I want to thank the members of the Subcommittee for permitting me to testify concerning section 530B of title 28 of the United States Code. Section 530B requires Department attorneys to comply with "state laws and rules, and local federal court rules, governing attorneys in each State where such attorney engages in that attorney's duties, to the same extent and in the same manner as other attorneys in that State." Section 530B will take effect on April 19, 1999, absent action by the Congress, and this provision will cause significant problems for federal civil and criminal law enforcement.
I will give you specific examples of the kinds of problems that section 530B creates, but I want to say at the outset that the Department of Justice demands that its attorneys carry out their law enforcement responsibilities in conformity with the highest ethical standards. And they do so. That is what the American public expects of its government attorneys, that is what the Congress expects, and I can assure you, as a federal prosecutor and former judge, that is what federal judges expect. Indeed, federal judges hold Department attorneys to a higher standard than anyone else who appears before them.
I also want to emphasize that the Department has no desire to oust states of disciplinary authority or to exempt Department attorneys from the reach of state ethics rules. The Department's policy is that its attorneys conform in general to the ethical rules of the jurisdictions in which they are licensed and the rules of the courts in which they appear. In addition, the Department has volumes of regulations to which its attorneys must conform upon pain of disciplinary action. Moreover, Department attorneys are subject to discipline not only by state bars and federal courts, but also by the Department's Office of Professional Responsibility, which Attorney General Reno has more than tripled in size during her tenure. And, these attorneys are subject to the code of conduct set by the Office of Government Ethics for all executive branch employees. See 5 C.F.R. Part 2635, Standards of Ethical Conduct for Employees of the Executive Branch.
Given this background, one might ask -- what's wrong with the McDade amendment? The answer to that question requires a look at some of the state bar rules themselves and the quandary that many federal prosecutors will face if the amendment goes into effect. The McDade amendment has two principal flaws. First, the amendment subjects federal prosecutors to all rules in all jurisdictions, whether or not those rules were drafted with the nationwide practice of federal prosecutors in mind. Oftentimes, state bar rules, which developed in the particular circumstances of a single state's legal system, do not fairly address the complex work of federal prosecutors, who supervise wide-ranging national investigations and enforce public law to the benefit of everyone. Second,the McDade amendment's vague directive to comply with rules in each state where an attorney engages in that attorney's duties leaves prosecutors unsure about what rule applies to particular conduct. There is one certain result of this confusion - cautious attorneys will simply refrain from taking critically important investigative steps or will leave agents to make their own decisions about whom and how to investigate. This turns back the clock on the salutary development of the last 50 years during which attorneys have become much more involved in investigations, a development that helps assure that citizen's rights are respected during federal investigations. In addition,'section 530B will result in significant satellite litigation that will have nothing to do with ethics, but rather will serve as a weapon to delay or deter legitimate law enforcement. I will discuss each of these problems in turn.
The bottom line is that there should be no mistake about the effect of Section 530B. It will undermine the ability of federal attorneys to serve the public interest through use of legitimate techniques to investigate crime and fraud against the United States.
State Ethics Rules that Interfere with Federal Law Enforcement
Codes of professional responsibility for attorneys developed over the past century as codes designed to promote honesty and integrity among attorneys. State rules with this focus - for example, rules requiring honesty to the court and opposing attorneys and parties, governing conflicts of interest, and regulating trust accounts - are straightforward and even handed in their treatment of different categories of attorneys. More recently, however, state bar rules have expanded into areas that are more the province of courts and legislatures - for example, rules governing the investigative steps prosecutors are permitted to take, what evidence must be presented to grand juries, and what procedures must be followed to subpoena non-privileged information from attorneys. Such rules, rather than simply regulating honesty and integrity, purport to supplement, if not replace, federal rules of procedure and present problems for federal attorneys that more traditional ethics rules never did. Moreover, because state codes of professional responsibility contain such rules, placing the authority to set these rules in state bars becomes much more problematic. State bars are unlikely to consider federal interests in setting their bar rules. Indeed, state bar rules often reflect the interests and priorities of the private bar.
