December 11, 2008
McNulty Revisited: <i>How the FILIP Memorandum Changes the DOJ’s Approach to Corporate Investigations and Prosecutions</i>
Coauthored by Stephen B. Brauerman
On Aug. 28, 2008, Deputy Attorney General Mark Filip released the latest in a series of memoranda that guide the Department of Justice’s (“DOJ”) approach to the investigation and prosecution of corporate crimes. Issued primarily in response to criticism from legal scholars who bemoaned prosecutors’ attacks on the attorney-client and work product privileges and institutional prejudice against advancement and joint defense agreements, the Filip Memo represents the government’s attempt to balance these concerns with its obligation to enforce the law aggressively and its goal of promoting responsible corporate behavior. This article briefly reviews the history of the DOJ’s corporate charging guidelines, discusses the policy changes from the DOJ’s earlier charging guidelines, and analyzes the Filip Memo’s impact on corporate investigations and prosecutions.
Almost a decade ago, the DOJ issued the first in a series of memoranda, designed to bring uniformity to federal investigations and prosecutions of corporate misconduct. The Holder Memo, named for then Deputy Attorney General Eric Holder and issued on June 16, 1999, emphasized the value of corporate cooperation in federal investigations and identified several factors that prosecutors could consider on an advisory basis in addressing mitigation of a company’s exposure to criminal liability: 1) waiving attorney-client and work product privileges; 2) refusing to provide advancement/indemnification to officers and directors charged with or suspected of misconduct; 3) implementing remedial/restitution programs; 4) disciplining culpable employees; and 5) avoiding joint defense agreements. In the wake of Enron, Worldcom, Adelphia, Tyco and other corporate scandals, Deputy Attorney General Larry Thompson issued his own memorandum (“the Thompson Memo”) on Jan. 20, 2003, which made the advisory principles outlined in the Holder Memo mandatory on federal prosecutors.
Faced with widespread opposition from the corporate legal community that criticized the Thompson Memo for “discouraging full and candid communications between corporate employees and legal counsel,” Deputy Attorney General Paul McNulty released the McNulty Memo on Dec. 12, 2006. Although the McNulty Memo liberalized DOJ’s treatment of a company’s refusal to waive evidentiary privileges and limited consideration of advancement and indemnification practices, broad exceptions left prosecutors free to continue many of the practices condoned by the Thompson Memo. Criticism, from both within and without the DOJ, coupled with the threat of congressional action led to the issuance of the Filip Memo on Aug. 28, 2008.
The Filip Memo is a misnomer because, unlike its predecessors, the principles it announced were included for the first time in the United States Attorneys’ Manual. This change is more style that substance, however, as the Filip Memo retained the basic structural framework set forth in the McNulty Memo, continuing to identify the same nine factors that prosecutors should consider when deciding whether to charge a corporation with a criminal violation. The majority of the Filip Memo’s revisions focus on the “Value of Cooperation,” which, in recognition of the corporation’s unique ability promptly to provide information that could aid the government’s investigation and minimize injury to the public and other corporate constituencies, mitigates against potential liability. During a press conference announcing the Filip Memo, Deputy Attorney General Mark Filip highlighted the five principal policy changes from the McNulty Memo:
Focus on Facts: Cooperation credit no longer depends on the waiver of the attorney-client and work product protections, rather prosecutors must focus on the willingness and suffici
On Aug. 28, 2008, Deputy Attorney General Mark Filip released the latest in a series of memoranda that guide the Department of Justice’s (“DOJ”) approach to the investigation and prosecution of corporate crimes. Issued primarily in response to criticism from legal scholars who bemoaned prosecutors’ attacks on the attorney-client and work product privileges and institutional prejudice against advancement and joint defense agreements, the Filip Memo represents the government’s attempt to balance these concerns with its obligation to enforce the law aggressively and its goal of promoting responsible corporate behavior. This article briefly reviews the history of the DOJ’s corporate charging guidelines, discusses the policy changes from the DOJ’s earlier charging guidelines, and analyzes the Filip Memo’s impact on corporate investigations and prosecutions.
FROM HOLDER TO MCNULTY
Almost a decade ago, the DOJ issued the first in a series of memoranda, designed to bring uniformity to federal investigations and prosecutions of corporate misconduct. The Holder Memo, named for then Deputy Attorney General Eric Holder and issued on June 16, 1999, emphasized the value of corporate cooperation in federal investigations and identified several factors that prosecutors could consider on an advisory basis in addressing mitigation of a company’s exposure to criminal liability: 1) waiving attorney-client and work product privileges; 2) refusing to provide advancement/indemnification to officers and directors charged with or suspected of misconduct; 3) implementing remedial/restitution programs; 4) disciplining culpable employees; and 5) avoiding joint defense agreements. In the wake of Enron, Worldcom, Adelphia, Tyco and other corporate scandals, Deputy Attorney General Larry Thompson issued his own memorandum (“the Thompson Memo”) on Jan. 20, 2003, which made the advisory principles outlined in the Holder Memo mandatory on federal prosecutors.
Faced with widespread opposition from the corporate legal community that criticized the Thompson Memo for “discouraging full and candid communications between corporate employees and legal counsel,” Deputy Attorney General Paul McNulty released the McNulty Memo on Dec. 12, 2006. Although the McNulty Memo liberalized DOJ’s treatment of a company’s refusal to waive evidentiary privileges and limited consideration of advancement and indemnification practices, broad exceptions left prosecutors free to continue many of the practices condoned by the Thompson Memo. Criticism, from both within and without the DOJ, coupled with the threat of congressional action led to the issuance of the Filip Memo on Aug. 28, 2008.
DOJ’S REVISIONS
The Filip Memo is a misnomer because, unlike its predecessors, the principles it announced were included for the first time in the United States Attorneys’ Manual. This change is more style that substance, however, as the Filip Memo retained the basic structural framework set forth in the McNulty Memo, continuing to identify the same nine factors that prosecutors should consider when deciding whether to charge a corporation with a criminal violation. The majority of the Filip Memo’s revisions focus on the “Value of Cooperation,” which, in recognition of the corporation’s unique ability promptly to provide information that could aid the government’s investigation and minimize injury to the public and other corporate constituencies, mitigates against potential liability. During a press conference announcing the Filip Memo, Deputy Attorney General Mark Filip highlighted the five principal policy changes from the McNulty Memo:
Focus on Facts: Cooperation credit no longer depends on the waiver of the attorney-client and work product protections, rather prosecutors must focus on the willingness and suffici