Backers Expect Attorney-Client Privilege Bill to Pass


Zach Lowe

The American Lawyer



A bill that would protect attorney-client privilege during federal investigations of corporations gained another major supporter Tuesday when Sen. Jim Webb, D-Va., added his name to the sponsors list.


The bill, which passed the House of Representatives on voice vote, now has the backing of a dozen high-profile senators, 32 former federal prosecutors and a diverse coalition of organizations that includes the American Civil Liberties Union and the Chamber of Commerce, says Susan Hackett, senior vice president and general counsel for the Association of Corporate Counsel.


Hackett is one of several key people who helped draft the legislation last year, and those supporters say they expect the bill to pass easily if the Senate Judiciary Committee votes it out before the Senate’s summer recess.


That it has so much momentum is something of its surprise, even to its supporters, since it emerged from a climate of intense scrutiny of white-collar crime.


“There were a lot of detractors when we first came out with this bill,”

Hackett says. “But this is not a pro-company bill. This is about the fundamental premise upon which all legal counseling is based. We are very pleased with the progress we’ve made.”


The bill would make it illegal for federal prosecutors to order companies to turn over privileged documents as a condition of a cooperating agreement. That has been a popular tactic to get access to the juicy stuff, but it’s already happening less because of the disastrous KPMG tax shelter case, says William Sullivan, a Winston & Strawn partner and former federal prosecutor who spoke at a panel discussion during ALM’s Corporate Counsel Conference earlier this month [ALM is the parent company of The Am Law Daily and The American Lawyer].


In the KPMG case, a federal judge tossed out indictments against several individual defendants after learning that prosecutors banned KPMG from paying their legal fees — a condition the judge considered onerous.


Still, the concern is there. The bill, called the Attorney-Client Privilege Protection Act, would revise the so-called McNulty Memorandum, named for former deputy attorney general Paul McNulty, who wrote the memo. McNulty came up with guidelines purportedly limiting a prosecutor’s right to demand privileged information from companies seeking a plea deal or a deferred prosecution agreement.


The defense bar believed the guidelines did not go far enough; McNulty was actually softening earlier guidelines by former Deputy Attorney General Larry Thompson. The bill would replace those guidelines by simply making the practice illegal.


Sullivan, for one, would like to see the proposed bill go further by calling for penalties for prosecutors found to be in violation.


The bill’s authors thought about that clause but decided against it, says Stephanie Martz, director of the National Association of Criminal Defense Lawyer’s White Collar Crime Project and a major supporter of the bill.


Martz expects the bill to pass whether the Senate gets to it now or under the next president. “There’s no logical reason it shouldn’t pass,”

she says. “We haven’t run into any opposition except from U.S.

Department of Justice officials. It’s not going to matter who the president is.”

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