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40–629 PDF 2008

S. HRG. 110–280

EXAMINING APPROACHES TO CORPORATE FRAUD

PROSECUTIONS AND THE ATTORNEY-CLIENT

PRIVILEGE UNDER THE MCNULTY MEMORANDUM

HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

SEPTEMBER 18, 2007

Serial No. J–110–55

Printed for the use of the Committee on the Judiciary

(

(II)

COMMITTEE ON THE JUDICIARY 

PATRICK J. LEAHY, Vermont, Chairman 

EDWARD M. KENNEDY, Massachusetts 

JOSEPH R. BIDEN, JR., Delaware 

HERB KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

BENJAMIN L. CARDIN, Maryland 

SHELDON WHITEHOUSE, Rhode Island 

ARLEN SPECTER, Pennsylvania 

ORRIN G. HATCH, Utah 

CHARLES E. GRASSLEY, Iowa 

JON KYL, Arizona 

JEFF SESSIONS, Alabama 

LINDSEY O. GRAHAM, South Carolina 

JOHN CORNYN, Texas 

SAM BROWNBACK, Kansas 

TOM COBURN, Oklahoma 

BRUCE A. COHEN, Chief Counsel and Staff Director 

MICHAEL O’NEILL, Republican Chief Counsel and Staff Director 

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C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Page

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont .................... 1

prepared statement .......................................................................................... 96

Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama .......................... 4

Specter, Hon. Arlen, a U.S. Senator from the State of Pennsylvania ................. 3

WITNESSES 

Immergut, Karin, United States Attorney, District of Oregon, Department 

of Justice, and Chair, White Collar Subcommittee for the Attorney General’s Advisory Committee, Portland, Oregon ................................................... 4

Richman, Daniel, Professor, Columbia Law School, New York, New York ........ 12

Seigel, Michael, Professor, University of Florida Fredric G. Levin College 

of Law, Gainesville, Florida ................................................................................ 14

Thornburgh, Dick, former Attorney General of the United States and Of 

Counsel, K&L Gates, Washington, D.C. ............................................................. 10

Weissmann, Andrew, Partner, Jenner & Block, New York, New York .............. 16

QUESTIONS AND ANSWERS 

Responses of Karin Immergut to questions submitted by Senator Sessions ...... 25

Responses of Daniel Richman to questions submitted by Senators Leahy 

and Sessions ......................................................................................................... 30

Responses of Michael Seigel to questions submitted by Senators Sessions 

and Leahy ............................................................................................................. 34

SUBMISSIONS FOR THE RECORD 

American Bar Association, Governmental Affairs, Washington, D.C., statement and attachments ......................................................................................... 38

Coalition to Preserve the Attorney-Client Privilege, statement .......................... 71

Immergut, Karin, United States Attorney, District of Oregon, Department 

of Justice, and Chair, White Collar Subcommittee for the Attorney General’s Advisory Committee, Portland, Oregon, prepared statement ................ 76

Richman, Daniel, Professor, Columbia Law School, New York, New York, 

prepared statement .............................................................................................. 99

Seigel, Michael, Professor, University of Florida Fredric G. Levin College 

of Law, Gainesville, Florida, prepared statement ............................................. 103

Thornburgh, Dick, former Attorney General of the United States and Of 

Counsel, K&L Gates, Washington, D.C., prepared statement ......................... 110

Veasey, E. Norman, Senior Partner, Weil, Gotshal & Manges, LLP, Wilmington, Delaware, report .................................................................................. 115

Weissmann, Andrew, Partner, Jenner & Block, New York, New York, prepared statement ................................................................................................... 128

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EXAMINING APPROACHES TO CORPORATE 

FRAUD PROSECUTIONS AND THE ATTORNEY-CLIENT PRIVILEGE UNDER THE 

MCNULTY MEMORANDUM 

TUESDAY, SEPTEMBER 18, 2007

U.S. SENATE, COMMITTEE ON THE JUDICIARY, Washington, D.C. 

The Committee met, pursuant to notice, at 10:35 a.m., in room 

SD–226, Dirksen Senate Office Building, Hon. Patrick J. Leahy, 

Chairman of the Committee, presiding. 

Present: Senators Leahy, Specter, and Sessions. 

OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. 

SENATOR FROM THE STATE OF VERMONT 

Chairman LEAHY. Today, the Judiciary Committee considers 

whether the Department of Justice has struck the right balance between robust prosecution of corporate fraud and the bedrock legal 

principle of fairness protected by the attorney-client privilege. I 

thank Senator Specter for his leadership on this issue, and I thank 

the distinguished panel of witnesses for being with us today. 

