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Federal Investigations of Corporations-Changes to the "McNulty Memo" Are Coming Soon

On July 9, 2008, U.S. Attorney General Michael Mukasey told the Senate Judiciary Committee that the Department of Justice would soon issue revisions to the so-called “McNulty Memo,” which sets forth the factors that federal prosecutors are to consider in deciding whether to charge a corporation with a crime.

The McNulty Memo has been the subject of substantial criticism. Opponents contend that the McNulty Memo, like its predecessor, the “Thompson Memo,” gives prosecutors too much power to force corporations to waive the attorney-client privilege and the work product doctrine in order to avoid indictments which, irrespective of the validity of the charges, can amount to a corporate death sentence, as it did for Arthur Andersen, LLP.

Congress, led by Senator Arlen Specter, is considering legislation – The Attorney-Client Privilege Protection Act – to limit the DOJ’s ability to pressure companies into waiving the privilege. In an apparent effort to forestall that legislation, Attorney General Mukasey and Deputy Attorney General Mark Filip, on July 9, informed the Senate Judiciary Committee that the DOJ would soon revise the McNulty Memo.

In a July 9 letter to Senator Specter and Judiciary Committee Chairman Senator Patrick Leahy, Deputy Attorney General Filip wrote that the revisions would provide as follows:

1. A corporation’s “cooperation” with prosecutors will be measured by the extent to which the corporation discloses relevant facts and evidence, not its waiver of privileges.

2. Prosecutors will not demand disclosure of non-factual attorney work product or “core” attorney-client privileged communications.

3. Prosecutors will not consider whether the corporation has advanced attorneys’ fees to employees.

4. Prosecutors will not consider whether the corporation has entered into a joint defense agreement.

5. Prosecutors will not consider whether the corporation has retained or sanctioned potentially culpable employees.

The proposed revisions do not represent a radical break from the McNulty Memo’s guidance. Rather, the proposed revisions are largely clarifying and incremental. Senator Specter, who responded to Filip by letter dated July 10, remains skeptical of the DOJ’s efforts. It remains to be seen if the forthcoming “Filip Memo” will convince Congress to defer to the DOJ, or if Congress will instead adopt its own legislative solution.

Kevin Allen is a partner with Thorp Reed & Armstrong, LLP and the author of the book "The Attorney-Client Privilege in Pennsylvania," published by PBI Press. For more information, Mr. Allen can be reached via e-mail at kallen@thorpreed.com.

This Thorp Reed & Armstrong, LLP Communiqué is prepared in summary form and is not to be construed as legal advice or opinion on any specific fact or circumstance. We do not assume any responsibility to revise the Communiqué if there are subsequent changes in the law. To review other communiqués previously distributed, please visit Thorp Reed & Armstrong’s website at www.thorpreed.com

July 2008