These problems are illustrated by the recent application of state bar rules governing contacts with represented parties to federal law enforcement. Contacts rules were developed to govern private attorneys in civil litigation. Beginning in the late 1980s, defense attorneys made increasing efforts to have these rules applied to federal prosecutors investigating federal criminal cases. In 1994, faced with different interpretations of Model Rule 4.2 in each state and very restrictive interpretations in some, the Department promulgated its own ethics rule to provide a uniform, national rule on this issue, which is fundamental to so much of what federal prosecutors do. That regulation was not an attempt to exempt Department attorneys from ethics rules -rather, the regulation sets forth explicit rules for Department attorneys, provides sanctions for their violation, and contemplates state bar discipline for intentional violations. Since that time, the Department has been working with the Conference of Chief Justices and others to develop a new Model Rule that would ensure that prosecutors can participate in traditionally accepted investigative techniques without undue fear of ethical sanctions. Although we continue in these efforts, we are still faced with many different interpretations in the different jurisdictions, and the ABA's Model Rule is even more restrictive today than it was in 1994.
Here are some concrete examples of the problems we will face if the McDade amendment goes into effect:
Undercover operations are critical to many major investigations, including investigation of major drug trafficking rings, terrorist groups, and traditional organized crime. The Committee on Professional Ethics of the Florida State Bar Association, however, has issued an opinion that leaves this basic law enforcement technique in doubt. Most state contacts rules have an exception for contacts "authorized by law." Florida's rule has no such exception, and the Florida state bar apparently considers the rule to be absolute -- attorneys and agents working for attorneys may not communicate with any person who claims to have a lawyer with respect to a particular matter. Accordingly, the bar opined that federal prosecutors are not permitted to conduct undercover operations against a target who is represented by counsel. Fl. Eth. Op. 90-4 (1990 WL 446959) (Fla. St. Bar Assn.). Thus, for example, a federal prosecutor would not be permitted to supervise an undercover operation to infiltrate an organized crime enterprise if the targeted mob boss was represented by counsel. The Florida bar minimized the obvious harm to law enforcement that this rule would cause by "observing" that the target would likely be unaware of the undercover operation and so would not be represented in the "matter," even if the target had counsel. But this completely ignores the realities of modern federal law enforcement - would the Florida bar really have believed that John Gotti did not know he was under investigation? Criminal organizations are often perfectly well aware that they are being investigated - they just do not know exactly what the government is doing. Under the Florida bar rule, Mr. Gotti's lawyer might have been able to write to the United States Attorney, stating his knowledge of the investigation, and most likely even of the existence of a grand jury probe, announce his representation of Gotti, and thereby preclude the government from wiring an undercover F.B.I. agent to try to elicit incriminating statements from Gotti.
A recent case in Minnesota presents the same problem. In State v.Roers, 520 N.W.2d 752 (Ct. App. 1994), the court held that Minnesota's contacts rule was violated by undercover communications with someone represented by an attorney. If the court really meant that any such contact, even those prior to arrest or indictment, is prohibited by the rule, undercover investigation of ongoing criminal activity could be seriously hampered.
The pre-indictment, undercover activities that would appear to be prohibited by these rules are exactly the types of legitimate, traditionally accepted activities that federal courts have routinely approved. See, e.g., United States v. Balter, 91F. 3d 427 (3d Cir. 1996) (allowing an informant to tape a suspect in a murder-for-hire investigation); United States v. Powe, 9F.3d 68 (9th Cir. 1993); United States v. Ryans, 903 F. 2d 731 (10th Cir. 1990). Under section 530B, a federal prosecutor in those states will be unlikely to authorize or participate in such activities -not because they are not legitimate, fully constitutional investigative techniques, but because they have been questioned or prohibited by state bars. This will seriously interfere with major undercover operations in those states with the most restrictive rules.
