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33–811 PDF 2007

THE McNULTY MEMORANDUM’S EFFECT ON THE

RIGHT TO COUNSEL IN CORPORATE INVESTIGATIONS

HEARING

BEFORE THE

SUBCOMMITTEE ON CRIME, TERRORISM, 

AND HOMELAND SECURITY

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MARCH 8, 2007

Serial No. 110–24

Printed for the use of the Committee on the Judiciary

(

Available via the World Wide Web: http://judiciary.house.gov 

(II)

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

LINDA T. SA ́ NCHEZ, California 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ARTUR DAVIS, Alabama 

DEBBIE WASSERMAN SCHULTZ, Florida 

KEITH ELLISON, Minnesota 

[Vacant] 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio

PERRY APELBAUM, Staff Director and Chief Counsel 

JOSEPH GIBSON, Minority Chief Counsel 

SUBCOMMITTEE ON CRIME, TERRORISM, AND HOMELAND SECURITY

ROBERT C. SCOTT, Virginia, Chairman

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

JERROLD NADLER, New York 

HANK JOHNSON, Georgia 

ANTHONY D. WEINER, New York 

SHEILA JACKSON LEE, Texas 

MARTIN T. MEEHAN, Massachusetts 

ARTUR DAVIS, Alabama 

J. RANDY FORBES, Virginia 

LOUIE GOHMERT, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California

BOBBY VASSAR, Chief Counsel 

MICHAEL VOLKOV, Minority Counsel 

(III)

C O N T E N T S 

MARCH 8, 2007

OPENING STATEMENT 

Page 

The Honorable Robert C. Scott, a Representative in Congress from the State 

of Virginia, and Chairman, Subcommittee on Crime, Terrorism, and Homeland Security ........................................................................................................ 1

The Honorable J. Randy Forbes, a Representative in Congress from the 

State of Virginia, and Ranking Member, Subcommittee on Crime, Terrorism, and Homeland Security .......................................................................... 3

WITNESSES 

Mr. Barry M. Sabin, Deputy Assistant Attorney General, U.S. Department 

of Justice, Washington, DC 

Oral Testimony ..................................................................................................... 14

Prepared Statement ............................................................................................. 17

Mr. Andrew Weissmann, Partner, Jenner and Block, New York, NY 

Oral Testimony ..................................................................................................... 24

Prepared Statement ............................................................................................. 26

Mr. William M. Sullivan, Jr., Partner, Winston and Strawn, LLP, Washington, DC 

Oral Testimony ..................................................................................................... 33

Prepared Statement ............................................................................................. 35

Ms. Karen J. Mathis, President, American Bar Association, Chicago, IL 

Oral Testimony ..................................................................................................... 45

Prepared Statement ............................................................................................. 47

Mr. Richard T. White, Senior Vice President, Secretary, and General Counsel, 

The Auto Club Group, Dearborn, MI 

Oral Testimony ..................................................................................................... 75

Prepared Statement ............................................................................................. 77

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable Sheila Jackson Lee, a Representative 

in Congress from the State of Texas, and Member, Subcommittee on Crime, 

Terrorism, and Homeland Security .................................................................... 4

APPENDIX 

Material Submitted for the Hearing Record .......................................................... 113

(1)

THE McNULTY MEMORANDUM’S EFFECT ON 

THE RIGHT TO COUNSEL IN CORPORATE 

INVESTIGATIONS 

THURSDAY, MARCH 8, 2007

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON CRIME, TERRORISM,

AND HOMELAND SECURITY

COMMITTEE ON THE JUDICIARY, 

Washington, DC.

The Subcommittee met, pursuant to notice, at 9:33 a.m., in Room 

2141, Rayburn House Office Building, the Honorable Bobby Scott 

(Chairman of the Subcommittee) presiding. 

Mr. SCOTT. The Subcommittee will come to order. 

I am pleased to welcome you today to this hearing before the 

Subcommittee on Crime, Terrorism, and Homeland Security, on 

‘‘The McNulty Memorandum’s Effect on the Right to Counsel in 

Corporate Investigations.’’

As noted in the U.S. Supreme Court in Upjohn Company v. 

United States, the attorney-client privilege is the oldest of privileges for confidential communications known to common law. The 

purpose of the privilege is to encourage full and frank communications between attorneys and their clients, so that sound legal advice and advocacy can be given by counsel. 

Such advice of counsel depends upon the lawyer being fully informed by the client. And as the court noted in Trammel v. U.S.

in 1980, the lawyer-client privilege rests on the need for the advocate and the counselor to know all that relates to the client’s reasons for seeking representation, if the professional mission is to be 

carried out. 

And this purpose can only be effectively carried out if the client 

is free from consequences or apprehensions regarding the possibility of disclosure of the information. 

This is not the case when waivers are coerced or obtained under 

duress. And there is certainly a coercive situation where there is 

fear or concern by a defendant in a criminal case, that he or she 

may not receive full leniency without a waiver of attorney-client 

privilege. 

As long as there is reason for concern that full leniency may not 

be granted without a waiver of attorney-client privilege, the fact 

that the department does not specifically require a waiver is of little consolation. 

2

As the court noted in the Upjohn case, an uncertain privilege, or 

one which purports to be certain but results in widely varying applications by courts, is little better than no privilege at all. 

The attorney-client privilege is a privilege of the client, not the 

lawyer, and lawyers have an absolute responsibility to protect a client’s privilege. Corporations are persons relative to constitutional 

rights of persons. 

Coercing waivers of corporate attorney-client privilege has not always been the practice among Federal prosecutors. Formerly, a 

company could evidence its cooperation with such prosecutors by 

providing insight and access to relevant information and to the 

company’s workplace and employees. The definition of a company’s 

cooperation did not entail production of legally privileged communications or attorneys’ litigation work product material. 

Memoranda issued by the Department of Justice over the past 

several years, however, reveal that policies which suggest that corporations face an increased risk of prosecution, if they claim such 

constitutionally protected privileges. 

The first such memorandum was issued by former deputy attorney general, Eric Holder in 1999. That memorandum was designed 

to provide prosecutors with factors to be considered when determining whether to charge a corporation with criminal activity, and 

to specifically allow prosecutors engaging the extent of a corporation’s cooperation to consider the corporation’s willingness to waive 

attorney-client and work product privileges. 

The Holder memorandum was then superseded in 2003 by another memorandum issued by former deputy attorney general, 

Larry Thompson. The Thompson memo contained the same language regarding the waiver of attorney-client and work product 

privileges and also addressed the adverse weight that might be 

given to a corporation’s participation in a joint defense agreement 

with its officers or employees and its agreement to pay their legal 

fees. 

Today, the current department policies relating to corporate attorney-client and work product privilege waivers are embodied in 

the McNulty Memorandum issued in December of 2006 by current 

deputy attorney general, Paul McNulty. 

So, this new memorandum does state that waiver request be the 

exception rather than the rule. It continues to threaten the viability of the attorney-client privilege in business organizations by allowing prosecutors to request a waiver of privilege upon finding of 

legitimate need. 

I fully recognize that the department faces many hurdles when 

undertaking the investigation and prosecution of corporate malfeasance. We only need to look at victims of the Enron collapse, where 

nearly 10,000 individuals lost their jobs, their pensions, their plans 

for the future. And we know that it is vital that prosecutors have 

the tools necessary to prosecute these crimes and hold accountable 

wrongdoers who profit at the expense of ordinary working Americans. 

I also know, however, that facilitating and encouraging such investigations must not occur at the cost of vital constitutional rights 

of corporations or their employees. 

3

I firmly believe that by protecting these well established and essential constitutional interests, we can only facilitate legitimate investigations by encouraging corporate offices and employees to consult with their attorneys regarding corporate wrongdoing in a confidential setting, but also ensure fairness of our criminal justice 

system for all Americans. 

It is now my privilege to recognize my colleague from Virginia, 

the Ranking Member of the Committee, Randy Forbes, for his 

opening statement. 

Mr. FORBES. Thank you, Chairman Scott. And I want to thank 

you for scheduling this important hearing. 

I also want to thank our distinguished panel of witnesses for taking your time and giving us your expertise and advice today. 

One year ago, on March 7, 2006, this Subcommittee conducted an 

oversight hearing on just this issue. At first glance, the landscape 

surrounding the issue of corporate waivers of attorney-client privilege appears to have changed with the Justice Department’s 

issuance of the so-called McNulty Memorandum governing criminal 

prosecutions of corporations. 

But a closer examination of the McNulty Memorandum shows 

that many of the same questions and concerns that were raised at 

last year’s hearing remain. This is disturbing to all of us. 

I remain concerned that prosecutors may be overreaching by demanding that corporations waive their attorney-client privilege as 

a condition of cooperation and a decision not to indict a company. 

The attorney-client privilege is deeply rooted in our jurisprudence and the legal profession. It encourages frank and open communication between clients and their attorneys, so that clients 

hopefully can receive effective advice and counsel. 

In the corporate context, as we saw in the case of Arthur Andersen, the life of a corporation can turn on a prosecutor’s exercise of 

discretion whether or not to charge a corporation. That decision can 

have profound consequences to our economy, the employees and the 

community, and should not turn on whether or not a company 

waives its attorney-client privilege. 

I know that cooperation of the criminal justice system is an important engine of truth. To me, the important question is whether 

prosecutors seeking to investigate corporate crimes can gain access 

to the information without requiring a waiver of the attorney-client 

privilege. There is simply no reason for prosecutors to require privilege waivers as a routine manner. 

I look forward to hearing from today’s witnesses and to working 

with my colleague, Mr. Scott, on this important issue, and I yield 

back the balance of my time. 

Mr. SCOTT. Thank you. 

Without objection, all Members may include opening statements 

in the record at this point. 

We have been joined by the Chairman of the full Committee, Mr. 

Conyers, and also Mr. Coble, Mr. Sensenbrenner and Mr. Chabot, 

at this point. 

And, without objection, Members may include opening statements. 

[The prepared statement of Ms. Jackson Lee follows:]

4

PREPARED STATEMENT OF THE HONORABLE SHEILA JACKSON LEE, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF TEXAS, AND MEMBER, SUBCOMMITTEE ON CRIME, 

TERRORISM, AND HOMELAND SECURITY


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Mr. SCOTT. We will now go on to our witnesses. 

