Confiding in the Government <b><i>Corporate Fraud Brings New Pressures to Provide Disclosure to the Government in Confidentiality and Non-waiver Agreements</b></i>

In the wake of the headline-grabbing corporate fraud scandals starting with Enron, the Justice Department earlier this year issued revised guidelines making a corporation's waiver of the attorney-client and work-product protections a factor in determining whether to charge a corporation for criminal conduct, including fraud. Under these guidelines, prosecutors may “consider” a company's willingness to identify wrongdoers, make witnesses available, disclose the results of its internal investigation and waive the attorney-client and work-product protections. Memorandum from Deputy Attorney General Larry D. Thompson re: Principles of Federal Prosecution of Business Organizations, Jan. 20, 2003. (The pertinent section of the guidelines reads: “In determining whether to charge a corporation, 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.) The SEC, Commodity Futures Trading Commission (CFTC) and NASD have similar policies. Following the adoption of these guidelines, government demands that corporations waive the privilege and work-product protection have become routine, even at the outset of investigations. See, eg, T. Loomis, “New DOJ Guidelines Encourage Waiving Attorney-Business Client Privilege,” Broward Daily Business Review 8, February 26, 2003.