2007 Issue 1 - New York City Bar Association

More documents

Recommendations

Info

L A W Y E R ’ S R O L E I N C O R P O R A T E G O V E R N A N C E This is a request that any corporation seeking to be viewed as a cooperator may find difficult to reject. Indeed, given the government’s greatly heightened sensitivity to severance payments, many corporations will not even attempt to make such payments, out of concern such an attempt will be viewed as uncooperative. In short, a contemplated severance payment may never reach its intended recipient, as a result of a negotiated escrow or a court-ordered freeze, followed by an enforcement action in which—if successful—the SEC obtains a monetary recovery which it can satisfy with the escrowed or frozen funds. A Board of Directors should carefully weigh the costs and benefits of such payments in light of the evidence that exists at the time and the stage of the investigation. In some circumstances, the advantage of paying severance may outweigh concerns about regulators’ perceptions. When a Board concludes that severance is appropriate, it may be advisable for it to precondition any payment of severance on full cooperation and on the absence of any finding that the employee in question is culpable. 7. Waiving attorney-client privilege Though the Thompson Memo provides that waiving attorney-client privilege is not an “absolute requirement,” the DOJ often expects organizations that are the subject of investigations to waive attorney-client privilege. Similarly, the CFTC assesses whether the company willingly waives attorney-client privilege and work product protection for internal investigation reports, corporate documents, and employee testimony. Moreover, regulators often cite waiver of privilege as a factor in determining cooperation. 215 One difficulty for clients, among others, is that waiver of the privilege renders otherwise privileged documents, information, and advice readily discoverable by future civil litigants. Recently, regulators have been increasingly willing to enter into partial waiver agreements, whereby the privilege is ostensibly waived only as to the regulators. Courts, however, have been reluctant to recognize the limited waiver exception and many courts have held that the privilege, once waived as to regulators, is waived as to all. 216 Guillaume Hannezo, (Dec. 23, 2004) (former CEO was required to relinquish claim to severance package that SEC had escrowed under Section 1103); Yochi J. Dreazen, SEC, In Inquiry Into Vivendi, Seeks to Freeze Messier Payouts, Wall St. J., Sept. 17, 2003, at A18. 215. See, e.g., SEC Litig. Rel. No. 19517, n. 207 above (SEC not commencing an enforcement action against corporation because of corporation’s cooperation, including not asserting any applicable privileges). 216. See, e.g., In re Royal Ahold N.V. Sec. & ERISA Litig., 230 F.R.D. 433, 438 (D. Md. 2005) T H E R E C O R D 202
L A W Y E R ’ S R O L E I N C O R P O R A T E G O V E R N A N C E The determination of whether to waive is a critical one for the corporation. A waiver may be the most effective way for a corporation to root out wrongdoing, to ensure that it is compliant in the future, and to win credit from the government, avoiding either a criminal charge or hefty civil penalties. For a corporation faced with true wrongdoing, there may be no practical alternative to self-reporting and a waiver: where a corporate employee engages in misconduct, the corporation itself is harmed. It is thus perfectly appropriate and may be in the best interests of the corporation both to report such misconduct to the government and to provide the government with all the materials, including memoranda of witness interviews, necessary for the government to prosecute the wrongdoer. Such swift and pro-active cooperation can send a message to employees that the corporation is committed to compliance and has a zero tolerance policy with respect to corporate misconduct. However, a reflexive decision to waive is not cost-free. The promiscuous waiver of the privilege can have several deleterious consequences that must be considered