Our first witness is Mr. Barry Sabin, from the Department of 

Justice. He is the deputy assistant attorney general in the Criminal Division for the United States Department of Justice. Since 

January of 2006, he has been responsible for overseeing the fraud, 

criminal appellate section, gang squad and capital case unit. 

Prior to his current appointment, he served as a chief of the 

Criminal Division’s counterterrorism section and has been a Federal prosecutor since 1990. He received his bachelor’s and master’s 

degrees from the University of Pennsylvania, his law degree from 

New York University Law School. 

Our next witness will be Mr. Andrew Weissmann, a partner in 

the law firm of Jenner and Block’s New York office, where he specializes in white-collar criminal and regulatory matters. Prior to his 

current position, he served for 15 years with the Department of 

Justice where he worked as assistant U.S. attorney and was selected to serve as the director of a special task force created to investigate the Enron corporate scandal. 

Previously, he was selected by the director of the FBI to be a special counsel, and served as chief of the Criminal Division of the 

U.S. Attorney’s Office in the Eastern District of New York. In recognition of his efforts in the Department of Justice, he received numerous awards including the Attorney General’s Award for Exceptional Service, the highest award given to Federal prosecutors. 

He is a graduate of Princeton University, a recipient of a Fulbright Fellowship at the University of Geneva and a graduate of 

the Colombia Law School. 

Next, William Sullivan, a litigation partner at the law firm of 

Winston and Strawn. In this capacity he concentrates on corporate 

internal investigations, white-collar criminal defense and complex 

civil and securities litigation. He previously served over 10 years 

as assistant U.S. attorney for the District of Columbia. He also 

worked in the Manhattan district attorney’s office and in private 

practice as a litigator in New York City. 

He has spoken on the Government’s insistence on the waiver of 

attorney-client privilege for corporations under investigation in 

front of the American Bar Association, and has also addressed the 

World Trade Organization on Sarbanes-Oxley issues. He received 

his bachelor’s and master’s degrees from Tufts University and his 

law degree from Cornell University. 

Next we have Karen Mathis, president of the American Bar Association, and partner in the Denver office of McElroy, Deutsch, 

Mulvaney and Carpenter. 

Prior to holding her current position with the ABA, she served 

as the association’s second-highest elected office, the chair of its 

house of delegates, where she served as a member since 1982. She 

has been active in the Denver Bar Association and the Colorado 

Bar Association for many years, where she held offices in the young 

lawyers section in both associations and served as vice president of 

the Colorado Bar Association. 

She earned a law degree from the University of Colorado School 

of Law and bachelor’s from the University of Denver. 

Our next witness will be introduced by the Chairman of the full 

Committee, Mr. Conyers. 

14

Mr. CONYERS. Thank you. Good morning, ladies and gentlemen. 

It is great to see the president of the bar here again. She is becoming more and more regular in her appearances. 

I am delighted to just bring to the Committee’s attention the 

presence of an old friend and a distinguished witness, Richard 

White. 

He currently is the general counsel for the Auto Club Group of 

Companies in Dearborn, Michigan, and was a founding partner in, 

I think, the largest, predominantly African-American firm in Michigan, Lewis, White and Clay. David Baker Lewis is still the head 

of that firm. 

And we are delighted that you are here today. 

He has come up from Morehouse College, Harvard University 

Law School, has been very active in the civil rights community in 

the State, and has also been commissioner of Foreign Claims Settlement Commission, and serves as a member of the executive committee and board of directors of the American Corporate Counsel 

Association. 

I am very happy to introduce to the Committee Richard White. 

Glad you are here. 

And we look forward to some very important testimony on a subject that could be ignored. What we are finding out, Chairman 

Scott, is we are having legislation by memorandum, and we have 

gone through quite a few of them. 

And I think the combination of civil rights, civil liberties, chamber of commerce, defense lawyers all coming together makes this 

an obvious subject for our attention and your scrutiny. And I thank 

you for the opportunity to introduce Richard White. 

Mr. SCOTT. Well, thank you. 

Each of our witnesses’ written statements will be made part of 

the record in its entirety. 

I would ask each of the witnesses to summarize his or her testimony in 5 minutes or less. To help you stay within that time, there 

is a timing light on the table. When you have 1 minute left, the 

light will switch from green to yellow. And when finally the red 

light comes up, we would ask you to complete your testimony. 

Deputy Assistant Attorney General Sabin? 

TESTIMONY OF BARRY M. SABIN, DEPUTY ASSISTANT ATTORNEY GENERAL, U.S. DEPARTMENT OF JUSTICE, WASHINGTON, DC 

Mr. SABIN. Chairman Scott, Ranking Member Forbes, Members 

of the Subcommittee, thank you for the opportunity to be here 

today to discuss the Department of Justice’s corporate criminal 

charging policies and its respect for the attorney-client privilege. 

These policies have been articulated in a memorandum issued by 

Deputy Attorney General Paul McNulty 3 months ago. 

In connection with my testimony today regarding the McNulty 

Memorandum, I would like to underscore five key points that are 

fundamental to the department’s corporate criminal charging policies: one, the tone of the McNulty Memorandum and its respect for 

the importance of the attorney-client privilege; two, developing concrete data to uniformly consider and implement the McNulty 

Memorandum; three, establishing a legitimate need for requesting 

15

a waiver of the attorney-client privilege; four, instituting a meaningful consultation and approval process to ensure consistent application of department practices; and five, an incremental approach 

to seeking information—first factual information and then legal 

opinions—from the corporate entity, if appropriate. 

The tone of the McNulty Memorandum is critical to an understanding of the department’s approach to corporate criminal charging policies. It is a tone of respect for the importance and longstanding nature of the attorney-client privilege. The department 

helps protect investors and ensure public confidence in business entities and the markets in which those entities participate. 

The Department shares this common goal with the vast majority 

of corporate leaders who believe in and work hard to maintain integrity and honesty in corporate governance. 

The attorney-client and work product protections serve an extremely important function in the U.S. legal system and can help 

responsible corporations in their efforts to comply with applicable 

law. 

At the same time, waiver of the privilege may advance important 

interests. As articulated in the McNulty Memorandum, a company’s disclosure of privileged information may permit the Government to expedite its investigation. Indeed, this may assist the Government and the corporation. 

The principles of charging business organizations, now embodied 

in the McNulty Memorandum, establish a nine-factor test that 

prosecutors consider in determining, in their discretion, whether to 

charge a corporation. 

A prosecutor must consider and weigh all of the relevant factors. 

The issue regarding cooperation is one of nine factors, and the 

waiver issue is a subfactor of cooperation. 

It is important that this Subcommittee understand that the department has never instructed prosecutors to seek routine requests 

for waiver of privilege. Nor is waiver of privileged information a 

prerequisite to getting credit for cooperation by a corporation. Indeed, the policy now makes clear that legal advice, mental impressions and conclusions by counsel are protected and should only be 

sought in rare circumstances. 

Any request for such materials must be in writing and seek the 

least intrusive waiver necessary to conduct a complete and thorough investigation. This means that the request must be narrowly 

tailored to meet the specific investigation need. The United States 

attorney considers that request in consultation with the Assistant 

Attorney General of the Criminal Division. The request and approval must be in writing, and those records must be maintained. 

Prosecutors must establish a legitimate need for that specific information. The four-pronged test is set forth in my written statement. 

This test ensures that evaluating the need for waiver is a 

thoughtful process, and that prosecutors are not requesting it without examining the quantum of evidence already in their possession 

and determining whether there was a real need to request privileged information. 

Prosecutors must take preliminary investigative steps to determine whether a corporation and its employees have engaged in 

16

criminal activity before seeking waiver, thereby ensuring that prosecutors cannot seek waiver at the outset of the investigation. 

To be clear, a prosecutor must take an incremental approach, 

first establishing a legitimate need and then submitting a narrowly 

tailored, written request. 

The United States attorney, in consultation with the assistant attorney general of the Criminal Division, approves a request for factual information; the deputy attorney general approves requests for 

legal information. 

In light of the substantial and thoughtful revisions contained in 

the McNulty Memorandum, the Department urges this Subcommittee, at a minimum, to allow the guidance a chance to work 

before considering any legislation. 

In the approximately 3 months since the memorandum was 

issued, the deputy attorney general’s office has not received a single request seeking a waiver of legal advice and strategy. Moreover, 

the Criminal Division has only received a few requests to seek 

purely factual information. In each of these instances, the Criminal 

Division has engaged in a meaningful dialogue regarding the requests with the district. 

Our prosecution efforts confirm that corporate fraud is not a historical relic. The Department of Justice continues to devote significant time and resources to protecting our financial markets and the 

American investor. We remain committed to investigating and 

prosecuting corporate matters. 

The Department’s past and current efforts to combat corporate 

fraud have assisted in some part, I believe, to supporting compliance in the business community. Since the president established 

the Corporate Fraud Task Force, many corporations have implemented effective compliance programs, and corporations are 

quicker to respond when they find fraud committed by the corporation. 

It is this common ground—prosecutors committed to the fair administration of justice and responsible business leaders fulfilling 

their duties of honest dealing to corporate shareholders—that 

unites us in our determination that eliminating fraud is good for 

business. 

We appreciate the opportunity to share our views with this Subcommittee. 

Thank you. 

[The prepared statement of Mr. Sabin follows:]

17

PREPARED STATEMENT OF BARRY M. SABIN


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TESTIMONY OF ANDREW WEISSMANN, PARTNER,

JENNER AND BLOCK, NEW YORK, NY 

Mr. WEISSMANN. Good morning, Chairman and Members of the 

Subcommittee and staff. I will make three points regarding the 

McNulty Memorandum. 

The memorandum leaves completely intact the Government’s 

ability to penalize a company that does not take punitive action 

against employees for the mere assertion of their constitutional 

right to remain silent. 

Under the McNulty Memorandum, companies may be deemed by 

the Department of Justice as uncooperative, simply because they 

do not fire employees who refuse to speak with the Government, 

based on the fifth amendment. 

By contrast, the Senate bill reintroduced this past January 

would appropriately prohibit the Government from considering an 

employee’s assertion of the fifth amendment in evaluating whether 

to charge the individual’s employer. 

