The McNulty Memorandum – The Early Years with Thompson

The Thompson Memorandum reiterated the DOJ policy regarding the prosecutions of business entities. The Thompson Memorandum was heavily criticized by the private bar and the business community because of its perceived over-reaching. Initially, the criticism of the Thompson Memorandum was

aimed at the factors considered by the DOJ in whether a business entity should be charged, and, even more specifically at Section II. 4. That Section provided, in part:  "In conducting an investigation, determining whether to bring charges, and negotiating plea agreements, prosecutors should consider the following factors in reaching a decision as the proper treatment of a corporate target: . . . 4. the corporation’s timely and voluntary disclosure of wrongdoing and its willingness to cooperate in the investigation of its agents, including, if necessary the waiver of corporate attorney-client and work product protection; . . .."  Thompson Memorandum, at 3.

In effect, the Thompson Memorandum reinforced the concept that those organizations that the government believed had not fully cooperated with the DOJ’s investigation, would be more likely to be prosecuted and to face potentially catastrophic criminal penalties. In evaluating an organization’s cooperation, the Thompson Memorandum instructed prosecutors to consider several factors. These included: 1) whether the company agreed to waive its protections under the attorney-client privilege and the work product doctrine for internal investigation materials such as otherwise protected interview notes and memoranda; and 2) whether the company was paying attorneys’ fees or indemnifying its “culpable employees.” SeeThompson Memorandum, at 6-8. It was ultimately this last factor that prompted Judge Lewis A. Kaplan of the Southern District of New York to hold the prosecution’s use of the Thompson Memorandum to be unconstitutional. United States v. Stein, 435 F. Supp. 2d 330, 336 (S.D.N.Y. 2006) (“Stein”).

More later.

In the meantime, feel free to give me a call or e-mail me at walter.james@jamespllc.com.

WDJiii