I am deeply concerned about the lawlessness that has affected 

this Administration’s leadership at the Department of Justice. 

They have shown arrogance and asserted an unprecedented prerogative to rewrite the rules, often in ways that undermine the rule 

of law and disregard the finest traditions of impartial law enforcement and our justice system. 

They have literally sought to rewrite the rules on the prosecution 

of politically sensitive cases and on the retention and firing of 

United States Attorneys in ways that impermissibly and dangerously injected politics into our justice system. They have undermined the role of law enforcement by using partisanship in the hiring of career prosecutors, judges and other Justice employees. They 

have secretly rewritten the rules governing torture and the treatment of detainees in ways that call into question this Nation’s commitment to basic human rights and American values. And they 

have secretly rewritten the rules for government surveillance of 

Americans, threatening our privacy and basic legal protections. 

It is long past time for the Department of Justice to recommit 

itself to the rule of law and to the principles of our justice system. 

This Committee has through its oversight begun to seek accountability that I hope will lead to the restoration of law and order 

2

within the Justice Department and throughout the Executive 

branch. 

In the area of corporate fraud prosecutions, this Administration 

has rewritten the rules. In 2003, the Department of Justice made 

it easier for prosecutors to pressure corporations to waive the attorney-client privilege, the bedrock of our whole legal system. One 

judge went so far as to dismiss charges in a prosecution of fraud 

at the accounting firm KPMG based on Government overreaching 

and misconduct. Now, it is embarrassing for the Government to 

lose cases, not because the evidence is insufficient, but because 

they have pushed beyond the law. And it is unacceptable to steamroll principles that protect fairness. 

Senator Specter and I made our concerns clear about Justice Department overreaching in this area in a hearing last fall. And soon 

after, the Justice Department rewrote the rules again, this time 

spearheaded by then-Deputy Attorney General Paul McNulty in 

what has come to be known as the ‘‘McNulty Memorandum.’’ And 

the memo added new safeguards and restrictions, including some 

that had been called for at this Committee’s hearing, on prosecutors’ ability to request the waiver of the attorney-client privilege. 

I said at the time that it was a step in the right direction. With 

this hearing we continue our consideration whether or not the Department has, in fact, found and is implementing the proper balance. The McNulty Memorandum has been in place for less than 

a year. We want to know whether it is working and whether it has 

reached the right balance between aggressive enforcement of the 

corporate fraud statute, which all of us want, but also the proper 

respect for the attorney-client privilege, which we all also want. 

With nominations being made to the top positions at the Department of Justice of people who will be responsible for implementing 

it, we want to make sure it is being done right. We do not know 

where Judge Mukasey, who the President just announced as his 

nominee to be Attorney General, stands on this issue. I suspect between Senator Specter and me, we will be asking that question 

when he is up for confirmation, but we will ask it of other nominees. 

We want to make sure the Department strikes the right balance. 

We do not want to cripple our enforcement efforts to eradicate corporate fraud. We saw that the epidemic of greed, like Enron and 

Worldcom and many others, left a lot of employees without jobs but 

also bereft of their life savings, and it devastated the shareholders, 

the people to whom they owe a fiduciary responsibility. 

At the same time, I do not want to overreact to the Department’s 

overreaching. The administration sought to immunize too much 

misconduct. Corporate misconduct should not be given a safe haven 

or immunized from accountability. Nor should the corporate bar, 

and its representatives in the American Bar Association, be allowed to use the legitimate concerns of overreaching we have identified to create favored status for corporate fraud defendants. We 

do not want to go back to the dark days before Sarbanes-Oxley 

when we were subject to corporate greed and actions taken in the 

dark. 

So we have to get it right. We demand that corporate fraud be 

pursued aggressively, but prosecutors have to do it mindful of fairVerDate 0ct 09 2002 14:35 Feb 14, 2008 Jkt 040629 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\40629.TXT SJUD1 PsN: CMORC
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ness principles. I hope the Department will work with us to get it 

right. 

Before we go to Karin Immergut, who is the U.S. Attorney for 

the District of Oregon and also the Chair of the White-Collar Subcommittee for the Attorney General’s Advisory Committee, I want 

to yield to Senator Specter, and I am going to turn the gavel over 

to Senator Specter, who requested this hearing. I think it is an important one, and, again, as I have many, many other times in 

many, many other areas, I compliment the senior Senator from 

Pennsylvania for what he has done in this area. 

