The American Bar Association has joined forces with a broad and diverse coalition of legal and business groups and others in an effort to protect the attorney-client privilege and work product doctrine and roll back various federal governmental policies and practices that have seriously eroded these fundamental rights. Despite some recent success, the ABA and the coalition are gearing up for a sustained campaign to restore and protect federal recognition of the privilege and the doctrine.
The Importance Of The Attorney-Client Privilege
The attorney-client privilege enables both individual and organizational clients to communicate with their lawyers in confidence, and it encourages clients to seek out and obtain guidance in how to conform their conduct to the law. The privilege facilitates self-investigation into past conduct to identify shortcomings and remedy problems, to the benefit of corporate institutions, the investing community and society-at-large. The work product doctrine underpins our adversarial justice system and allows attorneys to prepare for litigation without fear that their work product and mental impressions will be revealed to adversaries.
Federal Government Policies That Erode The Attorney-Client Privilege
Unfortunately, a number of federal governmental agencies - including the Department of Justice, the U.S. Sentencing Commission, and others - have adopted policies in recent years that weaken the attorney-client privilege and the work product doctrine in the corporate context by encouraging federal prosecutors to routinely pressure companies and other organizations to waive these legal protections as a condition of receiving credit for cooperation during investigations. While the Department's policy was formally established by the so-called 1999 "Holder Memorandum" and 2003 "Thompson Memorandum,"1 the incidence of coerced waiver has increased dramatically during the past several years. The problem of government-coerced waiver was exacerbated in November 2004 when the Commission added language to the Commentary to Section 8C2.5 of the Federal Sentencing Guidelines that, like the Justice Department's policy, authorizes and encourages prosecutors to seek privilege waiver as a condition for cooperation.2
In an attempt to address the growing concerns being expressed about government-coerced waiver, then-Acting Deputy Attorney General Robert McCallum sent a memorandum to all U.S. Attorneys and Department Heads in October 2005 instructing each of them to adopt "a written waiver review process for your district or component," and local U.S. Attorneys are now in the process of implementing this directive.3 Though well-intentioned, the McCallum Memorandum does not establish any minimum standards for, or require national uniformity regarding, privilege waiver demands by prosecutors. As a result, it is likely to result in numerous different waiver policies throughout the country, many of which may impose only token restraints on the ability of federal prosecutors to demand waiver. More importantly, it fails to acknowledge and address the many problems arising from government-coerced waiver.
Unintended Consequences Of Federal Government Waiver Policies
Substantial new evidence has demonstrated that these policies adopted by the Justice Department and the Sentencing Commission have resulted in the routine compelled waiver of attorney-client privilege and work product protections. According to a new survey of over 1,200 in-house and outside corporate counsel that was completed by the Association of Corporate Counsel, the National Association of Criminal Defense Lawyers, and the ABA in March 2006,4 almost 75% of corporate counsel respondents believe that a "culture of waiver" has evolved in which governmental agencies believe that it is reasonable and appropriate for them to expect a company under investigation to broadly waive attorney-client or work product protections. In addition, 52% of in-house respondents and 59% of outside respondents have indicated that there has been a marked increase in waiver requests as a condition of cooperation in recent years. Corporate counsel also indicated that when prosecutors give a reason for requesting privilege waiver, the Thompson/Holder/McCallum Memoranda and the amendment to the Sentencing Guidelines were among the reasons most frequently cited.
These government policies weaken the attorney-client privilege and work product doctrine and undermine companies' internal compliance programs. By requiring routine waiver of the privilege, these policies discourage entities from consulting with their lawyers, thereby impeding the lawyers' ability to effectively counsel compliance with the law. In addition, by requiring waiver of the work product doctrine, the policies discourage entities from conducting internal investigations designed to quickly detect and remedy misconduct. Therefore, these policies undermine, rather than promote, good corporate compliance practices.