The issue raised by current DOJ policy is not about how so-called 

‘‘big business’’ behaves; it is about how the Government does. Indeed, the current DOJ policy was recently found by Judge Lewis 

Kaplan, in the so-called KPMG tax shelter case, to be constitutionally impermissible. And the factual situation in KPMG is not 

unique. 

Across the country, numerous corporations have instituted strict 

policies that call for firing employees who do not ‘‘cooperate’’ with 

the Government. 

Ironically, now that the McNulty Memorandum has largely eliminated the ability of prosecutors to weigh in on an employer’s decision to advance legal fees, but left intact the ability to reward a 

company that fires employees who assert the fifth amendment, the 

Government can encourage employers to take the more draconian 

corporate measure against its employees, but not the lesser. 

As a simple policy matter, whether a company punishes employees who assert the fifth amendment is a poor proxy for determining 

whether the entire company should be charged with a crime. Other 

factors—such as the level and pervasiveness of wrongdoing, a history of recidivism—are far more accurate measures of corporate 

culpability. 

But more importantly, the DOJ policy should be altered, because 

the Government should not be fostering an environment where the 

employees risk losing their job merely for exercising their constitutional right. 

A second problem is that, although the McNulty Memorandum 

states that refusal to disclose legal advice and attorney-client communications cannot count against a company, the same does not 

hold true for information the Government deems to be purely factual. 

But information that is deemed by the McNulty Memorandum to 

be allegedly purely factual is, in fact, usually clearly protected by 

the attorney-client privilege and/or work product privilege. The 

McNulty Memorandum’s examples illustrate this problem. 

As examples they list as purely factual information, witness 

statements, factual interview memoranda and investigative facts 

documented by counsel. 

25

But who an attorney interviews, what questions an attorney asks 

and what information is chosen as important to memorialize can 

reveal significant information about the attorney’s defense strategy. 

And for this reason, courts have repeatedly held—and I am quoting 

now from one of the cases—‘‘how a party, its counsel and agents 

choose to prepare their case, the efforts they undertake and the 

people they interview, is not factual information to which an adversary is entitled.’’

The McNulty Memorandum simply ignores this case law and its 

unassailable logic and abrogates to itself the determination that 

material that has heretofore been widely deemed to be privileged 

is not entitled to protection under the memorandum. 

Finally, one of the main flaws in the McNulty Memorandum is 

that the decision to charge a corporation is not required to be reviewed by Main Justice. In practice, wide variations in the field 

currently exist regarding the United States Attorney’s Office’s corporate charging practices. 

But the lack of oversight is bewildering, given the wide array of 

relatively minor decisions that are overseen by Main Justice and 

the enormity of the potential consequences of charging a corporation. And this lack of oversight is unfortunate, since there is considerable expertise at main justice in examining these issues. 

Again, it is ironic that one of the key innovations in the McNulty 

Memorandum was to have national oversight of decisions regarding 

requests for waiver of the attorney-client privilege in corporate investigations. 

Yet the final decision regarding whether to charge the company 

receives no such scrutiny. 

In conclusion, although DOJ has acted to remedy certain problems in its corporate charging policy, many remain. There is no 

reason to believe that those problems will disappear with the passage of time, since they are embedded in the McNulty Memorandum itself. 

Thank you for the opportunity to address this Committee. 

[The prepared statement of Mr. Weissmann follows:]

26

PREPARED STATEMENT OF ANDREW WEISSMANN


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TESTIMONY OF WILLIAM M. SULLIVAN, JR., PARTNER, 

WINSTON AND STRAWN, LLP, WASHINGTON, DC 

Mr. SULLIVAN. Good morning, Chairman Scott, Ranking Member 

Forbes and Subcommittee Members and staff. 

One year ago yesterday, this Subcommittee held hearings on this 

very issue. It stimulated an important dialogue. I was privileged to 

testify then. 

While the McNulty Memorandum is a commendable effort to regulate and, perhaps, restrict Government waiver requests, it remains to be seen whether it constitutes a real departure from existing practice. I am gravely concerned that the memorandum’s nonbinding guidelines may only serve to entrench and expand an internal deliberative process, predisposed to request attorney-client 

privileged information and attorney work product. 

I urge the Members of this Subcommittee to consider how these 

policies have given Government prosecutors unnecessary, unconstitutional and unfair advantages when pursuing corporate entities, 

and to perhaps craft an enforceable legislative response to not only 

restore balance, but to continue to foster an environment in which 

corporations can properly rely on counsel in order to follow the rule 

of law. 

The traditional protections for business organizations supported 

by the attorney-client privilege and work product doctrine are further eroding as prosecutors and regulators continue to demand participation in internal investigations and the submission of detailed 

reports in exchange for the mere prospect of leniency. 

In my experience, waiver requests are made even before I have 

completed my client’s internal investigation and, thus, even before 

I have determined that a waiver is in my client’s best interests. 

Prosecutors’ requests for information in a factual road map form 

would also encompass a broad subject matter waiver, leading to 

possible disclosure of privileged information beyond the scope of the 

investigation, to not only law enforcement officials, but also to future third parties, including other Government agencies or opportunistic plaintiffs’ attorneys. 

The corporate clients with whom I work unequivocally desire to 

identify and eliminate suspected criminal conduct occurring within 

their ranks. They come to me, their lawyer, seeking advice and 

guidance in abiding with internal corporate governance policies and 

external laws and regulations. 

In such discussions, I may be compelled to determine the existence, nature and extent of potential criminal activity. My obligation 

to the client is to make the best choice, based upon an informed 

understanding of the law and the facts. 

The presumption of innocence should never be forgotten or ignored. And counsel’s first responsibility should be to inquire as to 

whether misconduct in fact took place, and if so, whether there 

might exist a credible defense. 

Naturally, clients are fearful of sharing all pertinent information 

when they believe that the details of an attorney-client conversation may be turned over the Justice Department as part of a current or future investigation into these activities. 

In the worst cases, the current policies of the Department only 

serve to dampen the aggressive repression of criminal behavior 

34

within companies, because they, in fact, serve to inhibit the candid 

disclosure and remediation efforts by responsible corporate citizens 

and their counsel. 

In conclusion, while ultimately the McNulty Memorandum’s limited revisions may have been designed to appease some critics and 

potentially forestall imminent judicial and congressional action, 

they do not demonstrate an earnest reevaluation of Department 

policies regarding corporate criminal enforcement. 

In fact, legislation such as the Attorney-Client Privilege Protection Act, recently introduced by Senator Specter, may now be required. But there is certainly something to be said for our elected 

representatives taking the laboring or in resolving policy questions. 

Senator Specter’s bill seeks to protect the attorney-client relationship by prohibiting all Federal agents and attorneys in a civil 

or criminal case from demanding such waivers. While the idea encompassed by the bill is sound, it lacks an enforcement mechanism 

to ensure meaningful restraint. 

I encourage the consideration of a sanctions provision to deter 

the willful Government violator. 

Ultimately and finally, perhaps the time has come for us to expend the same amount of energy spent on this privilege dialogue 

in establishing the standards and means with which to measure 

corporate compliance, governance and ethics programs and their 

adherence to the objectives of the Federal sentencing guidelines as 

legitimate factors for purposes of determining a corporation’s cooperation instead of its willingness to jeopardize its future ability 

to conform to law through its renunciation of the attorney-client 

and work product privileges. 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Sullivan follows:]

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PREPARED STATEMENT OF WILLIAM M. SULLIVAN, JR.


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Mr. SCOTT. Thank you. 

We have been joined by the gentleman from California, Mr. Lungren, and the gentleman from Massachusetts, Mr. Delahunt. 

Thank you for joining us. 

Ms. Mathis? 

TESTIMONY OF KAREN J. MATHIS,

AMERICAN BAR ASSOCIATION, CHICAGO, IL 

Ms. MATHIS. Thank you. Good morning, Chairman Scott, Ranking Member Forbes, Members of the Committee and, of course, 

your staff members. 

My name is Karen Mathis. I am the president of the American 

Bar Association. I practice law in Denver, Colorado, with McElroy, 

Deutsch, Mulvaney and Carpenter. 

It is a great pleasure to be back with you today and to speak on 

this very important topic to all of us, on behalf of the American Bar 

Association and its 413,000 members, who feel very strongly that 

we must support the attorney-client privilege and the work product 

doctrine. 

It is a concern that we have about the language of the Justice 

Department’s new McNulty Memorandum, and other similar Federal policies, that have seriously eroded these fundamental rights 

about which I want to speak with you today. 

We are concerned about the separate provisions in McNulty 

Memorandum that erode employees’ constitutional and other legal 

rights, including the right to effective legal counsel. 

We are working in close cooperation with a broad coalition of 

legal and business groups. They range from the United States 

Chamber of Commerce to the National Association of Criminal Defense Lawyers to the Association of Corporate Counsel. And this is 

in an effort to reverse what we feel are very damaging and harmful 

policies. 

The Government’s policy was established in 2003 in the Thompson Memorandum, modified, as you said, in 2006 in the McNulty 

Memorandum. And it does erode the attorney-client privilege and 

the related work product doctrine by pressuring companies to 

waive these protections—in most recent cases, in order to receive 

cooperation credit during investigations. 

The ABA is concerned that the Department’s new policy will continue to cause a number of profoundly negative consequences, and 

I would like to list some of those. 

First, it will continue to lead to the routine compelled waiver of 

the attorney-client privilege and the work product protections. Instead of eliminating the improper practice of forcing companies to 

waive in return for cooperation credit, the McNulty Memorandum 

still allows prosecutors to demand waiver after receiving high-level 

Department approval. 

And, like the Thompson Memorandum, it gives these companies 

credit, if they voluntarily waive without being asked. 

Whether it is direct or indirect, these waiver demands are unjustified, as prosecutors only need the relevant facts to enforce the 

law, not the opinions and the mental observations of corporate 

counsel. 

46

Second, the McNulty Memorandum continues to seriously weaken the confidential attorney-client relationship in the corporate context, by discouraging companies from consulting with their lawyers 

and impeding the lawyers’ ability to effectively counsel compliance 

with the law. 

Third, it will continue to undermine companies’ internal compliance programs by discouraging them from conducting internal investigations designed to quickly detect and to remedy any misconduct. 

For these reasons, the new memorandum will continue to undermine, rather than enhance, compliance with the law. 

Last May, prior to the issuance of the McNulty Memorandum, 

the ABA sent a letter to Attorney General Gonzales, and we asked 

him to reform the Department’s policies. 

