issues in the Advancement of Legal ExpensesWhen 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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