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Deferred Prosecution Agreements and Privileged Documents

By Jacqueline C. Wolff and Ethan I. Jacobs
October 30, 2007

XYZ Inc. settles a federal criminal investigation by signing a deferred prosecution agreement (DPA). Now its attorneys think the company and its privileged documents are safe so long as XYZ stays out of trouble. But have they closed the barn door after the horse has run away? A little-noticed holding by Judge Lewis A. Kaplan in the KPMG tax shelter case suggests that a DPA may open privileged documents to defendants in criminal trials and even to civil litigants. United States v. Stein, 488 F. Supp. 2d 350, 360-68 (S.D.N.Y. 2007).

Companies expect to secure peace, and not just a temporary reprieve, by signing a DPA. Typically, they admit to details of wrongful conduct, promise not to repeat it, and agree to future cooperation. As part of that cooperation, the company may promise to provide documents at the government's request, including some protected by attorney-client privilege or work product protection. Companies know, however, that the government won't ask for documents unless it suspects that the company is involved with additional wrongdoing, and that the government's right to documents will end when the DPA expires.

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