The ABA's Response To The Privilege Waiver Problem
The ABA is working to protect the attorney-client privilege and work product doctrine in a number of ways. In 2004, the association established a Task Force on Attorney-Client Privilege to study and address the policies and practices of various federal agencies that have eroded attorney-client and work product protections. The ABA Task Force, which I have had the privilege to chair, held a series of public hearings on the privilege waiver issue and received testimony from numerous legal, business, and public policy groups. The Task Force also crafted new ABA policy - unanimously adopted by our House of Delegates last August - supporting the privilege and opposing government policies that erode the privilege. The new ABA policy and other useful resources on this topic are available on our Task Force website at www.abanet.org/buslaw/attorneyclient/.
The ABA and its Task Force on Attorney-Client Privilege also have been working with a broad and diverse coalition of influential legal and business groups - ranging from the U.S. Chamber of Commerce and the Association of Corporate Counsel to the American Civil Liberties Union and the National Association of Criminal Defense Lawyers - in an effort to modify both the Justice Department's waiver policy and the 2004 privilege waiver amendment to the Sentencing Guidelines to clarify that waiver of attorney-client and work product protections should not be a factor in determining cooperation.5 Materials relating to the work of the ABA and the coalition are available at www.abanet.org/poladv/acprivilege.htm.
After receiving extensive written comments and testimony from the ABA, the coalition, numerous former senior Justice Department officials - including three former attorneys general from both parties - and other organizations, the Sentencing Commission voted unanimously on April 5, 2006, to reverse the 2004 privilege waiver amendment to the Sentencing Guidelines.6 The change will be included in the package of amendments that the Commission sends to Congress on May 1, 2006. Unless Congress acts to modify or reverse the change, it will become effective on November 1, 2006.
While the Commission's vote to remove the privilege waiver language from the Guidelines is a very positive and encouraging development, the Justice Department has not yet taken steps to reexamine and remedy its role in the growing problem of government-coerced waiver. As a result, many federal prosecutors continue to routinely demand that companies waive their privileges as a condition for receiving cooperation credit. In addition, the McCallum Memorandum, which requires all 93 U.S. Attorneys around the country to adopt their own local privilege waiver review procedures, will further complicate this problem.
In an effort to address the problems created by the Justice Department's waiver policies, ABA President Michael Greco sent a letter to Attorney General Alberto Gonzales on May 2, 2006. In that letter, available online at www.abanet.org/poladv/acprivgonz5206.pdf, Greco expressed the ABA's concerns over the Department's privilege waiver policy and urged it to adopt specific revisions to the Holder/Thompson/McCallum Memoranda that were prepared by the ABA Task Force and the coalition. These suggested revisions would remedy the problem of government-coerced waiver while preserving the ability of prosecutors to obtain the important factual information they need to effectively enforce the law by (1) preventing prosecutors from seeking privilege waiver during investigations, (2) specifying the types of factual, non-privileged information that prosecutors may request from companies as a sign of cooperation, and (3) clarifying that any voluntary waiver of privilege shall not be considered when assessing whether the entity provided effective cooperation. This new language would strike the proper balance between effective law enforcement and the preservation of essential attorney-client and work product protections.
Outreach To State And Local Bars
In recognition of the nationwide implications of the privilege waiver problem, the ABA has also reached out to state and local bar associations and other organizations throughout the country on this issue. On January 31 and again on May 2, 2006, ABA President Greco sent a letter to hundreds of state and local bar leaders across the country urging them to take the following steps:
Establish Their Own Committees. Several state and local bars - including the New York, California, Arkansas, Connecticut and Boston bars - already have established committees to educate themselves on the issue and to assure that the privilege is protected. The ABA is urging the bars to establish committees or task forces and then coordinate their efforts with those of the ABA Task Force.
Contact Local U.S. Attorneys and the Justice Department. Just as the ABA wrote to Attorney General Gonzales, it is also urging state and local bars to write to their U.S. Attorneys urging them to adopt waiver review procedures that do not allow any requests, direct or indirect, for waiver of the privilege and work product. Bar groups are also being encouraged tosend a separate letter to the Justice Department that makes the central points outlined in the ABA's May 2 letter to Attorney General Gonzales.