Again, last September, such concerns were conveyed to the Department by former senior Justice Department officials. Both letters are attached to our written statement. And many congressional leaders have also raised the issue. 

Certainly in the hearings you referred to, Congressman Forbes, 

last March, virtually all the Members of this Subcommittee expressed strong concern about the preservation of the attorney-client 

privilege. And as you know, Senators Specter and Leahy have similarly echoed these concerns. 

It became clear that the McNulty Memorandum would not solve 

the problem the Government and we are calling—or I should say, 

we are calling—coerced waiver. And as you know, Senator Specter 

has introduced legislation in January, Senate Bill 186. The ABA 

and this coalition strongly support that measure. 

It is equally important that we enforce and protect employee 

legal rights, including the right to effective counsel and the right 

against self-incrimination. McNulty continues to erode these by 

pressuring the employers to take unfair punitive actions against 

employees during their investigations. 

While the new memorandum now generally bars prosecutors 

from requiring companies to not pay their employees’ attorney fees, 

in many cases it does carve out a broad exception, which I would 

be happy to address in your questions. And by forcing companies 

to punish their employees long before their guilt has been established, the Department’s policies continue to stand the presumption 

of innocence on its head. 

They overturn generally accepted corporate governance principles. And, as has previously been mentioned, they are constitutionally suspect under the KPMG case. 

For all of these reasons, we urge this Subcommittee to investigate and to promulgate proposed legislation, similar to S. 186. 

Thank you for your time. 

[The prepared statement of Ms. Mathis follows:]

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PREPARED STATEMENT OF KAREN J. MATHIS


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TESTIMONY OF RICHARD T. WHITE, SENIOR VICE PRESIDENT, 

SECRETARY, AND GENERAL COUNSEL, THE AUTO CLUB 

GROUP, DEARBORN, MI 

Mr. WHITE. Good morning, Mr. Chairman, and thank you, Chairman Scott, Ranking Member Forbes, and Members of the Subcommittee and your staffs assembled. I want to thank you for the 

opportunity to appear before you this morning. 

I am testifying both as general counsel and on behalf of the more 

than 20,000 in-house counsels from around the world who are my 

colleagues as members of the Association of Corporate Counsel. 

The Association of Corporate Counsel members represent more 

than 9,000 corporate entities in the United States and in 55 countries abroad, including public and private companies, large and 

small, profit and non-profit. 

I want to provide you the perspective of an in-house legal community on the current debate about Government policies that are 

eroding the attorney-client privilege, work product protections and 

individual rights in the corporate context. In particular, I want to 

make the following basic points. 

First, these protections are crucial to effective corporate compliance and ethics programs. Second, the McNulty Memorandum does 

not substantively change the Department of Justice’s abuse of practices that have eroded these protections. And third, in the face of 

the DOJ’s repeated refusal to fix these problems, legislation is indeed warranted. 

Mr. Chairman, from where I sit, these protections are essential 

to corporate compliance initiatives. As in-house counsel, we must 

gain the trust of employees and encourage them to routinely seek 

and follow our legal advice. 

Certainly, when it comes to compliance, we all want lawyers actively engaged in counseling employees. If employees believe that 

corporate counsel are simply conduits for delivering confidential information to prosecutors, attorney-client communications will be 

chilled, and compliance will ultimately suffer. 

For this reason alone, preservation of these fundamental protections and rights should be non-negotiable. Unfortunately, I believe 

that recent Government policies have given rise to a culture of 

waiver that has put the continuing vitality of these longstanding 

doctrines in serious jeopardy. 

As noted in my written testimony, ACC finds fault with the 

McNulty Memorandum in the following respects. 

One, the memorandum’s focus on formal written waiver demands 

essentially misses the point. My corporate colleagues know from experience that many Federal enforcement officials rely almost exclusively, in practice, on informal demands to persuade—indeed, at 

times to coerce—corporations to waive the attorney-client and work 

product protections. 

No formal demand is necessary, given this culture of waiver that 

the DOJ and other agencies have fostered in the past few years. 

Two, the McNulty Memorandum’s modest changes regarding reimbursement of attorneys’ fees do not protect employees. As Karen 

has pointed out, the prosecutors are still permitted to trample on 

employee rights when it comes to effective assistance of counsel, 

when it comes to denying employees information for their defense, 

76

and the refusal to allow joint defense arrangements with employees. 

Three, the McNulty Memorandum’s internal DOJ authorization 

procedures do not constitute meaningful and acceptable safeguards. 

On the rare occasion a prosecutor ever makes a written waiver demand, merely requiring authorization from another prosecutor in 

the same Department does not constitute a meaningful protection 

of the attorney-client and work product privileges. 

Despite the desire and efforts of ACC members to have the Department of Justice itself fix the problem it created, the Department repeatedly has refused to address or even acknowledge that 

the problem exists. 

Notably, even today, reports from in-house and outside counsel 

suggest that a prosecutor’s conduct has not changed during the 

months since the issuance of the McNulty Memorandum. These reports at this juncture are anecdotal, but, indeed, from our standpoint, persuasive. 

They suggest that there have been statements from a prosecutor 

that the request for a waiver predates the McNulty Memorandum 

and, therefore, is sort of grandfathered under Thompson. We do not 

believe that such artful dodges should be part of the system of justice that we all know and respect. 

Above all, we strongly support a legislation that would prohibit 

Government officials from formally or informally requesting a waiver of these protections. There has been reference to Senate bill S. 

186, which, as part of the coalition, we indeed support. 

In the final analysis, whether the McNulty opinion and memorandum stands will depend on how you balance the real voluntary 

nature of the privilege in the first place. It is either voluntary or 

it is not, and should not be given up simply because the memorandum says that it is a precondition to cooperation. 

Thank you very much. 

[The prepared statement of Mr. White follows:]

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PREPARED STATEMENT OF RICHARD T. WHITE


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Mr. SCOTT. Thank you, Mr. White. 

We will proceed under the 5-minute rule with questions, and I 

will begin. I recognize myself for 5 minutes. 

Mr. Sabin, should a corporation be punished for exercising its 

constitutional right to attorney-client privilege? 

Mr. SABIN. No. 

Mr. SCOTT. If there is a difference in consideration for those that 

waive and those that do not, isn’t there, therefore, a punishment 

for those that do not waive their right? 

Mr. SABIN. No, it is a voluntary decision by the corporate entity 

whether or not to waive and disclose that information. 

Mr. SCOTT. And will they be given positive, beneficial consideration for waiving their right to attorney-client privilege? 

Mr. SABIN. Yes. A corporate entity that cooperates with the Government investigation and waives that privilege, as one subfactor 

of the nine factors set forth in the McNulty Memorandum, that 

would be positively considered as part of the overall analysis of corporate criminal charging policies. 

Mr. SCOTT. And those that do not waive are not given that consideration, that little subfactor consideration? 

Mr. SABIN. The distinction between category one and category 

two information, the——

Mr. SCOTT. But, I mean——

Mr. SABIN [continuing]. The declination of a corporate entity not 

to provide legal analysis or opinions or mental impressions, explicitly stated in the McNulty Memorandum, will not be considered 

against that corporate entity. 

Mr. SCOTT. But, I mean, those that waive the privilege will be 

given beneficial consideration. Those that do not will not be given 

beneficial consideration. Therefore, there is a differential in consideration between those who waive and those who do not. 

Mr. SABIN. The fact that——

Mr. SCOTT. So, those that do not are, in effect, punished. 

Mr. SABIN. I disagree with that conclusion. 

We consider positive cooperation as part of the analysis in the 

McNulty Memorandum as to whether, in the totality of the circumstances, how the Government should decide whether to charge 

or not charge a corporate entity. 

Mr. SCOTT. Do you ever ask individuals to waive attorney-client 

privilege for the purpose of getting beneficial consideration? 

Mr. SABIN. The McNulty Memorandum addresses the corporate 

context. It is separate relating to the individuals. I believe that 

practice has occurred, yes. 

Mr. SCOTT. Did people get beneficial consideration for waiving 

their attorney-client privilege in a criminal case? 

Mr. SABIN. I cannot speak to that, you know, grounded in any 

particular experience. But the fact that, say, a person in a drug 

case and we are investigating the extent and pervasiveness of that 

activity, or in a mafia prosecution and that is waived, I think that 

that would be a positive consideration for that individual, again, 

distinct from a corporate analysis. 

Mr. SCOTT. If there is beneficial consideration, why would that 

not be considered coercion to waive your privilege? 

96

Mr. SABIN. Because the privilege is the corporate entity’s whether to waive or not. It is within their discretion whether to proceed 

in that fashion or not. It is not the Government either routinely 

asking for it or demanding it. That is not our guidance; that is not 

our practice. 

Mr. SCOTT. Thank you. 

Ms. Mathis, you indicated that you wanted some time to address 

the exception? 

Ms. MATHIS. Thank you, Congressman. 

If your staff and you would take a look at footnote three, which 

appears on page 11 of McNulty Memorandum, you will find that, 

when the totality of the circumstances show that a corporation’s 

advancement of its employee’s legal feess is intended to impede a 

criminal investigation, then the attorney—the U.S. attorney—may, 

on the U.S. attorney’s own say-so, direct a corporation not to pay 

those attorneys’ fees. 

The effect of this footnote, sir, is that you have a back door to 

stopping a corporation from paying an employee’s legal fees that is 

big enough to fly a C-140 through. 

All you have to do as a U.S. attorney is say that, looking at the 

totality, there was intent to impede a criminal investigation, and 

then the employee’s legal fees cannot be paid. 

So, in this particular instance, one has to really question whether 

McNulty has advanced the cause of an individual’s constitutional 

rights to legal counsel or not. 

Mr. SCOTT. Thank you. I yield back. 

Mr. Forbes? 

Mr. FORBES. Thank you, Mr. Chairman. 

Again, I want to thank each of you for taking your time and 

being here today. We wish we had the time to chat with you individually, because you bring so much expertise to the table, but we 

are limited to 5 minutes. 

You know, one of the issues that we hear raised here this morning—there is a little bit larger issue that I have been concerned 

about. And that is kind of the abuse of prosecutorial discretion we 

have seen that—and it is not just on the Federal level, it is on the 

State level. 