Investigation of criminal activity that continues after arrest could also be seriously hampered. In general, prosecutors cannot communicate with a represented defendant about the "matter" for which the individual is being represented, but may communicate with the defendant about another "matter". Oftentimes, U.S. Attorney's offices learn that defendants under indictment are continuing their criminal conduct, such as by making new drug sales, or are seeking to avoid conviction through obstruction of justice or witness tampering. For example, in a recent case investigated by a United States Attorney's office, defendants in a securities fraud case were released on bail following their arrest. In the course of interviewing victims, prosecutors learned that one elderly victim had been contacted by a defendant seeking $250,000 based on the same fraud. Prosecutors arranged for the victim to tape record ensuing conversations with the defendant, producing evidence of ongoing fraud by the defendant and others. Prosecutors must be able to investigate such ongoing conduct in order to ensure that indicted defendants are not able to continue their illegal conduct.
A similar, and even more dangerous situation, occurs when prosecutors become aware that a defendant is trying to arrange for the murder of a witness. Under the Department's regulation, prosecutors can place a wire on a cooperator with instructions to try to get the defendant to talk about his plans. A rigorous no-contact rule could prevent prosecutors from using this essential investigative technique, with potentially disastrous consequences. This is not a hypothetical circumstance. In a recent case, a United States Attorney's office was told by an informant that an indicted defendant was seeking to murder a witness against him and a law enforcement officer involved in the investigation. The office consulted with state bar counsel about the issue of an undercover contact of the defendant by the informant. The state bar counsel said that the contact would violate the state's ethics rules, although it was unlikely that the prosecutor would be disciplined.
Of course, a state bar might decide that such contacts are permissible because investigation of the new offense is not the same "matter" under the contacts rule. This is the position taken in the Department's contacts rule and by the federal courts. Most states, however, have no law on point and the contacts rules themselves provide little guidance. The result is that prosecutors will have to put their licenses to practice law on the line in order to do their jobs.
This fact - that the consequence to prosecutors of mistaken predictions of the direction of state ethics rules is professional discipline - is one of the major problems with section 530B. When prosecutors are faced with contacts issues, they do not have time to solicit opinions from state ethics authorities. Consider the predicament of a federal prosecutor licensed by the state of Virginia who faces a situation similar to that one of my prosecutors when I was the United States Attorney for the District of Columbia faced. That prosecutor learned from a witness that an incarcerated defendant was trying to convince the witness to leave town before trial. The prosecutor received information from another source that the defendant was going to have the witness killed if she did not leave. On the day the prosecutor learned this information, he sent the witness, equipped with a hidden tape recorder, to talk to the defendant about his desire that she leave town. Immediately after the visit to the jail, the United States Marshals Service took the witness out of town for her protection. The prosecutor obviously did not have time to seek advice from bar counsel.
In Virginia, the prosecutor might have been deemed to have committed professional misconduct. In Gunter v. Virginia State Bar, 385 S.E.2d 597(Va. 1989), the Virginia Supreme Court held that recording conversations between third parties by a lawyer, or with his or her authorization, without the consent of all parties to the conversation is unethical. Despite the fact that the court relied on an American Bar Association ethics opinion containing an explicit exception for law enforcement the Virginia bar recently distributed continuing legal education materials that suggested that the prohibition was absolute. When a federal prosecutor in Virginia made inquiries of the Virginia bar ethics authorities, he was told that the prohibition contains no exceptions for prosecutors. When the prosecutor asked how Virginia state prosecutors cope with this rule, he was told that the police conducted these sorts of activities without any involvement by prosecutors. Perhaps the bar would arrive at a different conclusion if an actual case presented itself. But an actual case will present itself only when a federal prosecutor licensed in Virginia faces professional discipline. Federal prosecutors carrying out their duties to enforce the law should not have to place their professional licenses at risk in this way.
