Your ABA

A Matter of Opinion


Since the late 1990s, however, federal prosecutors also have been able to deal with companies on the middle ground of deferred prosecution agreements. These deals allow companies to escape charges in exchange for public acknowledgment of wrongdoing. They also customarily include payments of fines and other penalties, cooperation with government investigators and reforms of business practices.

Deferred prosecutions have become a source of controversy. Prosecutors say the agreements efficiently get the government the information it needs to smoke out individual wrongdoers while allowing companies to quickly resolve their problems and move on with their businesses. But white-collar defense lawyers say the agreements are nothing more than gimmicks for prosecutors too lazy to do their own work.

“It’s the benefit of the bargain,” said Alice Fisher, the assistant attorney general in charge of the Justice Department’s criminal division, during an ABA Annual Meeting program in August that was sponsored by the Criminal Justice Section. “The company gets to move on. It can reach a resolution with the government instead of waiting years and years.”

One defense lawyer scoffed at deferred prosecutions as nothing more than publicity stunts.

“But it sure looks good in the newspaper,” said Robert Morvillo of New York City, who defended Martha Stewart on charges that she lied to prosecutors about a stock sale. “When you analyze what has happened,” Morvillo said, “you see a whole bunch of innocent people getting hurt.”

The innocents include shareholders and company employees who lose money or jobs as a result of a company’s criminal troubles, he said. Formal Justice Department policy requires prosecutors to consider such collateral consequences in their charging decisions.

But a second defense lawyer, Ross Garber of Hartford, Conn., said prosecutors are largely interested in just two things: whether a company will waive its attorney-client privilege as part of its cooperation with the government, and whether it intends to pay the legal fees for individual employees who may be involved. So more often than not, companies waive the privilege and cut off employee legal fees.

Forget the Fifth

Defense lawyers say privilege waivers enable the government to gather evidence against individual employees—including their statements to internal company investigators—without worrying about things like Fifth Amendment rights against self-incrimination. The waivers also can expose companies to liability in civil cases because nearly all federal courts hold that a waiver to the government is a waiver to the world.

Cutting off company legal assistance increases chances for guilty pleas, given that many individuals simply can’t afford the high cost of a full-blown criminal defense.

“Think of how much easier that is than having to go out and do an investigation and prove a case,” said Garber.

Fisher suggested that corporate obligations aren’t nearly so broad as defense lawyers say. “A corporation is not there to defend its employees,” she said. “A public corporation is looking out for its shareholders, and that’s its responsibility.”

Later during the annual meeting, the ABA’s policy making House of Delegates adopted a recommendation by the Task Force on Attorney-Client Privilege. The measure opposes government prosecution practices that consider whether an organization has cooperated with an investigation if those practices erode the constitutional and other legal rights of employees.

The measure says prosecutors should not be encouraged to consider whether a company paid employees’ legal fees or failed to penalize employees who exercised Fifth Amendment rights against self-incrimination.

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