Department of Justice Seal

Remarks Prepared for Delivery by Deputy Attorney General Mark R. Filip at Press Conference Announcing Revisions to Corporate Charging Guidelines

New York, NY
Thursday, August 28, 2008

Good morning.  I am here today to announce that the Department of Justice has made significant revisions to its policy for the investigation and prosecution of corporate crimes.  The new policy addresses issues that have been of great interest to prosecutors and corporations alike, particularly in the area of cooperation between business organizations and the government. 

Let me please begin with some background.  For many years now, federal prosecutors have been guided by Department of Justice policy that governs how they investigate, charge, and prosecute corporate crimes.   These matters are critical to the public interest, and they are a high priority for the Department.   Through our investigation of corporate crime -- and, where appropriate, our prosecution of corporate crime -- the Department strives to protect the integrity of our Nation’s free markets, and to safeguard investors, employees, and the general public from the potentially devastating effects of corporate wrongdoing.  In this respect, the Department shares a common cause with responsible corporate leaders:  we are both committed to promoting the public’s trust and security in our capital markets.  We are also committed to ensuring that corporations and corporate leaders who abide by the law are not disadvantaged in the marketplace at the expense of companies and corporate leaders who are prepared to profit by breaking the law.   

In the investigation of corporate wrongdoing, the government often has an important ally:  the corporation itself.  In many cases, corporations are uniquely suited to identify relevant personnel and evidence, to provide relevant business records, and to convey pertinent information to the government.  Moreover, corporations can often do this expeditiously, which means the government, with the corporation’s help, can locate assets that would otherwise have disappeared, or arrest wrongdoers who would otherwise have fled, or restore money to victims who would otherwise have received nothing.  

For all of these reasons, it has long been the Department’s policy to give credit to a corporation in exchange for its cooperation.   But the question of what exactly a corporation must do to earn such credit has been the subject of much attention and criticism in recent years.   In particular, many in the legal community have argued that prosecutors have unfairly demanded that corporations produce privileged materials or waive attorney-client or work-product protections as a precondition for receiving cooperation credit.  Others have expressed concern that the Department could unfairly withhold such credit from a corporation that advanced attorneys’ fees to its employees, or failed to sanction culpable employees, or entered into joint defense agreements.

In response to these concerns, I had the privilege of engaging in thoughtful and extended discussions with members of Congress and representatives of a diverse array of groups.  These groups represented, for example, the criminal defense bar, the civil liberties community, and the business community.  In addition, I also had the chance to speak with former Department of Justice officials concerning these issues.  The Department is grateful for the willingness of all of these various leaders to share their views. 

The Justice Department also conducted our own careful and thorough review of these issues.  As part of that effort, various Department prosecutive leaders and I reviewed our policies in this area at length to see if improvements could be made. 

The changes to Department policy announced today reflect the insights gleaned from that dialogue, as well as lessons learned from the Department’s prosecutions.   The Department has been guided in this endeavor by three critical mandates:  (1) to enforce the law aggressively; (2) to respect the rights of criminal defendants and others involved in the criminal justice process; and (3) to promote fair outcomes for the American people.  We also have acted with the recognition that the attorney-client privilege and work product protection play critical roles in the American legal system.  For example, they promote responsible corporate behavior by encouraging self-regulation and by encouraging corporate efforts to comply on an ongoing basis with complex and often evolving regulatory regimes. 

There are several revisions to the Department’s corporate charging policy, but I would like please to discuss briefly a few of the principal changes. 

First, 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.  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, just like any other defendant. 

To put it another way, corporations will receive the same credit for disclosing facts that are contained in unprotected materials as they would for disclosing the identical facts contained in protected materials.  The government will assess neither a credit nor a penalty based on whether the disclosed materials are protected by the attorney-client privilege or attorney work product.
 Second, prior Department policy allowed federal prosecutors to request, under certain conditions, that a corporation disclose non-factual attorney-client privileged communications and work product, such as legal advice.  This is what the old guidelines designated “Category II” information, and it lies at the core of the attorney-client privilege and work product protection.  The new policy forbids prosecutors from asking for such information, with only two exceptions, both of which are well-recognized in existing law.

The sort of core attorney-client communications I’m talking about might occur, for example, when a salesperson at a pharmaceutical company asks the general counsel’s office whether her marketing practices were lawful under a complicated body of potentially applicable federal law.  Permitting and respecting the need for such attorney-client communications is particularly important, because such dialogue is often a necessary, and typically a salutary, part of a company’s effort to obey the law on an ongoing basis. 

Third, 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 the earlier guidance, the Department 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.  This of course will generally not be the case. 

Fourth, 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.  There are legitimate reasons why a business would choose to enter, or not enter, that kind of agreement.  The government may, of course, ask that a corporation refrain from taking information the government provided it and disclosing that information to third parties.  But the mere participation in a joint defense agreement by a corporation will not be taken into account for the purpose of evaluating cooperation. 

Fifth, prior guidance allowed prosecutors to consider whether a corporation disciplined or terminated employees for the purpose of evaluating cooperation.  That is now disallowed.   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.

Before concluding, let me please stress one additional point that may have been lost in the past concerning these issues, and that our new policy now makes very clear.  No corporation is obligated to cooperate or to seek cooperation credit by disclosing information to the government.  Refusal by a corporation to cooperate, just like refusal by an individual to cooperate, is not evidence of guilt.  Put differently, if a business decides not to cooperate, that does not, in itself, support or require the filing of charges in any way.  It simply means that the corporation will not be entitled to mitigating credit for cooperation, which might well be germane when a corporation otherwise could be properly prosecuted.  This is a very basic point, but it’s a critical one, as it flows from the presumption of innocence that underlays our entire criminal justice system.

Today's announcement, and the policy that we are now implementing, reflect the Department’s firm commitment to two goals that I believe we all share:  safeguarding the attorney-client privilege, which is so central to our criminal justice system, and preserving the Department’s ability to investigate corporate wrongdoing effectively, which benefits corporations and members of the public alike. 

As an important element of that commitment, the revised principles will be set forth for the first time not as a memo, but in the United States Attorneys’ Manual.  They will be binding on all federal prosecutors within the Department of Justice, effective immediately.

I would like please to make one final point.  This kind of general policy guidance is important.  So is thorough training and supervision, which the Department will provide to ensure compliance with these revised principles.  But there is no substitute for the application of considered judgment by line prosecutors and United States Attorneys around the country, and by their colleagues at the Department's headquarters. 

The dedicated prosecutors of the Department of Justice have done an outstanding job of this in the past, and I have every confidence and expectation that they will continue to do so in the future.

Thank you very much, and I will be happy to take a few questions.                    

Press Release

Corporate Charging Guidelines