The problems presented by state bar contacts rules are by no means limited to criminal law enforcement. One of the most significant problems posed by these rules is in the corporate context, involving both civil and criminal law enforcement. Attomeys representing corporations often claim to represent all employees of the company, perhaps thousands of employees, and sometimes even former employees, a group that might include employees fired for whistle blowing activities. Corporate counsel is often, even usually, aware when the company is under investigation by the government. The Model Rule has been criticized for being vague on this point, and this vagueness has led to different interpretations in many states -- even where the state rules themselves are identical. Some state contacts rules are extremely broad, covering not only senior management but any employee whose statements can be imputed to the corporation. Some state rules may even cover former employees. Compare Public Service Electric & Gas Co. v. AEGIS, 745 F. Supp. 1037 (D.N.J. 1990) (prohibiting all contact with former employees except through formal discovery) with Curled v. Cumberland Farms, Inc., 134 F.R.D. 77 (D.N.J. 1991)(permitting contacts with former employees).
These rules make it very difficult to investigate corporate wrongdoing. Government attorneys might not even be able to speak to employees, such as whistle-blowers, who want to speak to the government, who have no interest in being "represented" by corporate counsel, and who initiate contact with the government. United State's Attorneys offices regularly receive letters from corporate counsel stating that counsel represents all employees of the company and purporting to forbid the government from speaking to any of them without counsel's permission. Indeed, the United States Attorney's office in San Francisco received such a letter from counsel for a corporation under criminal investigation who asserted that California's contact rule prohibits contacts with employees [even] in situations where the corporation's and the employee's interest may not be the same." The contacts rule attempts to ensure that corporations are not deprived of the benefit of counsel, but it is not intended to shield wrongdoing or to allow corporate counsel to avoid conflicts when individual employees have interests different from the corporation.
A recent decision in California shows how significant this problem could be if state ethics rules apply across the board to Department attorneys. In United States v. Talao, No.Cr. 97-0217-VRW (N.D. Cal. 1998), the United States initiated a criminal investigation as a result of allegations and information in a gui tam action. The qui tam action was based on allegations of wage and hour violations and kickbacks against a closely-held corporation and its owners. The company and the owners were represented by one attorney. An employee of the company was subpoenaed to testify in the grand jury. The owners of the company learned of the subpoena and instructed their attorney to accompany the witness to the grand jury. On the day of her grand jury appearance, the employee met with the company and owners' attorney prior to going to the courthouse. However, the employee went to the courthouse and met the prosecutor without the attorney. The employee told the prosecutor that she did not want to be represented by the owners' attorney and, in addition, that one of the owners had telephoned her the previous day and told her to testify falsely in the grand jury. The prosecutor told the employee that she was entitled to counsel and offered to obtain court-appointed counsel. The employee declined counsel. When the owners' attorney arrived at the courthouse, the employee refused to meet with him. Despite all of this - the employee's refusal to be represented by the company and owners' attorney, her refusal even to meet with him, her statement to the prosecutor that the owners of the company were apparently suborning perjury, and the prosecutor's offer to obtain counsel for the employee - the court still found that the prosecutor had violated California's version of Rule 4.2 concerning contacts with represented persons and determined that, if the case proceeded to trial, the jury would be informed of the government's "misconduct" for the purpose of evaluating the credibility of the employee's testimony.
Although I have focused on state rules on contacts with represented persons, which pose the most serious challenge to effective law enforcement, many other bar rules threaten to interfere with legitimate investigations. Some state bar rules purport to regulate when a prosecutor can subpoena an attorney or what information a prosecutor must provide a grand jury. In these areas, the bar rules seem to go beyond the regulation of ethics and instead attempt to regulate rules of procedure and evidence. In addition to interfering with what is properly the province of the legislature and the courts, these rules also create new obstacles for federal prosecutors.
It is difficult to identify all the rules that might affect federal prosecutions because some bar rules, which are wholly legitimate and important on their face, are interpreted in a way that no one would expect. For example, in Oregon, a state bar rule, one with a salutary prohibition of deception, has been interpreted to prohibit government attorneys' participation in sting operations because these operations involve deception. In re Gatti, No. 95-18 (Ore. St. Bar). A federal prosecutor conducting an investigation of a drug organization would thus be prohibited from authorizing an undercover purchase of drugs. A prosecutor could not supervise a sting operation intended to lure burglars and thieves into selling their ill-gotten proceeds to an undercover F.B.I. agent posing as a fence. A prosecutor could not authorize law enforcement agents to pose as children to fool pedophiles using the Internet in order to sexually exploit minors.