Send An Op-ed Piece to Local Media Outlets. Bar groups are also being urged to contact their local media with an op-ed supporting the change in Justice Department policies, and provided a model for local adaptation.
These letters, and other related items of interest to state and local bar leaders, are available online at www.abanet.org/buslaw/attorneyclient/materials/stateandlocalbar/home.shtml.
In addition to this outreach, the ABA, through its Task Force, is also monitoring developments in the area of employee rights in the context of investigations, paying particular attention to a tax shelter trial of 16 former employees of the accounting firm KPMG. Judge Lewis A. Kaplan of the Federal District Court in Manhattan considered in early May whether federal prosecutors inappropriately pressured KPMG into refusing to pay its employees' legal fees as a condition of not indicting the firm. At issue in that case was whether the prosecutors violated the employees' Sixth Amendment and other legal rights by following that section of the Department's Thompson Memorandum linking cooperation credit to the company's willingness not to pay the employees' legal defense costs. Similarly, the Task Force is examining other threats to the confidential attorney-client relationship, including the growing practice of accountants demanding that companies turn over - and hence waive the privilege concerning - sensitive attorney-client communications during the course of audits. The Task Force will ask the ABA House of Delegates to adopt new association policy on these and possibly other related issues at the ABA Annual Meeting in August 2006.
Congressional Review Of Government Waiver Policies
In addition to the ABA and the coalition, many Congressional leaders have also raised concerns over the privilege waiver policies of the federal agencies. On March 7, 2006, the House Judiciary Subcommittee on Crime, Terrorism, and Homeland Security held a hearing on the privilege waiver issue. The Justice Department and several representatives of the coalition appeared and testified, while the ABA submitted a written statement for the record. During the hearing, virtually all of the Subcommittee members from both political parties expressed strong support for preserving the attorney-client privilege and serious concerns regarding the Justice Department's waiver policy. The Senate Judiciary Committee is now considering holding a similar hearing.
Although the ABA and the coalition have succeeded both in raising awareness of the privilege waiver problem and persuading the Sentencing Commission to reconsider the privilege waiver amendment to the Sentencing Guidelines, much still needs to be done. In addition to the Justice Department, other federal agencies - including the Securities and Exchange Commission, the Internal Revenue Service and others - continue to require waiver of the attorney-client privilege and work product doctrine in order to receive favorable treatment during investigations. Therefore, the ABA, the coalition, and other like-minded entities must continue their efforts to roll back these and other government waiver policies in order to protect the confidential attorney-client relationship and all of the societal benefits that it provides.
1Memorandum from Larry D. Thompson, Deputy Attorney General, Department of Justice, to Heads of Department Components, U.S. Attorneys, Principles of Federal Prosecution of Business Organizations (January 20, 2003), available at www.usdoj.gov/dag/cftf/business_organizations.pdf.
2A detailed discussion of the 2004 privilege waiver amendment to the Sentencing Guidelines is contained in the ABA's March 28, 2006 written comments to the U.S. Sentencing Commission, available online at www.abanet.org/poladv/abaussc32806.pdf
3A copy of the McCallum Memorandum of October 21, 2005 is available online at www.abanet.org/poladv/mccallummemo212005.pdf.
4The detailed Survey Results are available online at www.acca.com/Surveys/attyclient2.pdf.
5The Coalition to Preserve the Attorney-Client Privilege consists of the following entities: the American Chemistry Council, American Civil Liberties Union, Association of Corporate Counsel, Business Civil Liberties, Inc., Business Roundtable, the Financial Services Roundtable, Frontiers of Freedom, National Association of Criminal Defense Lawyers, National Association of Manufacturers, National Defense Industrial Association, Retail Industry Leaders Association, U.S. Chamber of Commerce, and Washington Legal Foundation.
6These statements and other useful resources on the topic of privilege waiver are available at www.abanet.org/poladv/acprivilege.htm.
Published June 1, 2006.
