March 9, 2007
By Margaret Aulino
A House subcommittee raised the prospect March 8 of imposing sanctions on prosecutors who force business organizations to waive attorney-client privilege in order to get credit for cooperation during criminal investigations.
The Senate Judiciary Committee held a hearing on the matter in September, and Sen. Arlen Specter (R-Pa.) introduced the Attorney-Client Privilege Protection Act of 2007 (S. 186 ) in January. That bill would bar federal prosecutors from requesting waivers of privilege or conditioning lenient treatment upon disclosure of privileged information.
Members of the House Judiciary Committee's subcommittee on crime, terrorism, and homeland security noted that Specter's bill has no enforcement mechanism and suggested that some sort of oversight is necessary to stop the Justice Department from pressuring corporations to waive the privilege.
McNulty Memo Supplants Thompson Guidance
Justice addressed the issue in December when it modified its policy on corporate prosecutions. In a memo issued by Deputy Attorney General Paul McNulty, which replaced the department's former policy on prosecuting corporations issued by then-Deputy Attorney General Larry Thompson, federal prosecutors were told that waivers could only be sought when there is a "legitimate need," and that the government lawyers have to get approval from the local U.S. attorney before seeking privileged information. Witnesses at the subcommittee hearing said that, despite the McNulty memo, prosecutors still expect waivers.
"In theory it's an improvement. In practice I have seen no change at all," said Andrew Weissmann, of Jenner & Block, New York.
William M. Sullivan, of Winston & Strawn , Washington, D.C., told the subcommittee he has "still been badgered" to share privileged communications with federal prosecutors. Other witnesses, representing the Association of Corporate Counsel and the American Bar Association, shared what they called "anecdotal evidence" that pressure to waive privilege continues in spite of the new policy.
The McNulty memo divides information into two categories. Category 1 information is described as "purely factual." Federal prosecutors must get written permission from the U.S. attorney before asking for Category 1 materials, and the U.S. attorney must "consult with" main Justice before giving that approval. Requesting Category 2 information, which the memo describes as "legal advice given to the corporation," requires approval from the deputy attorney general.
Few Formal Requests So Far
Deputy Assistant Attorney General Barry M. Sabin told the subcommittee that since the McNulty memo was issued, the department has not received a single request for Category 2 information. Sabin said five requests have been made for Category 1 information. "[W]e have had meaningful dialog in each instance," he said.
The Justice Department "is not pressuring corporations to waive," Sabin told lawmakers. "We are not seeking to obtain waivers as a routine matter."
Sabin said the Justice Department has been providing its staff with training and guidance on the McNulty memo, but defense attorneys charged that federal prosecutors have taken their coercive efforts underground.
"No formal demand is necessary given this culture of waiver that the Department of Justice has fostered," said Richard T. White, chairman of the board of the ACC.
Rep. John Conyers (D-Mich.), who chairs the House Judiciary Committee and attended the hearing even though he does not sit on the subcommittee, agreed with that assessment.
"The advantage of the below-the-radar activities that the department can engage in is pretty clear," said Conyers. "You can write this in red letter law all you want but ... when the U.S. attorney sits down with an attorney defending someone, they don't read the federal code to each other. What's happening right now is that we are undertaking a small but important part of creating a level playing field."
Distinction Without Difference?
Sabin said he has seen no evidence "that the practice is different from the reality" under the McNulty memo.
Critics have noted that the memo tells prosecutors they may not penalize corporations that refuse to share privileged information, but it also allows prosecutors to reward corporations that volunteer attorney-client communications. Subcommittee chair Rep. Robert C. Scott (D-Va.) suggested that the policy is a distinction without a difference.
"You can't charge extra for using a credit card, but you can give a discount for paying cash. If you call it a discount, it's OK. If you call it a surcharge, then it's not OK," Scott said. "As long as there's a differential, you can call it anything you want. People who do not waive ... get punished. If everyone knows that differential is there, you don't have to say it."
'Culture of Waiver.'
A coalition of interest groups, including the U.S. Chamber of Commerce, the National Association of Criminal Defense Lawyers, and the ACC, have argued that the "culture of waiver" actually harms efforts at good corporate citizenship. If employees know their communications with attorneys may be shared with the government, they are less willing to alert executives about misconduct or provide information during internal investigations, the groups have said.
Corporate clients must be able to consult attorneys with the understanding that the contents of the conversation will not be used against them, White and others said.
"Rights should be nonnegotiable," said White. "Merely requiring authorization from another prosecutor in the same department does not constitute a meaningful protection of the attorney client and work product protections."
Rep. William Delahunt (D-Mass.) called attorney-client privilege "a core value" of the U.S. legal system that "has to be respected."
Delahunt suggested that sanctions may be necessary to ensure that prosecutors will never pressure corporations to waive rights.
"Human nature being what it is, the aggressive prosecutors who are passionate about a particular case ... eventually, in my opinion, will slip into that gray area," Delahunt said.
He suggested that imposing personal liability on prosecutors constitutes "a different kind of enforcement."
"Guidance and training are wonderful, but when there's a clear sanction" beyond administrative remedies, "that's a different situation," he said. Delahunt told Sabin: "I would suggest that if you went back to Justice and did a survey of AUSAs [assistant U.S. attorneys] ... there would be real reluctance to accept that sanction."
Rep. J. Randy Forbes (R.-Va.), ranking member of the subcommittee, said he wouldn't "go as far" as imposing personal liability on prosecutors, but he asked ABA President Karen J. Mathis to offer suggestions on how to enforce a ban on coercive waivers. Mathis said her organization would gladly offer suggestions on some sort of enforcement mechanism. "The ABA's position is that it's important for both Houses to put their own stamp on legislation," Mathis said.
Scott, the subcommittee chair, said the hearing was "a starting point." The issue of sanctions "is a different question," he said, adding that he does not know whether a separate hearing on sanctions will be held.