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Congress threatens a sacred privilege

By Karen J. Mathis
President, American Bar Association

Karen J. Mathis

Prosecuting white collar crime is important. But preventing it is even more so. Regrettably, one approach the U.S. Department of Justice is pursuing undermines corporate compliance with the law rather than strengthening it.

That approach is the so-called Thompson Memorandum of 2003, which encourages federal prosecutors to condition prosecution and sentencing leniency on waiving confidentiality for communications with lawyers, for corporations suspected of crimes. The effect of the trade-off is to inhibit communication, reducing opportunities for lawyers to guide corporations in compliance with the law.

The American Bar Association urged the Senate Judiciary Committee in a hearing last month to send a strong message in its oversight capacity to the Justice Department expressing the view that the attorney-client privilege and a related concept, the work product doctrine, are “fundamental principles of our legal system” and must be protected.

In a letter to then-Attorney General Alberto Gonzales by 10 former senior officials of the Department of Justice in recent years — three former Attorneys General, three former Deputy Attorneys General and four former Solicitors General — these high-profile lawyers agree with the ABA that departmental policies are undermining those fundamental rights. These are hardly apologists for a miscreant business community or protective defense lawyers. Instead, they make a case for preventing criminal conduct that the Attorney General might otherwise have to prosecute in the future.

As they note, lawyers are “indispensable in helping companies and their officials understand and comply with complex laws.” Unless their lawyers enjoy the trust of corporate board members, managers and operating personnel, those company leaders will not share information freely with them, information the lawyers must have if they are to guide compliance with the law.

There is no room for trust once companies waive their attorney-client privilege, releasing their lawyers from the ethical obligation — and legal ability — to protect confidential communication. Because the privilege belongs to clients and not to lawyers, company lawyers have no basis to resist disclosing those confidences.

The policy “is undermining rather than strengthening compliance [with the law] in a number of ways,” say these law enforcement stalwarts. Companies “have no choice but to waive these protections,” but the consequences for the rest of us are grave and severe, they say.

Justice’s carrot-and-stick approach discourages consultation with lawyers, impeding lawyers’ ability to counsel compliance with the law. That harms the investing public, say the former prosecutors.

The policy also makes it harder for companies to detect and remedy misconduct in their own organizations. Internal compliance programs, “one of the most effective tools for detecting and flushing out malfeasance,” are impaired when employees are uncertain about the confidentiality of what they tell the lawyers who conduct those programs, the former Justice Department officials maintain.

Finally, waiving the privilege with respect to government investigators amounts to waiving it for all parties and exposes sensitive information that can be used against the company in class action, derivative and other suits, harming company employees and shareholders.

“This risk of future litigation and all its related costs unfairly penalizes organizations that choose to cooperate on the government’s terms. Those who determine that they cannot do so — in order to preserve their defenses for subsequent actions that appear to involve great financial risk — instead face the government’s wrath,” say the Justice Department alumni.

“Prosecutors can obtain needed information in ways that do not impinge upon the attorney-client relationship,” these deans of law enforcement maintain. They joined their voices with those of the ABA and a coalition of a remarkably diverse range of business and legal organizations, ranging from the American Civil Liberties Union to the U.S. Chamber of Commerce to the National Association of Criminal Defense Lawyers.

We urge all members of Congress to join us in encouraging the Attorney General to listen and preserve the 500-year-old attorney-client privilege.

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