STATEMENT OF HON. ARLEN SPECTER, A U.S. SENATOR FROM 

THE STATE OF PENNSYLVANIA 

Senator SPECTER. [Presiding.] Well, thank you very much. I am 

not sure whether I should call you ‘‘Mr. Chairman’’ or ‘‘Senator 

Leahy’’ now that the gavel has been turned over to me. 

Chairman LEAHY. You know what to do. 

Senator SPECTER. And there was no restriction on the turnover 

of the gavel, so I will still call you ‘‘Mr. Chairman.’’ And thank you 

for scheduling this hearing. I think it is a very important hearing, 

and I would like to see us deal with the relevant issues so that our 

Committee would be in a position to come to a judgment and to 

mark up a bill and to move forward, to either vote it up or vote 

it down, but to have it considered by the Senate and ultimately by 

the House as well. 

I start on my thinking on this subject with two very basic propositions: First, that there is a right to counsel in the Constitution, 

a very fundamental right, and an indispensable part of right to 

counsel is the privilege to talk to your lawyer about confidential 

matters without concern that they will be disclosed. And the second 

very basic proposition is the burden of proof, which is on the Government. And my view, with some experience in the field, has been 

that you do not prove the case out of the mouth of the defendant. 

You just do not do that. 

Now, when you get involved in the complex standards as to when 

it is implied, whether the privileged information will benefit the investigation, of course, it is going to benefit the investigation. 

Whether it can be obtained quickly and completely from other 

sources, well, what does ‘‘quickly’’ mean? What does ‘‘completely’’ 

mean? Whether there is a legitimate need, it seems to me that that 

is totally extraneous to the underlying values that we are dealing 

with here. And when we have the modifications which Deputy Attorney General McNulty added to the Thompson Memorandum 

about who gives the approval, if it is a fact matter, the U.S. Attorney asks the Assistant Attorney General, unclear as to whether the 

consultation means the Assistant Attorney General can overrule 

the request. I think it probably does mean that. Or if it is a matter 

of advice, then it goes to the Deputy Attorney General. It is hard 

for me to conceive of any situation where it is justifiable to ask the 

lawyer what advice he has given the client. That is just really beyond my comprehension—again, with some experience in the field. 

So I hope we can flush out the issues and present them to the 

Committee and come to a decision. 

4

We have been joined by the distinguished former prosecutor who, 

I suspect, may have a view somewhat different than mine. He occasionally does. Senator Sessions, I will not ask you if you would like 

to make an opening statement because I know the answer to that. 

So I will just call on you. 

STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM 

THE STATE OF ALABAMA 

Senator SESSIONS. Thank you. I look forward to the witnesses, 

and if there are problems in the process of obtaining client-attorney 

investigative materials, I would be willing to listen to that; if there 

are abuses, I would be. But I am not inclined to believe that a corporation—that a prosecutor cannot discuss with a corporation 

whether or not they want to waive their right and provide information. I do not want to be in a position in which a board, a corporate 

board finds out there is wrongdoing in the corporation, conducts an 

investigation, and cannot be—a discussion cannot be entertained as 

to whether or not they might benefit from turning that over, that 

the crooks in the corporation be sent to jail, where they ought to 

be sent, and the corporation perhaps survive the prosecution. Those 

are things that to me are pretty realistic and deal with the way the 

real world is. But if there is a problem here, we need to find out. 

And if the Department of Justice is not handling this procedure 

right, perhaps we can make it better. 

Thank you, Mr. Chairman. I like you there as Chairman. I enjoyed serving under you, and I am glad to serve under you again. 

Senator SPECTER. Well, we will try to make that agreement come 

true as soon as we can, although not this morning. 

[Laughter.] 

Senator SPECTER. Our first witness representing the Department 

of Justice is Ms. Karin Immergut, U.S. Attorney for the District of 

Oregon, a distinguished academic career from Amherst, her law degree from Boalt School of Law at the University of California, and 

we will put into the record a very extensive, impressive resume. 

I am going to ask you, Ms. Immergut, to stick to the 5-minute 

time limit, as I will everybody. This is an unusually heavy day. We 

have Judge Mukasey, whom I have a meeting with later this morning, and we have the D.C. voting rights bill on the floor. So that 

if the witnesses can limit it to the stipulated time of 5 minutes, 

that will give us the maximum time for dialog. 

Thank you for joining us, and the floor is yours. 

