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Coercive, Abusive and Unconstitutional --- For Starters

The rule of law in the United States got some badly needed help last week from an unlikely source -- 33 former United States Attorneys. A letter they sent to Senator Patrick Leahy (D., VT), chair of the Judiciary Committee, asked him to support the proposed Attorney-Client Privilege Protection Act known as S. 186. The bill's purpose is to stop the Justice Department's practice of pressuring companies to waive the attorney-client privilege.

Forcibly stripping legal entities of constitutional rights by threatening indictment or harsher punishment is a brutal practice. But it's the companies' flesh-and-blood employees who suffer most. Once an organization waives the privilege on its way to a plea deal or deferred-prosecution agreement, statements taken by the company's counsel during the internal investigation are handed over to prosecutors without the employees' consent. Yet they face criminal prosecution and potential jail time for what they've said.

When they gave their statements, the employees didn't know all the relevant facts, couldn't possibly understand the implications of their words, had no idea the conversation would ever go outside the company, and never had help from lawyers -- or even knew they needed legal help -- before or during the questioning. But according to the former USAs, "as in several recent cases, they can be prosecuted for making false statements to the government, even though the statements were made only to company counsel."

A lesser but still important consequence of the DOJ's tactics is the undermining of compliance. Employees who learn not to trust the attorney-client privilege will say less to company lawyers. When companies operate under deferred-prosecution agreements, for example, the privilege is gone for two or three years. During that time everything said to in-house lawyers is open to the DOJ or SEC. So of course the lawyers aren't useful to employees as a compliance resource. Without a steady internal flow of honest and open dialogue, how can companies ever develop an effective compliance program -- the main requirement of every FCPA-related settlement?

The New York Times reported that before the former U.S. Attorneys took up the cause, the DOJ's pressure tactics had come under "withering attack from lawyers, senior former Justice Department officials and federal judges, who criticized them as coercive, abusive and unconstitutional." There's more alarm today as the DOJ's modus operandi is adopted by more of the federal government -- now including the SEC, the Federal Communications Commission, and the Department of Housing and Urban Development, among others.

We close with thanks to the 33 former U.S. Attorneys. They must know better than most how the DOJ's current tactics are harming our companies, our citizens and our ideals. S. 186 would put a stop to it throughout the government. Let's hope Senator Leahy and his colleagues are listening.

The June 20, 2008 letter from the 33 former United States Attorneys to Senator Leahy can be found here courtesy of the Blog of the Legal Times.

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Full post as published by The FCPA Blog on June 24, 2008 (boomark / email).