Today, the United States Department of Justice again revised its corporate charging guidelines for federal prosecutors, making it important that every corporation reassess the effectiveness of its compliance program. The revised guidelines will affect how federal prosecutors assess the cooperation of a company in a government investigation and the effects of disclosing company information to prosecutors.

The revisions are an apparent effort to appease Congress and ward off stronger legislation to counter prosecutorial overreaching in this area. The new guidelines replace those announced by then-Deputy Attorney General Paul J. McNulty on December 12, 2006. The earlier guidelines received much scrutiny from the federal defense bar and Congress.

The new guidelines direct prosecutors to judge a company's cooperation based on relevant facts and evidence that it discloses to the government, not on whether the company waived its attorney-client privilege or attorney work product doctrine. Current Deputy Attorney General Mark R. Filip listed the five principal changes:

1) Cooperation credit will depend on a company's disclosure of relevant facts and evidence, not on whether the company waived its attorney-client privilege or attorney work product doctrine or produced such documents;

2) Prosecutors are forbidden from requesting that a company produce its confidential, non-factual, attorney-client privileged communications or work product as part of its cooperation;

3) Prosecutors are instructed not to consider whether a corporation has advanced attorneys' fees to its employees, officers, or directors when evaluating cooperativeness;

4) Prosecutors may not consider a corporation's entry into a joint defense agreement in evaluating whether to give cooperation credit; and

5) Prosecutors may consider only whether a corporation has disciplined employees whom it identifies as culpable when evaluating the corporation's remedial measures or compliance program – not when evaluating the company's cooperation.

The revised guidelines come just as the House of Representatives has passed a bill that would strengthen a company's attorney-client privilege and a similar bill, proposed by Senator Arlen Specter, is pending in the Senate. Deputy Attorney General Filip, in a letter last month, had asked Senator Specter and Senator Patrick J. Leahy, Chair of the Judiciary Committee, to allow the Justice Department to revise its guidelines before they acted through legislation. To read the revised Principles of Federal Prosecution of Business Organizations, click here.

Coincidently, also on August 28, 2008, the United States Court of Appeals for the Second Circuit upheld the dismissal of a criminal indictment against 13 former employees of KPMG, LLP, because federal prosecutors deprived them of their Sixth Amendment right to counsel. The lower court ruling in this case is credited with motivating the Department of Justice to revise the Principles of Federal Prosecution of Business Organizations.

To inquire about the protections available to your company and its employees or about the ramifications of these changes for you or your organization, please contact Henry E. Hockeimer, Jr., at 215.864.8204 or hockeimerh@ballardspahr.com.


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