STATEMENT OF KARIN IMMERGUT, U.S. ATTORNEY, DISTRICT 

OF OREGON, U.S. DEPARTMENT OF JUSTICE, AND CHAIR, 

WHITE COLLAR SUBCOMMITTEE FOR THE ATTORNEY GENERAL’S ADVISORY COMMITTEE, PORTLAND, OREGON 

Ms. IMMERGUT. Thank you, Senator. I do not know if I should 

call you ‘‘Mr. Chair’’ right now, but, Senator Specter, members of 

the Committee, thank you for the opportunity to appear here today 

to talk about the McNulty Memorandum and the corporate criminal charging policy at the Department of Justice. Today I hope to 

give you a career prosecutor’s view about three issues: first, how 

prosecutors use waivers of-attorney-client privilege and work product protections out in the field; second, how the McNulty MemoVerDate 0ct 09 2002 14:35 Feb 14, 2008 Jkt 040629 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\40629.TXT SJUD1 PsN: CMORC
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randum is working in practice; and, third, how current policies protect victims and the investing public and could be significantly impeded by legislative efforts to further restrict corporate waivers. 

First, waivers generally arise when a corporation faced with 

criminal liability comes to a Federal prosecutor and says it wants 

to cooperate; and, further, in exchange for that cooperation, the corporation seeks leniency. At that point, the prosecutor would ordinarily say: Tell us what happened, who did it, and how did they 

do it. If a corporation can provide that factual information without 

waiving a privilege, that should typically be enough. However, because corporations generally gather facts through their attorneys, 

sometimes a corporation must waive its work product or attorneyclient privileges in order to cooperate and fully disclose those facts. 

Seeking waivers of important rights is not uncommon as part of 

our work with cooperators. We routinely ask individual cooperators 

to waive their Fourth and Fifth Amendment rights. Privilege waivers impose no greater burden on a corporation than we ask of individuals every day. 

When prosecutors seek waivers, they want the facts. They are 

not typically seeking legal advice or opinion work product unless 

there is a claim that the corporation or its employees acted in goodfaith reliance on advice of counsel, or that an attorney participated, 

even unwittingly, in the fraud. 

Since 2001, the Department has obtained more than 1,200 corporate fraud convictions and recovered billions of dollars for investors and shareholders. These prosecutions have been governed by 

a set of principles first established in the 1999 Holder Memorandum, which was then amended by the Thompson and the 

McNulty Memoranda. Those memoranda established a nine-factor 

test which requires a prosecutor to evaluate the culpability of a corporation and to distinguish between those corporations which 

present an ongoing danger to the public and those which are reliable corporate citizens. 

Criticism of these principles has focused on one sub-category of 

those principles: corporate waivers of attorney-client privilege and 

work product protections. The McNulty Memorandum was issued 

in December of 2006 in response to concerns about such waivers 

raised by the business community, defense lawyers, and members 

of this Committee, among others. For the first time, the McNulty 

Memorandum imposed express restrictions on when a prosecutor 

may request corporate waivers and what they might ask for. It also 

established new and rigorous authorization requirements. 

The McNulty Memo creates a clear and simple distinction between requests for factual information, which may be sought upon 

a showing of need, and requests for legal advice. A request for legal 

advice is permissible only in extraordinary circumstances, and then 

only with the permission of the Deputy Attorney General. And even 

then, if a corporation refuses to provide that legal advice, that refusal may not be held against them. 

Since its adoption, the robust client safeguards contained in the 

McNulty Memorandum have resulted in only four approvals of 

waiver of privilege for factual information and no approvals of 

waiver privilege for attorney-client communications from the Deputy Attorney General. We believe that these results show that a 

6

sound policy is in place and should be allowed to work. Our ability 

to obtain waivers in certain cases has helped victims because it allows cases to proceed more quickly and allows us to preserve assets 

to help victims recover some of their losses. In addition, the investing public deserves the quickest possible answer to allegations of 

fraud in the marketplace. 

In contrast, we are concerned that efforts to further restrict corporate waivers, such as Senate bill 186, will diminish our efforts 

to police a broad range of corporate crime and protect victims and 

the investing public by limiting the information available to us. 

Furthermore, Senate bill 186 would establish rules for the investigation of corporate suspects which are different from those applicable to every other type of suspect. That simply is not fair. 

Mr. Chairman, Senator Specter, over the last several years, the 

Department of Justice has made huge strides in combating corporate corruption. With the tools Congress has provided, we have 

made tremendous progress in restoring public confidence in the integrity of American corporate governance and protected shareholders and victims. But there is still work to be done. The rigorous 

safeguards contained in the McNulty Memorandum have worked 

and deserve a chance to continue. Our future efforts would be compromised if Congress enacted legislation such as Senate bill 186. 