by the corporation and that prudent counsel will raise with the corporation both during an investigation and, ideally, even before an investigation. First, the privilege exists in part to promote good corporate governance—it encourages employees to consult with counsel regarding conduct they observe or participate in. The waiver of the privilege may undermine sound corporate governance by chilling the very consultation and informed decision-making that the privilege is designed to promote. Second, survey results suggest that if the attorney client privilege continues to be eroded, it may undermine pro-active corporate selfregulation, and vigorous internal investigations. See ACC Survey, n. 67, above. Even though employees can be given no assurance of absolute confidentiality in consulting with company counsel (see pp. 86-87, above), a waiver of the privilege may lead employees to be hesitant to discuss sensitive or difficult issues since the waiver all but guarantees that their every word will end up in the hands of a government regulator. In addi- (holding that limited confidentiality agreement under which interview memos were disclosed to the government was not sufficient to preserve confidentiality of interview memos from class action plaintiffs); In re Columbia/HCA Healthcare Corp. Billing Practices Litig., 293 F.3d 289, 314 (6th Cir. 2002) (rejecting concept of selective waiver); In Re Natural Gas Commodity Litig., 03 Civ 6186 (VM) (AJP), 2005 U.S. Dist. LEXIS 11950, at *22-33 (S.D.N.Y. June 25, 2005) (discussing case law concerning non-waiver agreements). But see Saito v. McKesson HBOC, Inc., Civ. A. No. 18553, 2002 Del. Ch. LEXIS 125 (Oct. 25, 2002) (holding that “the corporation did not waive the work product privilege when it gave documents to the SEC and the USAO under [a] confidentiality agreement”). 2 0 0 7 V O L. 6 2 , N O. 1 203
Page 1 and 2:
THE RECORD OF THE ASSOCIATION OF TH
Page 3 and 4:
Of Note THE NEW YORK CITY BAR PRESE
Page 5 and 6:
O F N O T E cial Department, were p
Page 7 and 8:
R E C E N T C O M M I T T E E R E P
Page 9 and 10:
Page 11 and 12:
Page 13 and 14:
Page 15 and 16:
Page 17 and 18:
Page 19 and 20:
Page 21 and 22:
P R E V E N T I O N A N D P R O S E
Page 23 and 24:
Page 25 and 26:
Page 27 and 28:
Page 29 and 30:
Page 31 and 32:
Page 33 and 34:
Page 35 and 36:
Page 37 and 38:
Page 39 and 40:
Page 41 and 42:
Page 43 and 44:
Page 45 and 46:
Page 47 and 48:
Page 49 and 50:
Page 51 and 52:
Page 53 and 54:
Page 55 and 56:
Page 57 and 58:
Page 59 and 60:
Page 61 and 62:
Page 63 and 64:
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72:
P A U L R. M C D A N I E L devoted
Page 73 and 74:
P A U L R. M C D A N I E L The Repo
Page 75 and 76:
P A U L R. M C D A N I E L 2. It wo
Page 77 and 78:
P A U L R. M C D A N I E L Territor
Page 79 and 80:
P A U L R. M C D A N I E L the U.S.
Page 81 and 82:
P A U L R. M C D A N I E L An exemp
Page 83 and 84:
P A U L R. M C D A N I E L Conclusi
Page 85 and 86:
P A U L R. M C D A N I E L do busin
Page 87 and 88:
P A U L R. M C D A N I E L mestic i
Page 89 and 90:
Recommendations on the Selection of
Page 91 and 92:
Recommendations on the Selection of
Page 93 and 94:
J U D I C I A L S E L E C T I O N S
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
W E B S I T E A C C E S S I B I L I
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Formal Opinion 2006-3 Outsourcing L
Page 139 and 140:
F O R M A L O P I N I O N 2 0 0 6 -
Page 141 and 142:
F O R M A L O P I N I O N 2 0 0 6 -
Page 143 and 144:
F O R M A L O P I N I O N 2 0 0 6 -
Page 145 and 146:
F O R M A L O P I N I O N 2 0 0 6 -
Page 147 and 148:
Formal Opinion 2007-1 Applicability
Page 149 and 150:
F O R M A L O P I N I O N 2 0 0 7 -
Page 151 and 152: F O R M A L O P I N I O N 2 0 0 7 -
Page 155 and 156: Formal Opinion 2007-2 Secondment of
Page 165 and 166: Report of the Task Force on the Law
Page 167 and 168: L A W Y E R ’ S R O L E I N C O R
Page 201: L A W Y E R ’ S R O L E I N C O R
Page 225: L A W Y E R ’ S R O L E I N C O R
show all

2007 Issue 1 - New York City Bar Association

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?