Justice Department Issues New Corporate Charging Guidelines
In a significant development, the U.S. Department of Justice (DOJ) announced today that it has revoked the December 2006 McNulty Memorandum and issued new corporate charging guidelines applicable to the criminal prosecution of business organizations. These new charging guidelines will have a significant impact on the criminal prosecution of companies alleged to have violated export control laws, the U.S. Foreign Corrupt Practices Act and other federal criminal laws.
As discussed below, these new guidelines contain significant policy changes to safeguard the attorney-client privilege and work-product doctrines.
These new charging guidelines will be included in the U.S. Attorney’s Manual, rather than an internal legal memorandum as DOJ has done in the past. A PDF version of the revised "Principles of Federal Prosecution of Business Organizations" that will be included in the U.S. Attorney's Manual can be found here (5 MB). These new guidelines are effective immediately.
The following is a summary of the most significant changes contained in DOJ's new guidelines and policies:
1. Credit for cooperation will not depend on whether a corporation has waived attorney-client privilege or work product protection, or produced materials protected by attorney-client or work-product protections. Rather, it will depend on the disclosure of facts. Corporations that timely disclose relevant facts may receive due credit for cooperation, regardless of whether they waive attorney-client privilege or work product protection in the process. Corporations that do not disclose relevant facts typically may not receive such credit.
2. Prior DOJ policy allowed federal prosecutors to request, under certain conditions, that a corporation disclose non-factual attorney-client privileged communications and work product, such as internal legal advice and attorney work-product (previously designated “Category II” information). The new policy forbids prosecutors from asking for such information, with only limited exceptions.
3. The new policy instructs prosecutors not to consider whether a corporation has advanced attorneys’ fees to its employees, officers, or directors when evaluating cooperativeness. Under previous guidance, DOJ reserved the right to consider such payments negatively in deciding whether to assign cooperation credit to a corporation. That is no longer the case. A corporation’s payment of or advancement of attorneys’ fees to its employees will be relevant only in the rare situation where it, combined with other circumstances, would rise to the level of criminal obstruction of justice.
4. Under the new policy, federal prosecutors may not consider whether the corporation has entered into a joint defense agreement in evaluating whether to give the corporation credit for cooperating.
5. Prior guidance allowed prosecutors to consider whether a corporation disciplined or terminated employees for the purpose of evaluating cooperation. That is no longer permitted. Prosecutors may only consider whether a corporation has disciplined employees that the corporation identifies as culpable, and only for the purpose of evaluating the corporation’s remedial measures or compliance program.