We have a lot of wonderful prosecutors, just like we have a lot 

of wonderful law enforcement officers, but we have to always look 

at those abuses in those situations where it is not justice we are 

looking at, it is just more prosecutions. 

And the weight of the resources that can be brought against a 

corporation or an individual can just have enormous intimidation 

factors, and sometimes we do not always get to justice. 

Mr. Weissmann, that is why I was really interested in one of 

your comments about the need for us to have more oversight in the 

charging decisions against corporations and individuals. I wonder 

if you could just elaborate on that just a moment for us. 

Mr. WEISSMANN. Yes. First I should say, as an assistant United 

States attorney for 15 years and serving on the Enron task force 

for about 3.5 years, I got to see first hand an enormous array of 

talent at main justice and people who have experience in making 

the determination about how to treat corporations. 

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The problem of white-collar crime is, in many districts, relatively 

new in light of what happened at Enron, so that you have a number of U.S. attorneys offices now wading into a field that they 

frankly did not have a lot of experience in prior to Enron. 

I think it is important to have a system where people at Main 

Justice are evaluating how those decisions are made, because corporations are largely national, if not international, in scope. And it 

should not be the case that a company has to worry about the vagaries of whether a prosecutor in one part of the country is going 

to be applying a very different standard than in another part of the 

country. 

In many ways this applauds the Thompson memo and the Holder 

memo before it and the McNulty memo, because it is saying that 

there are valuable aspects to those policies, but I think, if you ask 

practitioners, they will tell you that they are not applied uniformly, 

by a long shot, around the country. 

Mr. FORBES. Mr. Sullivan, I was interested in your testimony 

where it seemed to indicate that prosecutors were actually requesting a waiver before there was even a determination as to whether 

or not there was a crime that was committed. 

Has that been your experience? 

Mr. SULLIVAN. In all fairness, Mr. Forbes, prior to the promulgation of the McNulty memo, I had been in the first meet-and-greet 

meetings with representatives of the Government upon my first engagement, when I was asked if I would be sharing the results of 

my internal investigation. 

And the questions went so far as to ask whether or not I was 

representing the corporation, or whether I was a third-party investigator, suggesting that from the very first, even if I were paid by 

the corporation, that I would be an individual who would not have 

a privilege relationship with that corporation. And the suggestion 

was it might be better if I was an independent contractor, as opposed to an advocate. 

I took great pains in those discussions to explain to the Government that I could be forthright and candid with them, that I would 

proffer to them hard, factual information, that I would not try to 

spin the story, but I could do that as being an advocate for the corporation itself. 

Mr. FORBES. And you could always deal with getting around the 

problem, if you wanted to, by offering the proffer in a situation like 

that, without having to provide a waiver. 

Mr. SULLIVAN. I began most of these discussions by proffering as 

an attorney. 

Post-McNulty, I have still been badgered by the Government demands that my corporation, my client, my company compel the provision of witness statements from employees under threat of termination. 

Now, this is in direct opposition to the Garrity case, which compels that the Government cannot pursue such leverage or intimidation tactics with their own employees. Someone who refuses to 

speak or invoke is not going to be threatened with sanctions. 

I have had such requests literally within the past month. 

Mr. FORBES. My time is about up, but Ms. Mathis and Mr. 

White, in case we do not get another round, could you follow up, 

98

maybe, with something in writing if you have experienced the kind 

of prosecutorial abuse in certain situations, and what your recommendations might be on how we can get a balance on that, and 

suggestions for that. 

It is something we are very much concerned about, and I do not 

know if I will have time to get your answers in, but you can try. 

Ms. MATHIS. Congressman, let me just, if I may, reflect on something that Mr. Sabin said earlier. And that is that, since McNulty, 

there have been no formal requests. 

And what we think is happening, but there is no hard evidence, 

because it is not being kept by DOJ, is that what is happening now 

is it has gone underground, and there now are implicit requirements that they be waived. 

And as the Chairman said earlier, if you are both at a standstill, 

but one person is given an advantage, whether it is in a golf game 

or around an oval track, then somebody has got an advantage. And 

the person who is left back here is left in the dust. And that is one 

of the main problems with McNulty. 

We would be happy to supplement our testimony. 

Mr. FORBES. Thank you. 

Mr. WHITE. We will be happy to do so. 

We are getting anecdotal calls and reports from some of our 

members, who are saying that the practice is vastly different from 

the language of the McNulty Memorandum. It is more informal 

than formal. 

Mr. FORBES. Well, thank you. My time is out. 

Thank you, Mr. Sabin. I hope I will get some more questions 

later for you. 

Mr. SCOTT. Thank you. 

Mr. Conyers? 

Mr. CONYERS. Thank you, Mr. Chairman. 

You know, this is a pretty one-sided hearing, in a way, for Mr. 

Sabin. You see, when bipartisanship comes together, things get 

pretty rough, don’t they? Because, this is pretty——

Mr. SABIN. I appreciate the opportunity to be here and have that 

dialogue. 

Mr. CONYERS. Yes. Well, I want to try to lighten the environment 

for you, because I kind of sense which way this train is moving 

here. 

And before we start, I think we are in an almost corporate crime 

wave. There is nobody that wants to get on top of some of the 

criminal activity that has been going on the last, past number of 

years than I do. 

But the advantages and the below-the-radar activity that the Department can engage in is pretty clear. You can write this in red 

letter law all you want. 

But it is what—you know, when the U.S. attorney sits down with 

an attorney defending someone, they do not read back the Federal 

Code to each other. ‘‘You get the drift,’’ as they say on the streets. 

And so, what is happening right now is that we are overtaking 

a small, but important part of creating the level playing field. And 

that is what interests me so very, very much. 

When you get the American Bar Association and dozens of organizations—progressive, conservative, corporate, civil rights—it 

99

seems to me—and I listen to the tenor of the discussion among our 

colleagues—we do not always get this kind of bipartisanship in the 

Judiciary Committee. 

So, I would just like to ask Mr. White and the president of the 

Bar, is there some way we can take this medicine, you know, calmly and understand? Why doesn’t the attorney general see the light 

here? Or will this hearing help him? 

Mr. SABIN. Can I address that, sir? 

Mr. CONYERS. Sure. 

Mr. SABIN. The attorney general actually spoke at the ABA 

white-collar crime gathering, conference, in San Diego last week 

and discussed the McNulty Memorandum with them. 

I am a member of the ABA. I am going down to chat with their 

litigation section next month. We appreciate the opportunity to talk 

through these issues. 

Mr. CONYERS. That is great. 

Mr. SABIN. We are not——

Mr. CONYERS. Whereas, the president is right here three seats 

down from you. [Laughter.] 

Mr. SABIN. Okay. Well, I would say that, to the extent that there 

are suggestions that practice is different from reality, we have not 

heard about that. So, if there are specific suggestions——

Mr. CONYERS. Let me recognize her with the couple minutes I 

have left. 

Are there any ways that this different—everybody is supporting—I mean, you support the McNulty. But the fact of the matter is, it is not sufficient. Is that the correct interpretation? 

Ms. MATHIS. Congressman, the American Bar Association believes, number one, in the basic jurisprudence concept of attorneyclient privilege and all that in the common law it has done to backstop our judicial system and to provide very limited privileges. 

But the privilege is not that broad. It does not cover facts. It does 

not cover a number of things. 

And we think that within that privilege, and the way it has been 

structured and reviewed by our judicial officers—mainly judges—

that it is sufficient for the purposes of Department of Justice. 

It is so central to our system of Government that people be entitled to that, that to the extent McNulty and its predecessors violate 

those precepts, that they must be amended, and that, clearly, the 

way to do that at this point is through congressional legislation. 

Mr. CONYERS. Absolutely. 

Richard White, would you like the last word? 

Mr. WHITE. I certainly would agree with the ABA on that point, 

and would suggest to you that the attorney-client privilege is a 

privilege that should not be for sale, either for positive incentives 

or punitive responses. It is that basic to our system of justice and 

fairness. 

And it sort of hits me as somewhat peculiar that we would, 

under Sarbanes-Oxley and other appropriate legislative initiatives, 

require codes of conduct and ethical behavior in corporations and 

allow behavior that could be, under some circumstances, unethical 

and inappropriate to go on. 

Legislation is not only warranted, it is absolutely necessary. 

Mr. CONYERS. Thank you. 

100

Mr. SCOTT. Thank you. Thank you. The gentleman’s time has expired. 

The gentleman from California, Mr. Lungren? 

Mr. LUNGREN. Thank you very much, Mr. Chairman. 

I mean, this issue came up about 2 years ago when Mr. Delahunt 

and I were concerned about it in the context of the Sentencing 

Commission’s recommendations, where, even though I believe it 

was a footnote, nonetheless, it was very obvious that there were 

going to be consequences as far as judges were concerned, following 

the Sentencing Commission guidelines as to whether or not a corporation basically gave it up—I mean, gave up the attorney-client 

privilege. 

And we joined together, along with others, to make our views 

known to the Sentencing Commission, and the Sentencing Commission basically decided that they would not do that anymore. 

So, the second phase of it is the Justice Department. And I see 

we have one, two, three, four separate memoranda that have been 

in succession on this—Mr. Holder’s, Mr. Thompson’s, Mr. McNulty’s, Mr. McCallum’s. 

And I guess I would ask one question to the four non-DOJ representatives here, and just, hopefully, a very short answer, because 

I only have 5 minutes, as well. 

Is there any improvement that you see as a result of the memorandum? That is, is the McNulty iteration of these memoranda an 

improvement for the Department? 

Mr. Weissmann? 

Mr. WEISSMANN. The short answer is that, in theory, it is an improvement; and in practice I have seen no change at all. 

Mr. LUNGREN. Mr. Sullivan? 

Mr. SULLIVAN. Frankly, it is a little early to tell. 

On the waiver side, there has not been any specific request. On 

the indemnification side there have been requests made to me to 

retain employees under threat of termination in order to compel 

their statements. That is a violation, unacceptable. 

Mr. LUNGREN. Ms. Mathis? 

Ms. MATHIS. It is not an improvement, Congressman. And one 

particular reason that it is not is, it has taken what might have 

been a formal request of a waiver—in other words, in the light of 

day—and it has put it back into an implicit request for waiver, 

where it is not as clear to see, nor will data be kept on it. 

But as the other witnesses have indicated, it is still ongoing, it 

is still pervasive. 

