U.S. Deputy Attorney General Paul J. McNulty announced earlier today that the DOJ is revising its corporate charging guidelines for federal prosecutors throughout the country. The new memorandum, informally titled the “McNulty Memorandum,” will supplant the Thompson Memorandum, which was issued in January 2003 by then-Deputy Attorney General Larry Thompson, now the general counsel at PepsiCo.
Both memoranda were designed to serve the same basic function: to help federal prosecutors decide whether to charge a corporation, rather than or in addition to individuals within the corporation, with criminal offenses. Under the Thompson memo, in deciding whether a corporation was cooperating with an investigation, prosecutors were allowed to consider two controversial factors: 1) whether a company would agree to waive the attorney-client privilege in regard to conversations had by its employees, and 2) whether a company had declined to pay attorneys’ fees for its employees.
The McNulty Memo requires that when federal prosecutors seek privileged attorney-client communications or legal advice from a company, the U.S. Attorney must obtain written approval from the Deputy Attorney General.
The new memorandum also instructs prosecutors that they cannot consider a corporation’s advancement of attorneys’ fees to employees when making a charging decision. An exception is created for those extraordinary instances where the advancement of fees, combined with other significant facts, shows that it was intended to impede the government’s investigation.
The Thompson memo was pointedly criticized by business groups and civil liberties organizations, who claimed that it eviscerated individuals constitutional rights. In July, federal judge Lewis Kaplan slammed the Thompson Memo in a case involving allegedly illegal tax shelters created by former KPMG employees. For more background on the Thompson Memo, check out this WSJ.com exchange between a former U.S. Attorney and two white-collar defense lawyers.