The response of the Oregon bar to criticism of its interpretation of its rule is that law enforcement agents are not bound by ethics rules and can continue to conduct undercover operations without attorney involvement. This reflects a completely unrealistic view of contemporary law enforcement and is terrible public policy to boot. Prosecutors conduct investigations because they have to. There is no way to conduct a gang investigation, or an organized crime investigation, or investigation of a large-scale drug operation, effectively without the active involvement of prosecutors.
Moreover, this is how it should be. The value of attorneys' direct involvement in investigations cannot be overestimated. Attorneys are well-schooled in the law and can help ensure that investigations stay within constitutional bounds. There are many areas of the law that are highly complex and specialized. In these areas - civil and criminal environmental law enforcement, money laundering, securities fraud, cases arising out of acts of terrorism - federal attorneys are critical because only they will understand the technical issues that are the difference between a case that should be brought to trial and one that does not meet statutory requirements. Attorneys must see and speak to the witnesses in order to make informed decisions about proceeding with a case. Attorneys are often in the best position to decide what the next investigative steps should be.
Unfortunately, federal prosecutors in the Eighth Circuit -- where the Department's contacts regulation has been invalidated -- are reporting that agents are seeking advice from prosecutors less frequently and are simply conducting investigations on their own. Agents are concerned that consulting with attorneys will limit the scope of the agents' investigations. This development is bad for everyone.
The examples that I have given represent the problems that we know about, but there is also much uncertainty about how particular state rules will be applied to federal law enforcement attorneys, and how vigorous state bars will be in using their authority under the section to control the activities of these attorneys. I am sure that the members of this subcommittee are familiar with the since-reversed Singleton decision in which a panel of the Tenth Circuit held that offering a plea to a reduced charge to a defendant in return for truthful testimony violated federal criminal law. Many states have rules prohibiting offering inducements to witnesses (one such state rule was cited in the original Singleton decision). Since the Singleton decision, more defense counsel are making motions to exclude testimony from cooperating defendants on the basis of these rules. While most state rules prohibit only inducements that are prohibited by law, the Florida rule contains no such exception. Does this mean that any inducement, such as moving the witness's family to safety pending the trial, is prohibited? We simply do not know. The Eleventh Circuit recently held that section 530B does not require suppression of cooperating witness testimony, but took no position on whether the use of such testimony violates the Florida rule. United States v. Lowery, 166 F.3d 1119 (11th` Cir. 999). This opinion is likely to provide little comfort to Department attorneys licensed in Florida.
Section 530B is Vague and Will Lead to Much Satellite Litigation
Section 530B presents many problems beyond the direct impact of specific rules. I will describe some of the great uncertainties the section creates.
While the caption to section 530B refers to ethics rules, the text of the section refers only to "laws and rules ... governing attorneys." This language will permit defense counsel to argue (incorrectly, we believe) for a form of reverse preemption - if a state bar has a rule in a particular area, even if it conflicts with clear federal law concerning, for example, wiretapping or consensual monitoring, or with the uniform rules of procedure and evidence that govern federal court proceedings, the state rule will prevail. We are currently litigating against just such an argument: counsel for a state bar argued in a recent case that "the clear intent of [section 530B] was to prevent the Justice Department lawyers from ignoring state ethical standards on the grounds of conflict with federal law."
Over the last 60 years, Congress has developed uniform rules of procedure and evidence for the federal courts, and no state or state bar should be able to override those. Nor should a state law that prohibits wiretapping trump federal law expressly permitting Department attorneys to authorize valid electronic surveillance. If this broad interpretation of section 530B were to succeed, the effect on federal law enforcement would be devastating. State rules concerning electronic surveillance, subpoenas, and grand jury practice vary widely. Our ability to use particular investigative techniques would vary from state to state and would be severely limited in some. I want to emphasize that the Department does not believe that this was Congress's intention and that we will litigate vigorously against this interpretation, but it is already clear that we will face such arguments. See ABA/BNA Analysis and Perspective, vol. 14, no. 20, at p. 498 (Oct. 28, 1998) (noting that opposing lawyers are likely to argue for a broad construction of section 530B).