Mr. LUNGREN. Mr. Weissmann? 

Mr. WEISSMANN. I would agree with Ms. Mathis, that it is not 

an improvement. It is an attempt, but that is about all that it is. 

And our feedback is from our folks out in the field, that the practice continues underground. 

Mr. LUNGREN. Mr. Sabin, I mean, based on that I have got one 

person who believes it is an improvement in words, but not in theory, another who said it’s being violated, one who said it is not an 

improvement and another one who said it is not an improvement. 

The very fact that Mr. McNulty felt it necessary to issue a new 

memorandum, and then, with the memorandum that accompanied 

the memorandum from Mr. McNulty, in which he said, we have 

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heard from responsible corporate officials recently about the challenges they face in discharging their duties to the corporation, 

while responding in a meaningful way to a Government investigation. 

Many of those associated with the corporate legal community 

have expressed concern that our practices may be discouraging full 

and candid communications between corporate employees and legal 

counsel. 

To the extent this is happening, it was never the intention of the 

Department for our corporate charging principles to cause such a 

result. And then indicates that they are, therefore, promulgating 

this new memorandum. 

What was the purpose of the memoranda? That is, the new 

memoranda? What do you say about those who say that, either it 

is insufficient, or that, while sufficient on its terms, it is being violated in its practice, or thirdly, that all it has done is driven these 

decisions underground? 

And I guess the last way to ask that last part is, what are you 

doing to enforce this? If, in fact, you believe in this memorandum, 

what would you do to respond to the complaint that, in fact, the 

memorandum is being observed in its breach? 

Mr. SABIN. We believe that the McNulty memorandum strikes 

the right balance with respect to our ability to thoughtfully and aggressively investigate corporate wrongdoing. We believe that it is 

an improvement. 

And back to Congressman Conyers’ point, in terms of the long 

view of history, I believe that the Department’s attempts to transparently and thoughtfully articulate the manner in which it goes 

about its corporate criminal charging decisions will be viewed as 

sound and well-placed and well-grounded. 

The prosecutors around the country—not only in Main Justice, 

but in the 93 U.S. attorneys offices—take their duties and responsibilities to enforce those laws and protect the American investing 

public extremely seriously. 

We are not seeking to obtain waivers as a routine matter. We are 

not seeking to abrogate constitutional violations. 

We are seeking to ensure that we have full and complete understanding of a factual nature, in order to make appropriate charging 

decisions as to the corporate and business entity. 

With respect to our means of enforcing it, we have had training 

and guidance, and continue to have such distributed to prosecutors, 

investigators and regulators around the country. Indeed, today, out 

in Salt Lake City, the securities fraud working group that is discussing with those entities how to ensure that there is complete 

and full and accurate compliance with it. 

Prosecutors understand those duties and responsibilities. And 

when guidance is provided by the Department’s leadership, it is expected to be followed. 

To the extent that folks here have suggested that it has gone underground, or that there is something going on below the radar 

screen, we welcome the referral of those specific matters to obtain 

concrete, specific data to address that kind of either implicit or 

‘‘wink-wink, nod-nod’’ activity. 

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To the extent that what we have had in terms of specific data, 

is that prosecutors do care about what has been said—the career 

prosecutors around the country in economic crime sections and 

fraud sections, in the Criminal Division’s Fraud Section, at Main 

Justice—the ability to enter into a real understanding of how to 

implement it and enforce it. 

We ask for that time to make sure that it is done thoughtfully 

and appropriately. 

We have had five matters where we have had specific requests 

for factual information, category one type, narrowly tailored requests for the waiver of information. And we have had that meaningful dialogue between the Criminal Division and the respective 

U.S. attorneys office. 

Mr. LUNGREN. Thank you, Mr. Chairman. 

I would just say that, I think you understand there is a bipartisan concern that, as we go after corporate corruption, we do not 

in any way create a prosecutorial culture of coerced waiver, because we happen to believe, on a bipartisan basis, that the attorney-client privilege is so important to the working of justice, the 

protection of American citizens, but also to promote actual legal 

compliance within a corporate structure. 

And I think you are going to find, on a bipartisan basis, we are 

going to continue to look at this and to see how it falls out. So, I 

thank you. 

Mr. SABIN. I appreciate those comments, Congressman. And we 

agree. I agree absolutely with what you just stated. 

Mr. SCOTT. The gentleman from Massachusetts? 

Mr. DELAHUNT. I thank the Chairman. 

And I, again, concur with the observations by the gentleman 

from California. I am sure you are aware that Mr. Lungren and I 

actually penned an opinion piece. 

But he has asked the questions—he has preempted me, because 

those really were the questions that I was going to pose. 

Let me acknowledge to Mr. White and Ms. Mathis that, from my 

perspective, you know, the attorney-client privilege is such a core 

value of American jurisprudence, that even if it should lead to 

great frustration, it has to be respected. This is so vital to our system of justice. 

But let me pursue with Mr. Sabin. I mean, as a prosecutor—and 

I know that Mr. Lungren was a former attorney general—we are 

very familiar with human nature. 

And human nature being what it is, aggressive prosecutors, who 

are passionate about a particular case or an investigation, eventually, in my opinion, will slip into that gray area where all of the 

training and all of the guidance simply do not, will not accomplish 

the kind of enforcement that I am sure you would like to see in 

terms of compliance. So, that is my problem. 

Now, if you want to talk about a sanction and maybe civil liability, personal liability, the ability to sue the Government, you know, 

that is a different kind of enforcement. 

Guidance and training is wonderful. But when there is a clear 

sanction—and I am not talking an administrative sanction, necessarily, but a sanction that could be brought in a court of law by 

103

a corporation—for those cases that seem to drift away from the explicit guidelines enumerated, now, that is a different situation. 

I would suggest that, if you went back to Justice and did a survey of assistant U.S. attorneys and others that are involved in this 

decision-making process, there would be real reluctance to accept 

that sanction—again, a real sanction. Because, I think it was Mr. 

White that—well, maybe it was actually yourself—that talked 

about, you know, reality and practice, there is a divergence there. 

And that is what I am particularly sensitive to, and I am sure 

members of this panel are, and as Mr. Lungren indicated, we will 

continue to monitor. But my own initial inclination is that—without revealing it in detail—is that Senators Specter and Leahy have 

an answer that I think respects the history of American jurisprudence. 

Mr. Sabin, you are more than welcome to comment. The last time 

I think you were here, we were discussing cockfighting, if I remember. [Laughter.] 

Mr. SABIN. Mr. Delahunt, you have a good recollection. 

Mr. DELAHUNT. Right. You were rather well-informed on 

that—— [Laughter.] 

Mr. SABIN. Well, I actually came up on a different topic. But 

since the other panel members were engaging in that, I think the 

Committee——

Mr. DELAHUNT. You are a renaissance man in terms of—— 

[Laughter.] 

Mr. SABIN. I appreciate the kind words that you say there. 

The Department appreciates that concern. I am aware of your 

op-ed with Congressman Lungren. I am aware of your prior prosecutorial background, as well as Congressman Lundgren. 

We respect and understand the concern that has been articulated. 

I would suggest that, let us look at the concrete, tangible data. 

Let us look at how it is implemented. Let’s look——

Mr. DELAHUNT. I understand. But, you know what? I mean, 

again the reality is, this data will only come in anecdotal form. And 

you welcome—and I am sure of your bona fides—referrals. 

But in the real world with defense counsel to make those references, there is a variety of motives that would dictate against 

that. 

I guess what I am suggesting is that it is really impossible in 

terms of defining a methodology that would give us that accurate 

data. And my own sense is that we just have to go on our sense 

of what the reality is and trying to understand human nature. 

Mr. SABIN. And I believe that prosecutors will follow Department 

directives, consistent with their ethical duties and responsibilities, 

to uphold the highest traditions and principle of the Justice Department. 

Mr. DELAHUNT. And I am sure the vast majority will. I am not 

suggesting otherwise. 

But we all know that there is always a percentage that will be 

so aggressive, that will extend—will go beyond the parameters and 

the boundaries that have been defined. 

And in our system of justice, the one thing that we cannot compromise is the integrity of the system, because when we begin to 

104

do that, we erode the confidence of the American people in our justice system. 

Mr. SABIN. Don’t disagree, sir. 

Mr. SCOTT. Thank you. Thank you. 

The gentleman from Texas, Mr. Gohmert? 

Mr. GOHMERT. Thank you, Mr. Chairman. I appreciate the opportunity for having this hearing. And I appreciated the Chairman of 

the full Committee’s comments about the bipartisanship here in 

this Committee. We are pleased the Democrats would join us on 

this issue. And, anyway—a little inside joke. [Laughter.] 

Mr. SCOTT. Moving right along——

Mr. GOHMERT. But moving right along. 

Mr. DELAHUNT. That was a very futile attempt at humor from 

somebody from Texas. [Laughter.] 

Mr. GOHMERT. But one of the things that has concerned me the 

last week is noting that perhaps just an inquiry about anything 

that may have to do with cases pending may be deemed as an ethics violation, or perhaps an obstruction of justice. 

So, I hope that the holding of this hearing does not rise to that 

level that we are all potentially obstructing. 

But, anyway, I have been concerned about the sentencing guidelines. Some of us remember when those were put in place, and the 

Supreme Court held that, absolutely, of course they are constitutional. 

And some of you, I am sure, remember an awful lot of Federal 

judges were very upset about that, but they got used to them. And 

then I did not hear a lot of complaints. 

And then the Supreme Court, since it is so consistent and they 

are so magnanimous in their incredible view of the law, came back 

and said, well, I do not know what we were thinking before, but 

it does not look constitutional to us now. 

But the problem is, you know, is the right of waivers were exacerbated in 2004. To have that even come up as a consideration, a 

waiver of the attorney-client privilege come up in a sentencing scenario—well, you talk about a chilling effect on the claiming of attorney-client privilege. 

And so, I have been a little out of the justice loop over the last 

few years, running for Congress and being here, and I am not familiar with whether or not there has been any effect, been any consideration at all, in the sentencing aspects, especially in view of 

Booker throwing out the guidelines. 

As you are probably aware, we have considered the last couple 

of years, some people have been proponents of inserting legislative 

guidelines. I have been one of those that were encouraging, when 

we were in the majority, let us hold up. I am hearing Federal 

judges say they are not sure they need them. Let us see how the 

data goes from the sentencing, and determine whether or not we 

really need to interpose like that. 