I thank you for this opportunity to appear before this Committee 

on this important subject, and I would be pleased to answer questions. 

[The prepared statement of Ms. Immergut appears as a submission for the record.] 

Senator SPECTER. We will now proceed with our customary 5-

minute round. 

Ms. Immergut, you say that if a corporation seeks leniency, then 

the issue arises as to the waiver of the privilege. It seems to me 

that the reality is just the reverse. The prosecutor is using the 

charging discretion to impose a more difficult prosecution, and that 

what the prosecution is really looking for is leverage, a blackjack 

to get the information. 

If the issue is waiver, a suspect has a right to waive. No problem 

about that. The difficulty arises in the context of the prosecutor 

seeking leverage to extract the attorney-client privilege waiver with 

using a more severe charge. Isn’t that the practicality reality that 

is involved here? 

Ms. IMMERGUT. Senator, if I understand your question, it is 

whether or not our ability to provide leniency is somehow forcing 

somebody to waive when they otherwise would not. 

Senator SPECTER. The question is: Doesn’t the process really 

focus where the prosecutor has the discretion on charging and the 

prosecutor initiates the matter and says the charge will be X if you 

waive your privilege and it will be X plus Y if you do not waive 

your privilege, as opposed to the suspect coming and saying let me 

waive the privilege for leniency? 

Ms. IMMERGUT. Frankly, the former, in my experience, typically 

is not how it works, and it is not the required analysis under the 

McNulty Memo. There are nine factors to consider in our corporate 

charging decision. Our only point, though, is when a corporation 

wants leniency, and the other eight factors do not necessarily inure 

7

to the corporation’s benefit with respect to whether or not they 

should be charged, certainly then corporations would typically say, 

‘‘We want to cooperate. How can we cooperate?’’ And, you know, 

‘‘What do we need to do in order for you not to charge us?’’ But, 

again, the charging decision is really based on evidence and as well 

as the other eight McNulty Memorandum factors. 

Senator SPECTER. Ms. Immergut, you say in your opening statement that you are not ‘‘seeking advice from counsel.’’ Then you 

later go into a situation where you are doing precisely that—seeking advice. 

It seems to me just totally antithetical, contrary to the basic 

right to counsel, to under any circumstance ask a lawyer what advice he has given to a client. 

Ms. IMMERGUT. Again, the McNulty Memo makes that distinction. The situation you have described is very much of a rarity, 

and, indeed, since McNulty has been implemented, no single approval for that sort of advice—

Senator SPECTER. Is it really relevant that it is a rarity if you 

are undercutting the value, the sacrosanct nature of a lawyer’s advice? 

Ms. IMMERGUT. Senator, if I could give you an example of a time 

where one might imagine that sort of advice would be pertinent is 

if there was information that corporate officers had indeed sought 

advice from general counsel, been advised not to do the conduct 

that they engaged in, and nevertheless went ahead and did it. That 

might be a circumstance in which we would ask corporate counsel, 

if a corporation is cooperating, ‘‘Can we get a copy of the memo 

that you provided to the CEO who committed misconduct?’’ so that 

we can show they were on notice that this was illegal conduct—it 

is evidence of their intent. 

Senator SPECTER. I have one final question for you. We have a 

letter from the former Chief Justice of Delaware, E. Norman 

Veasey. We will make the full letter a part of the record. But he 

cites a case that, ‘‘When the process required by the McNulty 

Memorandum was raised by company counsel, the prosecutor’s response was, ‘I don’t give a flying—’ about the policy, and further 

said the burden was on the company to appeal the waiver request 

up the chain of command to the Department of Justice.’’

Which raises the concern that, notwithstanding all of the protections which, handily, may not amount to much as I see them, as 

long as you have this waiver policy in effect, there is a high risk 

it is going to be disregarded at the operating level. What do you 

think about that? 

Ms. IMMERGUT. I personally in my office have spoken to my Assistant U.S. Attorneys about this issue. They are very well aware 

of the importance of adhering strictly to the McNulty Memo. I have 

also been involved in training all of the U.S. Attorneys from around 

the country. I have spoken with all of them about the issue. And 

certainly if there is one perhaps overzealous prosecutor who is not 

adhering, there are, obviously, personnel policies that are implicated. But I know that the U.S. Attorneys have made this very 

clear to their Assistant U.S. Attorneys how important it is to follow 

the McNulty Memorandum. 

