Efforts to Protect Privilege Falling Short

WASHINGTON
Marcia Coyle/Staff reporter
September 24, 2007

WASHINGTON – The Department of Justice’s latest effort to deal with complaints about prosecutors inappropriately seeking waivers of attorney-client privilege in corporate investigations often falls short of providing meaningful protection, according to a report to a Senate committee by a former Delaware chief justice.

In a submission to the Senate Judiciary Committee, former Chief Justice E. Norman Veasey, senior partner in New York’s Weil, Gotshal & Manges, said he agreed, at the request of the Coalition to Protect the Attorney-Client Privilege, to act as a pro bono, “neutral” recipient of actual experiences by defense counsel with the so-called McNulty Memorandum, named for former Deputy Attorney General Paul McNulty, which provided new restrictions on prosecutors seeking privileged information from companies.

Veasey said he spoke personally with lawyers who responded to a confidential Web site reporting form created by the Association of Corporate Counsel and the National Association of Criminal Defense Lawyers (NACDL).

“My role was to perform the function of a neutral narrator, without endangering any of the respondents or their clients’ interest,” said Veasey.

Not ‘fully effective’

Although many of the responding lawyers acknowledged that the Justice Department and other government agencies have made progress in addressing the privilege abuses, those presenting post-McNulty information, he said, believe the memorandum “may not be fully effective in erasing practices that it was designed to address.”

For example, in one East Coast corporate fraud investigation, prosecutors in a meeting with the company after the McNulty memo had been issued, asked for all materials, including privileged information, to be turned over in order to look behind the internal investigation.

When the company counsel raised the McNulty procedures, the prosecutor’s response was, “I don’t give a flying – ” about the policy, and said the burden was on the company to “appeal” the waiver request up the Justice Department chain of command – an inaccurate reading of the McNulty procedures.

In some cases, prosecutors were unaware of the McNulty memo, and in others, they put additional pressure on company counsel in order to avoid the memo’s reporting requirements. The anecdotal reports came from a variety of investigations involving fraud, environment, securities and other areas.

The Coalition to Preserve the Attorney-Client Privilege conducted empirical surveys in 2005 and 2006 on abuses of the privilege and work-product protections in corporate investigations, recalled Susan Hackett, senior vice president and general counsel of the Association of Corporate Counsel.

While those surveys influenced actions by the U.S. Sentencing Commission and prompted the introduction of legislation in the House and Senate, she added, the Justice Department attacked their credibility because they were anonymous.

“The reason we went into this project was to put a face on these stories and answer the concern that there was this faceless group of whiners out there,” she said. “When we created the process by which people were to report their experiences, we wanted to give them confidentiality, which was why the pipeline went directly to Judge Veasey, so he could verify them.”

Procedure ‘ingrained’

The survey sought experiences pre-McNulty as well as post-McNulty for comparison, according to Hackett. “The behaviors ingrained pre-McNulty remain ingrained post-McNulty and the memo hasn’t removed those practices,” she said.

The Senate Judiciary Committee held a hearing on Sept. 18 on the waiver issue. Oregon U.S. Attorney Karin Immergut, speaking for the Justice Department, said the McNulty memo is successfully countering abuses. Former Attorney General Richard Thornburgh countered that legislation is needed.

Senate Judiciary Chair Patrick Leahy, D-Vt., said, “The McNulty Memorandum has been in place for less than a year. We need to get a sense of whether and how it is working.” He will ask Attorney General nominee Michael Mukasey for his views.

Hackett said she is “optimistic” that Congress will enact legislation that would prohibit requests for waivers of privileged materials as a sign of a company’s cooperation with an investigation.

“The biggest problem we’ve got is there is just a wealth of issues these guys have to address at any time,” said Hackett. “It’s just a question of where does this fit with the 200 other pieces of legislation before them.”

The coalition supporting a legislative remedy also includes the American Chemical Council, the American Civil Liberties Union, the Business Roundtable, the U.S. Chamber of Commerce and others. The American Bar Association also supports the coalition’s effort.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: