2007 Issue 1 - New York City Bar Association

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pany. These factors fall into roughly three groups: (1) the nature and extent of the wrongdoing; (2) cooperation with the investigation and self-reporting of malfeasance; and (3) the collateral consequences of prosecution and the adequacy of other remedies. While the nature and extent of the company’s wrongdoing will typically be the most important consideration, it is notable that three of the nine factors address cooperation and compliance, and they are: Id. 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 4. the corporation’s timely and voluntary disclosure of wrongdoing and its willingness to cooperate in the investigation of its agents, including, if necessary, the waiver of corporate attorney-client and work product protection[]; 6 5. the existence and adequacy of the corporation’s compliance program; [and] 6. the corporation’s remedial actions, including any efforts to implement an effective corporate compliance program or to improve an existing one, to replace responsible management, to discipline or terminate wrongdoers, to pay restitution, and to cooperate with the relevant government agencies[.] 6 a. Cooperation and Self-Reporting The General Principle set forth in Paragraph VI of the Thompson Memo makes clear the Justice Department’s emphasis on cooperation and voluntary disclosure by organizations: “In determining whether to charge a corporation, that corporation’s timely and voluntary disclosure of wrong- 6. In 2005 the Department of Justice directed each U.S. Attorney and department head to establish a review process for supervisory approval of all requests to corporate entities for waiver of the attorney-client privilege and work product protection. See Memorandum from Robert D. McCallum, Jr., Acting Deputy Att’y Gen., to Heads of Dep’t Components & U.S. Atty’s (Oct. 21, 2005), available at http://www.abanet.org/poladv/mccallummemo212005.pdf. While this directive appears to be intended to assure appropriate supervision and review of waiver requests, it does not appear to indicate a weakening of the DOJ’s interest in obtaining privileged materials. Indeed, the October 21 memo reiterates the importance that the DOJ continues to attach to such materials, by quoting from the Thompson Memo, which continues in force as the DOJ’s statement of policy on charging corporations. The directive further notes that waiver review processes may vary from district to district, so that each U.S. Attorney will retain the prosecutorial discretion to determine how best to seek “timely, complete, and accurate information from business organizations.” Id. T H E R E C O R D 210
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 doing and its willingness to cooperate with the government’s investigation may be relevant factors.” 7 It goes on to explain that cooperation is multifaceted: “In gauging the extent of the corporation’s cooperation, the prosecutor may consider the corporation’s willingness to identify the culprits within the corporation, including senior executives; to make witnesses available; to disclose the complete results of its internal investigation; and to waive attorney-client and work product protection.” 8 Likewise, the Thompson Memo warns corporations that efforts to impede a government investigation or prosecution will count against them: Another factor to be weighed by the prosecutor is whether the corporation, while purporting to cooperate, has engaged in conduct that impedes the investigation (whether or not rising to the level of criminal obstruction). Examples of such conduct include: overly broad assertions of corporate representation of employees or former employees; inappropriate directions to employees or their counsel, such as directions not to cooperate openly and fully with the investigation including, for example, the direction to decline to be interviewed; making presentations or submissions that contain misleading assertions or omissions; incomplete or delayed production of records; and failure to promptly disclose illegal conduct known to the corporation. 9 b. Ethics and Compliance Programs As part of this emphasis on cooperation, the Thompson Memo also states that federal prosecutors will consider the quality and vitality of a company’s compliance program: Compliance programs are established by corporate management to prevent and to detect misconduct and to ensure that corporate activities are conducted in accordance with all applicable criminal and civil laws, regulations, and rules. The Department encourages such corporate self-policing, including voluntary disclosures to the government of any problems that a corporation discovers on its own. However, the existence of a compliance program is not sufficient, in and of itself, to justify not charging a corporation for criminal conduct undertaken by its officers, directors, employees, or agents. Indeed, the commis- 7. Thompson Memo at VI.A. 8. Id. 9. Id. at VI.B. 2 0 0 7 V O L. 6 2 , N O. 1 211
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2007 Issue 1 - New York City Bar Association

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