8

I believe that what you are suggesting is really a management 

and accountability issue, and I think that the McNulty Memo really reaches the right balance on that and has brought your concerns 

to the forefront of the Department of Justice, and we are making 

every effort now to make sure that we recognize the sacrosanct nature of the attorney-client privilege. We take that very seriously, 

and I can assure you that all of my fellow U.S. Attorneys have 

made that very clear to individual prosecutors in their offices. 

Senator SPECTER. Senator Sessions? 

Senator SESSIONS. Corporate fraud is an important thing, and 

millions of people have lost their whole life savings as a result of 

fraud by corporate officers. It is the investors and stockholders as 

well as the general public that suffers when fraud occurs. But it 

is not easy to prosecute or investigate. They have the best lawyers 

that you can find, and they utilize all the legitimate tools that they 

have. And so you get to some difficult circumstances, and you have 

to be strong, wouldn’t you say, Ms. Immergut, that a prosecutor 

cannot be a weak-kneed person going up against a major corporation in a fraud case. 

So I do not think that the phrase you used, ‘‘a blackjack against 

them,’’ is quite a fair thing. Every drug defendant that can be 

charged with eight different drug offenses and you tell them they 

will be able to get a reduced sentence and you will only charge 

them with four if they plead guilty, it could be said they were 

blackjacked. But you cannot credibly convey to a corporation that 

you are providing leniency unless they know you know they have 

committed a crime for which they can be convicted. Isn’t that right? 

Ms. IMMERGUT. That is correct, Senator, that it is in the context 

of a corporation facing criminal liability that it wants to cooperate. 

So just as with an ordinary defendant when we ask them for information or they choose to waive very, very important constitutional 

rights, they expect some benefit from the Government, and whether that is charging or sentencing—

Senator SESSIONS. Right, the point of which is in every criminal 

investigation context, particularly complex cases, there are circumstances in which the corporate lawyers know that the corporation has certain vulnerabilities when they have committed certain 

crimes, and they know, and they know there is proof, or they think 

maybe there is not proof to establish that. So the first point is that 

it is just nothing unusual in my view that a prosecutor who has 

in her hand evidence of corporate guilt on a number of different 

matters would use that as leverage to find out the full scope of all 

the criminal activity by providing some sort of leniency of a form 

in exchange for cooperation by the defendant. Is that correct? 

Ms. IMMERGUT. That is absolutely correct. And if I might just 

add to that, Senator, there have been cases where corporations 

have come in and said that they should not be charged and they 

are innocent and explain how something occurred, and we say, 

‘‘Well, can you show us some documents to prove that?’’ and it has 

indeed exonerated a corporation very, very quickly. And that is 

good for shareholders and good for the investing public. 

Senator SESSIONS. Well, the big losers—and I have seen a time 

or two in which you realize the people that are going to suffer most 

here are stockholders, who have no idea criminal activity was going 

9

on—and the board represents those, the corporate board. Evidence 

is brought to a corporate board that criminal wrongdoing is ongoing. They order an investigation. Now, we are not talking about attorney-client advice to the corporation for the most part. What the 

trend is—and it is perfectly reasonable—a corporation does not ask 

a private investigation to do the investigation. A corporation asks 

its counsel to do it. Right? And the reason they do that is because 

then they control the information that is attorney-client information. And they do not have to give it up unless they choose to give 

it up. Is that right? 

Ms. IMMERGUT. That is absolutely correct. 

Senator SESSIONS. So the lawyer goes out and does the investigation, comes back and tells the board, ‘‘We have got a real problem.’’ 

And the Board says, ‘‘What is this?’’ ‘‘Well, some of the corporate 

officers misbehaved.’’ And the board, acting on behalf of the stockholders, says, ‘‘Let’s throw them overboard. They violated the law. 

We did not know they were violating the law. Our duty is to our 

stockholders to try to minimize the damage to this perfectly good 

corporation. Let’s send these guys to the slammer.’’ Right? 

Ms. IMMERGUT. That is correct. 

Senator SESSIONS. And so what I am curious about, I just do not 

know how that is different than dealing with a drug defendant or 

anybody else that you deal with. What I was curious about, it does 

appear, though, that you have heard complaints about how this 

plays out in practice, and the Department did, last December, issue 

a policy that has been complained about, but it really is designed 

to provide more protection than has ever been given to corporate 

attorney-client relationships of this kind than ever before. Isn’t 

that right? 

