A recent federal court of appeals opinion has once again sparked widespread debate over the appropriate scope of the attorney-client privilege. The United States v. Ackers decision concluded that the privilege does not shield conversations between an attorney and an investment banker aimed at helping the attorney better advise his client about a proposed deal with the banker.
While courts continue to delineate the limits of attorney-client privilege, recent developments in the criminal enforcement of environmental violations suggest that it all may amount to much ado about nothing. Prosecutors are rapidly approaching the point of routinely demanding that companies waive their attorney-client privilege prerequisite to meaningful plea negotiations and, in some cases, even prerequisite to receiving penalty breaks for voluntary disclosures. Some prominent U.S. Attorneys have gone so far as to publicly call for federal policy requiring complete waiver of attorney-client privilege by all corporate targets wishing to obtain credit for their “cooperation.” Members of the environmental defense bar and regulated community believe that such enforcement policy is more about “coercion” than “cooperation,” given the enormous discretion that prosecutors possess in determining the fate of companies accused of environmental violations. The minimal standard of intent required to prove an environmental crime — in many cases as little as negligence or even strict liability — and the enormous penalties and potentially devastating collateral consequences (e.g., loss of government contracting or vital permits) leave companies with few reasonable options.
It is not hard to understand why the line prosecutor would want to get hold of the results of a company's internal investigation. From a substantive perspective, getting information from the company enables the government to do an end run on employees' Fifth Amendment privilege against self-incrimination. From a procedural perspective, requiring companies to waive their attorney-client privilege enables the prosecutor to build the bigger, better case faster, more cost-effectively, and free of surprises.
In light of these obvious temptations, the real question is why until recently federal prosecutors considered the results of internal corporate investigations off-limits. For one thing, prosecutors have traditionally had effective alternative means for gathering the information and building cases — among others, the immense power of the grand jury and the ability to immunize lower level employees and work up the chain of command to target more responsible parties. Furthermore, the Supreme Court has long recognized that the open and frank communication between company employees and company counsel serves to improve company compliance with the law and, thus, furthers the ultimate government goal of minimizing harm to the environment and public health. Finally, there are serious concerns about whether deputizing companies against their employees ultimately serves the ends of justice, particularly in the context of “general intent” crimes.
Although, in some extreme instances, negotiated waiver of privileges protecting internal investigations may be useful and appropriate, the government's increasing insistence on mandatory waiver of privileges as a pre-condition to “cooperation” (and resulting penalty reductions) will have adverse long-term consequences. Company compliance programs will fail because they rely on employees' belief that their freely critiquing company compliance, immediately bringing problems to the attention of management, and thoroughly documenting the necessary follow up will not result in their company having to waive privileges and leave honest, responsible employees exposed to the threat of criminal penalties just to keep the company's doors open. Effective internal investigations will no doubt become a thing of the past, as well — or, at least, meaningful documentation of them — soon eliminating the very purpose of “mandatory waiver” and diminishing the effectiveness of environmental enforcement across the board.
The United States Supreme Court aptly captured this sentiment in rejecting Independent Counsel Starr's recent attempt to force disclosures by the attorneys for the late Vince Foster: “The loss of evidence admittedly caused by the [attorney-client] privilege is justified in part by the fact that without the privilege, the client may not have made such communications in the first place.”
While courts continue to delineate the limits of attorney-client privilege, recent developments in the criminal enforcement of environmental violations suggest that it all may amount to much ado about nothing. Prosecutors are rapidly approaching the point of routinely demanding that companies waive their attorney-client privilege prerequisite to meaningful plea negotiations and, in some cases, even prerequisite to receiving penalty breaks for voluntary disclosures. Some prominent U.S. Attorneys have gone so far as to publicly call for federal policy requiring complete waiver of attorney-client privilege by all corporate targets wishing to obtain credit for their “cooperation.” Members of the environmental defense bar and regulated community believe that such enforcement policy is more about “coercion” than “cooperation,” given the enormous discretion that prosecutors possess in determining the fate of companies accused of environmental violations. The minimal standard of intent required to prove an environmental crime — in many cases as little as negligence or even strict liability — and the enormous penalties and potentially devastating collateral consequences (e.g., loss of government contracting or vital permits) leave companies with few reasonable options.
It is not hard to understand why the line prosecutor would want to get hold of the results of a company's internal investigation. From a substantive perspective, getting information from the company enables the government to do an end run on employees' Fifth Amendment privilege against self-incrimination. From a procedural perspective, requiring companies to waive their attorney-client privilege enables the prosecutor to build the bigger, better case faster, more cost-effectively, and free of surprises.
In light of these obvious temptations, the real question is why until recently federal prosecutors considered the results of internal corporate investigations off-limits. For one thing, prosecutors have traditionally had effective alternative means for gathering the information and building cases — among others, the immense power of the grand jury and the ability to immunize lower level employees and work up the chain of command to target more responsible parties. Furthermore, the Supreme Court has long recognized that the open and frank communication between company employees and company counsel serves to improve company compliance with the law and, thus, furthers the ultimate government goal of minimizing harm to the environment and public health. Finally, there are serious concerns about whether deputizing companies against their employees ultimately serves the ends of justice, particularly in the context of “general intent” crimes.
Although, in some extreme instances, negotiated waiver of privileges protecting internal investigations may be useful and appropriate, the government's increasing insistence on mandatory waiver of privileges as a pre-condition to “cooperation” (and resulting penalty reductions) will have adverse long-term consequences. Company compliance programs will fail because they rely on employees' belief that their freely critiquing company compliance, immediately bringing problems to the attention of management, and thoroughly documenting the necessary follow up will not result in their company having to waive privileges and leave honest, responsible employees exposed to the threat of criminal penalties just to keep the company's doors open. Effective internal investigations will no doubt become a thing of the past, as well — or, at least, meaningful documentation of them — soon eliminating the very purpose of “mandatory waiver” and diminishing the effectiveness of environmental enforcement across the board.
The United States Supreme Court aptly captured this sentiment in rejecting Independent Counsel Starr's recent attempt to force disclosures by the attorneys for the late Vince Foster: “The loss of evidence admittedly caused by the [attorney-client] privilege is justified in part by the fact that without the privilege, the client may not have made such communications in the first place.”