I still am not sure about that. 

I would like, maybe starting right to left. 

Mr. White, any comments, anything of which you are aware, 

cases in which you are aware, that the non-waiver of attorney-client privilege may have been considered in any way in the senVerDate 0ct 09 2002 11:20 Aug 21, 2007 Jkt 000000 PO 00000 Frm 00108 Fmt 6633 Sfmt 6601 H:\WORK\CRIME\030807\33811.000 HJUD1 PsN: 33811
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tencing aspect, because I am sure you would agree, that would 

have a dramatic chilling effect if it were. Right? 

Mr. WHITE. Well, it would. 

But, Congressman, from a practical standpoint, the chilling effect 

occurs long before sentencing. From a practical standpoint, the 

chilling effect occurs when I have employees who are reluctant to 

come forward in a code of conduct, ethical program, because they 

are concerned that what they say to me will be silver-plated over 

to——

Mr. GOHMERT. Well, and I understand that. A lot of people have 

covered those issues. And I only have a few minutes, and I was 

wanting to get to the sentencing guidelines aspect. 

Mr. WHITE. I think there are probably——

Mr. GOHMERT. But has it been——

Mr. WHITE. Sorry. I think there are probably others who, on the 

group here. I have not gotten directly involved in the sentencing 

aspect. And I think that Ms. Mathis and, perhaps, some of the outside counsel would have more to say about that. 

Mr. GOHMERT. Thank you for your candor, Mr. White. 

Mr. WHITE. I will just pass to them. Thank you. 

Mr. GOHMERT. Thank you. 

Ms. Mathis? 

Ms. MATHIS. Congressman, I think it is instructive to note that, 

after the U.S. Sentencing Commission decided to voluntarily withdraw their guidelines about privilege waiver, that the Commodity 

Futures Trading Commission did the same thing. 

So, I will tell you that my sense is that, by not coercing or asking 

for the voluntary waiver of the privilege, that it has not had a deleterious effect on the Sentencing Commission. 

The other point that I would make is that this is a little bit like 

shadow boxing, if I may, because the Department has said that, 

since McNulty, there have only been five requests for category one 

waivers, and there have been no requests for category two waivers. 

Now, if no one is asking for these waivers, then the question 

really does arise: What is wrong with legislation, which straightout says that no agent or attorney of the United States may pressure a company or another organization to disclose confidential information protected by the attorney-client privilege or work product 

doctrine, or to take some of these very draconian measures against 

its own employees? 

It is a rhetorical question. 

Mr. GOHMERT. Well, my time is up and I still have not gotten 

an answer on whether or not—because, even though it is not a part 

of the guidelines, the guidelines are affected, as we have heard before. It doesn’t mean that it is not being utilized. And so, maybe, 

if we have another round, I can get somebody to answer my question. 

Thanks. 

Mr. SCOTT. Did you want to continue responding? 

Mr. SULLIVAN. I am happy to continue. I second what Ms. 

Mathis——

Mr. GOHMERT. Thank you, Mr. Chairman. 

106

Mr. SULLIVAN. I second what Ms. Mathis has said about the 

guidelines and the CFTC. I had a role in submitting information 

for purposes of the CFTC’s report. 

I will try to directly answer your question by saying, in my experience, the sentencing guidelines, by virtue of the revision, there 

has not been a significant, or any impact, frankly, on any clients 

that I have had. 

If I may say one more thing. I am very aware of the buzzer. I 

have heard that before. I think we may be able to simplify this dialogue from the perspective of outside counsel. 

I am not here to suggest—and I don’t think any of my brethren 

are, either—that waiver is not sometimes good and useful. The 

1989 Salomon Brothers case, where the law firm of Wachtell Lipton 

decided to waive, in the face of pervasive and horrific facts, began 

the process. 

There are times to waive. If you have got a billion-dollar restatement and you represent the corporation, you might want to assist 

the Government for purposes of finding the individual, culpable 

wrongdoers. 

My point is, it is the corporation’s privilege. It should be the corporation’s decision. There should be no attempt to coerce on the 

part of the Government, and there should be no penalty for not 

waiving. It should be neutral, except if you choose to voluntarily 

waive; then you should be provided a benefit. 

Mr. WEISSMANN. I have nothing to add, because I agree with Mr. 

White. The issue for corporate criminal liability is one that arises 

at the charging phase, because for a company it is all about not 

being charged. 

And given the enormous hammer that the Government has, if 

there is a factor, whether it is to penalize or to reward based on 

a waiver, whether it be category one or category two, they are 

going to waive, because it is not viewed as voluntary. They are 

going to do everything they can to get every possible benefit, because the indictment can kill the company. 

Mr. SABIN. One aspect that has not been discussed is deferred 

prosecution agreements, that the idea that there is this kind of cooperation, voluntary disclosure, or even limited disclosure with respect to the privilege, allows the Government to make informed decisions and to address not necessarily in charging with an actual 

criminal charge, but to have a deferred prosecution agreement as 

a result of that voluntary cooperation. 

So that addresses sort of the sentencing phase, which never actually gets to a sentencing phase, because you have a compliance 

agreement, you have a monitor. Depending upon the specific circumstances of a deferred prosecution agreement, that is one of the 

sort of spans between the charging nature and the sentencing 

phase. 

And the Department is continually working through those relationships with experienced and sophisticated corporate defense 

counsel. 

Mr. SCOTT. Thank you. 

Mr. Forbes and I had about one additional question, and then 

part of my question. 

107

Let me just make a statement that, Mr. Sabin, I think you indicated that there is, in fact, a difference in treatment between those 

who waive and those who don’t, creating a differential. 

And that did not come as a surprise to everybody, because everybody knew that to begin with. 

And I have always been intrigued by the idea that you cannot 

charge extra for using a credit card. However, you can give a cash 

discount if you pay cash, creating a differential between those who 

pay cash and those who use credit cards. 

But somehow you eliminate that problem by, if you call it a discount, it is okay. If you call it a punishment or a surcharge, then 

that is not okay. 

The fact of the matter is, so long as there is a differential, you 

can call it what you want. The people who do not get—who do not 

waive are, in fact, put at a disadvantage, and some would call that 

punishment for not having waived. 

And if everybody knows that that differential is there, you do not 

have to say it, that’s pressure. 

Now, my question is, to kind of put these kind of things in perspective, what difference does it make to a corporation to get the 

cooperation? How much less of a penalty may they get? What are 

we talking about in terms of qualifying for the benefit? 

Mr. SABIN. Again, I reiterate, we are not—the Department of 

Justice is not pressuring corporations into waiving the privilege. 

We respect the privilege——

Mr. SCOTT. Everybody knows there is a differential between 

those who do and those who do not. 

Mr. SABIN. We reward cooperation for category one information 

that has been provided, voluntary disclosure information that has 

provided. 

In many instances, that is crucial information to ferret out the 

wrongdoing that is undertaken by individuals in the corporate entity. 

Again, I go back to the larger picture. It is a nine-factor analysis, 

and cooperation is just one factor. And the waiver of the privilege 

and the shielding of culpable agents and employees are subparts of 

that totality of the circumstances analysis. 

So, all those factors go into informed prosecutorial decision-making. 

Mr. SCOTT. I guess my question was, what difference does it 

make to a corporation to get that cooperative designation, as opposed to not getting that designation? How much benefit is it to the 

corporation? 

Mr. SABIN. And again, that is going to be fact-dependent 

upon——

Mr. SCOTT. Well, I mean——

Mr. SABIN [continuing]. Specific facts——

Mr. SCOTT. Are you talking about the fine will be cut in half, 

they will not get time in jail? I mean, what difference does it make 

for——

Mr. SABIN. I am not going to make a broad assertion as to the 

nature and extent of that. 

Mr. SCOTT. Okay, well, then let me——

108

Mr. SABIN. It is going to depend upon the specific facts and circumstances involved. And then you go to the pervasiveness of the 

misconduct, the complicity of management in the misconduct, the 

history of the corporation relating to that. All those factors go into 

the prosecutorial decision-making. 

Mr. SCOTT. Let me hear from some of the corporate counsel, because those are the ones that are considering whether or not it is 

worth waiving. 

Mr. Sullivan? 

Mr. SULLIVAN. Thank you, Chairman Scott. 

The key issue for corporate counsel, for purposes of engaging 

with the Government in the light of potential misconduct, is to 

avoid a corporate indictment. 

My testimony did not discuss, but written materials do, why I 

think—and this is probably a topic for another hearing—my corporation should only in exceedingly rare circumstances ever be indicted. 

But nevertheless, the corporate company’s indictment has dramatic, draconian ramifications. Its business suffers. Its stock price 

falls. Employees leave—well before conviction, well before there 

has been a determination of guilt beyond a reasonable doubt. 

So, that is the dynamic that corporate counsel fight to preclude, 

almost at all costs. 

And as I said before, if bad facts are pervasive, you need to engage to avoid an indictment. That is the Wachtell-Salomon case. 

If there is gray area, as I said in my opening statement, my obligation is to understand that the preponderance of—I am sorry—

that the guilt beyond reasonable doubt and the presumption of innocence still applies in these contexts. And I need to understand 

the facts and to establish a credible defense. 

It is the gray area cases where, if I choose not to waive, I should 

not be penalized. 

Mr. SCOTT. Mr. White? 

Mr. WHITE. Mr. Chairman, if a company is asked to waive, even 

before the investigation is complete, the value or the differential 

that you were talking about of waiving or not, cannot even be assessed by the company. 

So a knowing and/or intelligent waiver really does not take place 

at that level. You just waive or you do not get the benefit slash 

punishment. 

Mr. SCOTT. Thank you. 

Mr. Forbes? 

Mr. FORBES. Thank you, Mr. Chairman. 

Once again, I just want to thank all of you. 

And, Mr. Sabin, thanks for holding up under fire here. We want 

to make sure you know that we appreciate the great job that you 

and your office do in so many areas. We are just trying to get that 

balance and make sure we are protecting these rights. 

Mr. Sullivan gave a great summary of the whole waiver issue, I 

think, just a few moments ago. 

Mr. SULLIVAN. Thank you, Mr. Forbes. 

Mr. FORBES. And we really thank you for that. 