Ms. IMMERGUT. That is correct. We have always been able to request waivers, and corporations have always been able to choose 

whether or not to waive. The Holder Memo in 1999 was the first 

memo to actually just put that in as one of the guiding principles 

for charging corporations which provided transparency to the process. But one was always—it did not limit prosecutorial discretion 

or provide new prosecutorial powers. 

Senator SESSIONS. But they do not have to give it up. 

Ms. IMMERGUT. Absolutely. It is a choice by the corporation, and 

also it is the corporation’s privilege with the advice of counsel. It 

is not the individual employees. So that is, as you point out, if the 

shareholders want to provide information about individual CEOs, 

for example, other corporate officers, that is their privilege and 

right to waive it if they so choose. 

Senator SESSIONS. My time is up. 

Senator SPECTER. Thank you—have you concluded, Senator Sessions? 

Senator SESSIONS. Yes. My time is up. 

Senator SPECTER. Thank you very much. 

Thank you very much, Ms. Immergut, for coming in to testify. 

Besides being U.S. Attorney for Oregon, you have a position within 

the Department which has supervision over any U.S. Attorneys or 

do you have some special status in appearing for the Department 

today? 

10

Ms. IMMERGUT. I serve as Chair of the Attorney General’s Advisory Committee’s Subcommittee on White Collar Crime, and in 

that capacity, I was asked to help draft the McNulty Memo provisions, as well as engage in training with the other U.S. Attorneys, 

as well as talk to other U.S. Attorneys about cases in their districts. 

Senator SPECTER. Well, thank you for coming in. One of the reasons many of us are so anxious to have Judge Mukasey processed 

through the confirmation procedures is that there are so few ranking confirmed members of the Department of Justice in the upper 

echelon. 

Thank you very much. 

Ms. IMMERGUT. Thank you very much. 

Senator SPECTER. We will now turn to our panel of Governor 

Thornburgh, Professor Richman, Professor Seigel, and Mr. 

Weissmann. 

I could refer to Governor Thornburgh as ‘‘Attorney General 

Thornburgh.’’ He has a unique, really spectacular record of public 

service: a two-term Governor, U.S. Attorney for the Western District of Pennsylvania, Assistant Attorney General in the Criminal 

Division, Attorney General under two Presidents. He worked in the 

United Nations. Undergraduate degree from Yale, law degree from 

the University of Pittsburgh, and became U.S. Attorney in 1969 

when I was district attorney of Philadelphia, and we used to chase 

the criminals into central Pennsylvania because they did not want 

to be within his jurisdiction or mine. So it was a different world 

then. 

Thank you very much for joining us, Governor, and I look forward to your testimony. 

STATEMENT OF DICK THORNBURGH, FORMER ATTORNEY 

GENERAL OF THE UNITED STATES AND OF COUNSEL, K&L 

GATES, WASHINGTON, D.C. 

Mr. THORNBURGH. Thank you, Senator Specter, and thanks to 

Chairman Leahy; my former colleague in the Department of Justice, Senator Sessions. 

Senator SESSIONS. You were my boss, I think is the right phrase, 

and I was honored to serve with you. 

Mr. THORNBURGH. Well, why quibble? 

[Laughter.] 

Mr. THORNBURGH. I appreciate the opportunity to speak to you 

today about the ominous dangers that the Justice Department’s 

McNulty Memorandum poses to the attorney-client privilege, the 

work product doctrine, and the rights of individuals. 

Let me state at the outset that, in my view, the McNulty Memorandum is so inherently problematic that there is nothing to be 

gained by continuing to wait and see how it may be implemented. 

To the contrary, Congress should enact legislation such as S. 186 

promptly to restore the attorney-client privilege, the work product 

doctrine, and the constitutional rights of individuals to their proper 

places in our system of justice. 

A year ago, almost to the day, this Committee received extensive 

oral and written testimony from Mr. Weissmann—who is on this 

panel with me—former Attorney General Edwin Meese, and myVerDate 0ct 09 2002 14:35 Feb 14, 2008 Jkt 040629 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\40629.TXT SJUD1 PsN: CMORC
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self, among others, on the issues at stake today. We emphasized 

then the fundamental importance of the attorney-client privilege to 

our legal system generally and to corporate compliance programs 

in particular. We also explained the corrosive dynamic engendered 

by Federal cooperation policies that provide credit to organizations 

when they waive the privilege or work product protection. No matter what its procedural requirements or how reasonably the Department of Justice may promise to implement it, a waiver policy 

poses overwhelming temptations to target organizations, often desperate to save their very existence. Prosecutors do not need to issue 

express requests for privileged documents to receive them. The 

same insidious result arises from policies that offer credit to organizations if they take adverse actions against employees that prosecutors deem culpable. 