The other area of serious concern is in determining what rules apply to particular conduct. All attorneys face difficult questions about what state bar rules apply to particular conduct. As an ABA Committee explained a few years ago, "the existing authority as to choice of law in the area of ethics rules is unclear and inconsistent." ABA Committee Report Explaining the 1993 Amendment to Rule 8.5. Although the ABA has tried to improve this situation by amending Model Rule 8.5 to make clear that attorneys must generally comply only with the rules of the court before which they are litigating a particular matter, most states have not adopted this rule. This leaves all attorneys at risk that they may, in good faith, comply with the wrong rule.
This problem is especially difficult for federal prosecutors, whose practice necessarily crosses state lines and who often supervise investigations that span a dozen or more states. By statute, the Attorney General has authority to determine who will represent the United States in court, and Department attorneys - particularly those at Main Justice - travel across the country to represent the United States' interest, most often in states where they are not members of the bar. Federal prosecutors also must regularly react quickly to protect the public and bring criminals to justice. Uncertainty about what bar rules apply is thus particularly troubling.
To the extent that there is already confusion, section 530B makes the situation far worse because of its vague directive that government attorneys comply with rules in each state in which the attorney "engages in that attorney's duties." This directive could be read to require Department attorneys (unlike private attorneys) to comply with rules in every state where they take a deposition or supervise an investigation. Although we do not believe this interpretation is correct, we anticipate that there will be significant satellite litigation about what rules apply to particular conduct. This will needlessly slow the enforcement of federal law and will deter prosecutors, whose licenses may be on the line.
Let me give you a realistic example. A team of federal prosecutors may oversee an investigation that has grand juries in three states and investigators in ten states. We do not believe that the prosecutors should have to comply with different rules in each state where an investigator goes. Under current federal law, government attorneys generally comply with the rules of the court where the case is being litigated. Under section 530B, a cautious Department attorneys will have to consider how the rules of multiple jurisdictions might be applied to his or her conduct, with professional discipline as the consequence of a mistaken analysis. If the attorneys on the team are licensed in different states, each attorney may have to do a separate analysis of the rules that apply, and different rules might apply to each of them. Add supervising attorneys with different bar memberships, and you can see how complicated it gets.
This sort of uncertainty does not result in more ethical conduct by federal prosecutors. Rather, it will discourage prosecutors from early and effective involvement in major criminal cases and will make attorneys exceptionally timid about authorizing traditionally accepted law enforcement techniques because they are concerned that their licenses and careers may be jeopardized. Whether one believes that a single nationwide set of ethics rules for practice in federal court is the answer or that fifty sets of state bar rules for the practice in each state is the answer, I think we all can agree that it should be clear what rules apply to what conduct - something section 530B does not do.
I want to conclude with what I said at the outset. The Department is not seeking to exempt itself from ethics rules or to strip state bars of their authority. We firmly believe that federal prosecutors should comply with the highest ethical standards, regardless of who makes and enforces the rules. The federal courts and Congress through its oversight functions insist on this. But we also believe that ethics rules should be clear, predictable, and reasonably uniform - and also that they should not unreasonably interfere with legitimate law enforcement techniques.
Section 530B ensures that none of these things will exist for federal prosecutors. For this reason, we strongly believe that section 530B must be modified prior to going into effect. We are actively working to implement the provision, but we believe in the strongest terms that it should not be permitted to go into effect as is. No issue has galvanized Department attorneys more than this one because their licenses are on the line. The Attorney General and I stand ready to work with Congress to modify the provision to make certain that federal prosecutors are governed by high ethical standards, but also that they are able to do their jobs and effectively represent the interests of the United States.