And I think what Mr. White and you are both saying is that, 

really, in a corporate situation the indictment really is the senVerDate 0ct 09 2002 11:20 Aug 21, 2007 Jkt 000000 PO 00000 Frm 00112 Fmt 6633 Sfmt 6601 H:\WORK\CRIME\030807\33811.000 HJUD1 PsN: 33811
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tence. And so, by the time you get there, the game is pretty much 

up. 

Mr. Sabin, we have talked about the concrete evidence that you 

would like to have, and I think everybody knows, they are not 

going to be able to get you that. And maybe that is something that 

your office could look at. Maybe you are doing it. 

But even getting data like the number, or keeping track of the 

number of waivers that are taking place, and doing them by district, so that maybe that gives us some patterns we can look at. 

And maybe you are doing that. I don’t——

Mr. SABIN. That is explicit in the memorandum——

Mr. FORBES. That was the——

Mr. SABIN [continuing]. To maintain written records and to have 

those records available——

Mr. FORBES. Maybe——

Mr. SABIN [continuing]. Both in the U.S. Attorney’s Office——

Mr. FORBES. If we could get a look at those at some point in 

time, maybe that kind of could help us, sir, see——

Mr. SABIN. Well, I am not going to——

Mr. FORBES [continuing]. The numbers. I understand. 

Mr. SABIN. But I am——

Mr. FORBES. I am just throwing it out, what helps. 

Ms. Mathis, a final question for you. We are trying to get that 

pendulum swing right. We do not want to go as far as our friend, 

Mr. Delahunt, was raising in terms of civil penalties. 

I know the ABA supports Senator Specter’s legislation. 

What is the mechanism for enforcement in that legislation, and 

what does the ABA recommend as an enforcement mechanism that 

strikes that proper balance? 

Ms. MATHIS. Congressman, let me talk about it in general principles, because my understanding is that Senate bill S. 186 does 

not specifically have an enforcement mechanism. 

Mr. FORBES. But are you okay with that? I mean, do you feel 

that just having it in the legislation will be enough without any enforcement mechanism? 

Ms. MATHIS. The ABA’s position is that, it is important for the 

Congress, both houses, to put their own stamp on legislation, and 

that what you feel comfortable with is what you should do. 

But with regard to these types of prosecutorial misconduct, the 

common law has handled them often, by allowing the judicial officer—the judge in the case—to determine. And so, that is a general 

precept that the ABA is supportive of. 

However, if your legislation provides specific sanctions, we would 

be happy to work with your staff to look at what would fit within 

the normal contextual balance, as you point out, between the prosecutorial duties, and also the attorney-client privilege. 

Mr. FORBES. But you are pretty comfortable with leaving it up 

to the way the common law has handled it with discretion to the 

judge. 

Ms. MATHIS. Yes, so the judge could deal with it, yes. 

Mr. FORBES. Thank you all so much. Mr. Chairman, thank you. 

Mr. SCOTT. Thank you. 

Mr. Gohmert, do you have other questions? 

Mr. GOHMERT. Yes. 

110

Mr. SCOTT. Okay, thank you. 

Mr. GOHMERT. Thanks. 

I thought the gentleman’s analogy about gas prices with use of 

credit card, use of cash, was a great illustration. 

And I guess what I was trying to get to earlier, I understood all 

the other testimony. But if it were to come up at all in sentencing 

that this person either waived or didn’t waive, then there’s potential for effect there. 

But just quickly, on the issue of sanctions, and Ms. Mathis, I 

think you made a great point that, it seems in so many areas of 

the law, if you just give the judge the power of enforcement, then 

it takes care of itself. 

In Texas, several—and I had felonies and I had major civil litigation as a judge. But I liked the discovery rule that finally it came 

to, because there had been so much abuse. 

But a discovery rule that gave the judge latitude to either prevent witnesses from testifying as a form of sanction, prevent certain evidence from coming in as a form of sanction, or in the worst 

case scenarios, forcing—just outright dismissal. 

What do you think about some form of sanction in a rule like 

that? If I could get comments. 

Ms. Mathis? 

Ms. MATHIS. Congressman, it seems that those are exactly the 

kind of sanctions in terms of increasing bad effects, consequences, 

of the request for a waiver or the use of material that came from 

a waiver. 

I also concur with the statements that Mr. Sullivan has made 

earlier. It may well be in a corporation’s best interest, but it should 

be in their interest to waive. 

But if a judge were to find that there was pressure for them to 

waive, then it would need to be done early. And I think that is 

something we have to remember, that it may not be at the point 

of going into a trial. It may be at the point of indictment. 

And so, we would have to think about how would a judicial officer be involved prior to that indictment coming to the fore. 

Mr. GOHMERT. Well, if it were prior to indictment, or at the time 

of potential indictment, I am not sure I can envision different degrees. You know, either you get to indict or you do not. And I understood the great point about sometimes an indictment is a death 

penalty to a corporation. 

Do you agree that different degrees of sanctions would be good 

for the judge to have? 

Ms. MATHIS. In general, I am all for the judicial officer being able 

to have the full spectrum of opportunities for sanctions. 

Mr. GOHMERT. Yes. Not just a death penalty, throw the case out 

or leave it. Yes. 

But at the time of potential indictment, do you see any other degrees that I am missing, other than either you don’t get to return 

the indictment or you do? Are there any other measures that could 

be taken? 

Ms. MATHIS. I am going to pass that one, if I may, to Mr. White. 

Mr. GOHMERT. Mr. White? 

Mr. WHITE. Thank you, Karen. 

111

I am not sure I appreciate the pass, but I will give a pass at it. 

[Laughter.] 

Again, I will hearken back to one thing that Karen did say, and 

that is that we believe—I believe—that there is enough not only intellect, but commitment—and apparently bipartisan commitment—

to establish an appropriate enforcement principle, whether the 

principle is one of referring to the discretion of the court to do certain things on a pre-indictment basis, should it be found that 

there’s been some form of coercion, and that a right as trusted and 

as vulnerable as the right to attorney-client confidentiality has 

been breached. 

It would seem to me that that could become even a separate matter for inquiry in an appropriate prosecutorial way. 

And I would suggest to you that there may even be ethical requirements for prosecutors who are aware that another prosecutor 

may have violated a constitutional right of someone to have the 

duty to step forward and do something about it. That is on a preindictment basis. 

On a post-indictment basis, you know, the bell has already rung. 

And it would seem to me that a court could take notice of inappropriate behavior and act accordingly, either suppress certain evidence or impose certain sanctions, or some of the other things that 

you mentioned. 

Mr. GOHMERT. Mr. Sabin, do you see different degrees of potential sanction, even at the early indictment stage? 

Mr. SABIN. I would not concede that there is factual evidence 

that prosecutorial misconduct is occurring in this area, such that 

there should be a need for sanctions to be in play. 

We have the Office of Professional Responsibility for egregious 

misconduct violations, if and when they should occur. 

But to go back to the premise, I would strongly disagree that 

there is, as suggested here, some kind of concerted or widespread 

prosecutorial misconduct, requiring this Congress or——

Mr. GOHMERT. And I appreciate that, Mr. Sabin. 

And I understand that. And I actually appreciate the DOJ taking 

this effort in order to try to minimize the potential for that kind 

of problem. 

But it still did not answer my question of whether or not, given 

that is the position, I do not have anything factual to start at this 

point. 

I am just saying, if there were a rule, would you like to have 

input? Are there different degrees of sanctions at the indictment 

stage? 

Mr. SABIN. Sure, in the theoretical——

Mr. GOHMERT. Do you realize you may not be in the DOJ come, 

you know, January or February of 2009. 

Mr. SABIN. I am a career prosecutor, sir. So, I look forward to 

a long——

Mr. GOHMERT. Well, you must have missed the hearing that was 

going on this week. [Laughter.] 

But that potential is out there. 

Mr. SABIN. The ability to link it to a judicial officer, when that, 

I do not see in the pre-indictment stage, other than in a grand jury 

context with a judge overseeing the grand jury having authority for 

112

some kind of misconduct, would have a triggering mechanism for 

a judicial officer to be involved. 

Absent that, how does a court get involved in something that is 

merely an ongoing investigation? I do not see how you can link 

those two, at that investigatory phase, link it up with a judicial officer. 

Mr. SULLIVAN. Mr. Gohmert, if I may? 

Mr. GOHMERT. Well, I have to yield back to the Chairman at this 

point. I am out of time. But if the Chairman allows. 

Mr. SULLIVAN. Thank you, Mr. Chairman. 

In answer to your question and Mr. Sabin’s response, I think at 

the pre-indictment phase, if there were a sanctions provision and 

it can be showed that an aggressive prosecutor violated that sanctions provision, you could move to dismiss the indictment. 

You could allege in that motion that improper considerations 

were undertaken and adverse inferences were drawn by the refusal 

of the corporation to waive, that the request to waive itself was improper. 

You could submit that, even post-indictment, if such a motion 

would fail, that information obtained, or potentially to be obtained, 

through that request would be excluded for purposes of the prosecution’s case in chief. 

You could also suggest that the violating prosecutor be subjected 

to OPR—internal OPR investigatory review—as well as Bar sanctions, in accordance with the Bar jurisdictions where that person 

is admitted. 

So, I think there are a variety of efforts to be undertaken for purposes of chilling a willfully aggressive prosecutor who seeks to violate Senator Specter’s proposal. 

Mr. GOHMERT. Thank you, Mr. Sullivan. Appreciate that answer. 

Mr. SCOTT. I would like to thank the witnesses for their testimony. 

Members will have an additional—if they have additional written 

questions, we will submit them to you, and ask you to, if we submit 

any additional questions, respond as quickly as possible. 

Without objection, the hearing record will remain open for 1 

week for the submission of additional materials. 

And without objection, the Committee stands adjourned. 

[Whereupon, at 11:10 a.m., the Subcommittee was adjourned.] 

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Pact-13.eps
135


Pact-14.eps
136


Pact-15.eps
137


Pact-16.eps
138


Pact-17.eps
139


Pact-18.eps
140


Pact-19.eps
141

f


Pact-20.eps
142


ABA-1.eps
143


ABA-2.eps
144


ABA-3.eps
145


ABA-4.eps
146


PR-1.eps
147


PR-2.eps
148


PR-3.eps
149


PR-4.eps
150

Æ


PR-5.eps