Department of Justice Seal

Remarks as Delivered by Deputy Attorney General Mark R. Filip at American Bar Association Securities Fraud Conference

Arlington, Virginia
Thursday, October 2, 2008 - 12:30 P.M. EDT

Good afternoon. It’s a pleasure to be here.

I’m very grateful for the chance to speak about an issue that I know is of great importance to both this group and the Department of Justice: the role of attorney-client privilege in the investigation of corporations. As you know, the Department recently 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, corporate counsel, both in-house and outside counsel, particularly in the area of cooperation between business organizations and the government. I welcome this opportunity to discuss the Department’s new policy and what it means, I think, to the legal and corporate communities.

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 believes that it shares a common cause with responsible corporate leaders: we are all committed to promoting the public’s trust and security in our markets. We are also committed to ensuring that corporations and corporate leaders who abide by the law are not disadvantaged in the marketplace by companies and corporate leaders who are prepared to profit by breaking the law.

Given these common interests, the government often has an important ally in the investigation of potential corporate wrongdoing: 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 quickly, which means the government, with the corporation’s help, can, in appropriate cases, 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 critical question, of course, 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 the production of privileged materials or waiver of attorney-client or work product protections as a condition 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 recent changes to Department policy reflect the insights gleaned from that dialogue, as well as lessons learned from the Department’s prosecutions. The Department was 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 acted with the recognition that the attorney-client privilege and work product protection play critical – indeed, foundational – roles in the American legal system. That certainly holds true in the corporate world, where these protections encourage corporate efforts to comply on an ongoing basis with complex and often evolving regulatory regimes.

With all of this in mind, the Department made several material revisions to its corporate investigation and charging policy. I won’t address every one of the changes here, but I would like to highlight a few of the most significant. All of our revisions, and indeed the policy as a whole, reflect our commitment to treating corporations that are under investigation no better and no worse than individuals who are under investigation.

First, under the new policy, 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. Instead, 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. We believe this approach addresses one of the most contentious issues in recent white collar criminal practice: namely, whether and when prosecutors may give credit to a corporation for waiving privilege, or punish a corporation for failing to waive privilege. Our new guidance makes clear that the government needs facts, not waivers. The government should not care, and will not consider, whether a corporation has waived attorney-client privilege or work product protection in the course of providing facts.

Second, prior guidance allowed federal prosecutors to request, under certain conditions, the disclosure of non-factual attorney-client privileged communications and work product. 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. Take, for example, a salesperson at a pharmaceutical company who asks the general counsel’s office whether her marketing practices are lawful under a complex set of federal statutes. Permitting and respecting the need for such attorney-client communications is critical, because they are often a necessary, and typically a salutary, part of a company’s effort to obey the law on an ongoing basis. The new guidance forbids prosecutors from asking for such communications, with only two exceptions, both of which are well-recognized in existing law.

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 penalize a corporation for making such payments 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, combined with other circumstances, it would rise to the level of criminal obstruction of justice. That 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, just like an individual, would choose to enter or not enter that kind of agreement. The government may, of course, ask that a corporation not disclose to third parties information about the investigation that the government provided to the corporation – again, just as it would make the same request of individuals. But the mere participation in a joint defense agreement by a corporation will not be taken into account for the purpose of evaluating corporation.

Fifth, prior guidance allowed prosecutors to consider whether a corporation retained or sanctioned 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.

These are the key changes reflected in our new corporate charging policy. To embed these principles in the Department’s practice and culture, we have set them forth not as a memo, but in the United States Attorneys’ Manual. The policy is binding on all federal prosecutors within the Department of Justice.


Before concluding, I want to 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 underlies our entire criminal justice system.

That said, and at the risk of stating the obvious, cooperation can often be in the best interest of both the government and the corporation. It enables the government to identify wrongdoers quickly and bring them to justice, and it spares the corporation from lengthy and potentially costly business disruptions. Cooperation may not always be the easiest path; it requires a commitment to provide meaningful and often substantial assistance to the government. But it’s a path that corporations often will want to take, because it can redound to the good of their shareholders and the public. And its also worth acknowledging that cooperation often is not seen as an issue by a corporation at all – as is routinely the case, for example, when a corporation contacts federal authorities, states that it has been the victim of a crime against it by one of its employees, and produces a full-blown internal investigation, complete with legal and factual analyses, to support that contention. We spend a lot of time and attention, and appropriately so, discussing situations where cooperation may be difficult, but often, perhaps ever typically, its not an issue at all.

Let me close by expressing my thanks to all of those who shared with us their concerns and insights about these important issues. Our policy owes much to the insights we gleaned from our discussions with you and other thoughtful observers outside the Department. Please know that our new policy reflects the Department’s firm commitment to two goals 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.

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