I do not question then-Deputy Attorney General Paul McNulty’s 

good faith in attempting to remedy the widely recognized flaws of 

the Thompson Memorandum and its predecessor, the Holder 

Memorandum. Unfortunately, the McNulty Memorandum is only 

an incremental improvement and retains most of the basic flaws of 

its predecessors. I have set forth in detail the particulars of these 

flaws in my written statement to which I would refer you. 

There is no point in ‘‘giving the Department a chance’’ to implement the McNulty Memorandum, as some would suggest. Companies know what actions might win them a reprieve from indictment 

and, thus, prosecutors do not need to issue any express requests. 

The fact that companies can get cooperation credit for these actions 

is the fundamental flaw in the McNulty Memorandum. 

S. 186 would forbid Government lawyers from seeking waivers of 

privilege or work product, and from coercing organizations to take 

specified adverse actions against their employees. Importantly, S. 

186 would also forbid Government lawyers from ‘‘condition[ing] 

treatment’’ of an organization on whether the organization waived 

the privilege or penalized its employees, and from otherwise ‘‘us[ing 

such actions] as a factor in determining whether [the] organization...is cooperating with the Government.’’ S. 186 thus addresses 

the fundamental flaw in the McNulty Memorandum. 

Before I close, let me briefly respond to those who argue that legislation like S. 186 improperly or unwisely impinges on the discretion of Federal prosecutors. 

As you know, for a large part of my professional career, I either 

served as a Federal prosecutor myself or supervised other Federal 

prosecutors. S. 186 does not in any way impair Federal prosecutors 

from doing their proper jobs. They would remain free to prosecute—or refrain from prosecuting—as warranted by the evidence 

and the law. In support of such determinations, they could seek 

any communication or material they reasonably believe is not privileged, and they could accept voluntary submissions by companies 

of the results of internal investigations. They could also continue 

to seek other information through grand jury subpoenas, immunity 

agreements, and all the other tools that prosecutors have historically used. They simply could not seek, directly or indirectly, waivers of privileged information. 

In all the years that I served as a U.S. Attorney, as Assistant 

Attorney General in charge of the Criminal Division, and as AttorVerDate 0ct 09 2002 14:35 Feb 14, 2008 Jkt 040629 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\40629.TXT SJUD1 PsN: CMORC
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ney General, requests to organizations we were investigating to 

hand over privileged information never came to my attention—and 

I would have rejected such a request if it had. Clearly, in order to 

be deemed cooperative, an organization under investigation must 

provide the Government with all relevant factual information and 

documents in its possession, and it should assist the Government 

by explaining the relevant facts and identifying individuals with 

knowledge of them. But in doing so, it should not have to reveal 

privileged communications or attorney work product. This balance 

is one I found workable in my years of Federal service, and it 

should be restored. 

The attorney-client privilege dates from Elizabethan times. In 

defining the privilege in the corporate context, the U.S. Supreme 

Court in the UPJOHN case concluded that, and I am quoting, ‘‘an 

uncertain privilege...is little better than no privilege at all.’’ Just 

such uncertainty has been created by the Department of Justice, 

and the destruction of the privilege is only compounded by the 

McNulty Memorandum. 

Thank you for the opportunity to be here today, and I look forward to your questions. 

[The prepared statement of Mr. Thornburgh appears as a submission for the record.] 

Senator SPECTER. Thank you very much, Governor. 

We now turn to Professor Daniel Richman: clerk to Justice Marshall, previous to that clerk to Chief Judge Weinberg of the Second 

Circuit; graduate of Harvard, a degree from the Yale Law School, 

and we will put into the record his distinguished curriculum vitae. 

Thank you for joining us, and we look forward to your testimony, 

Professor. 

STATEMENT OF DANIEL RICHMAN, PROFESSOR, COLUMBIA 

LAW SCHOOL, NEW YORK, NEW YORK 

Mr. RICHMAN. Thank you, Senator Specter, and I would also like 

to thank Chairman Leahy for inviting me, and Senator Sessions as 

well. 

Thank you for this chance to speak to the Committee about the 

role that Congress should play in limiting negotiations between 

prosecutors and corporate counsel with respect to the attorney-client privilege. I would first like to highlight what the legislation 

proposed or what any of the legislation proposed on the table would 

not do. I really do not think in a broad range of cases it would 

change very much. The fact is that in a broad range of cases corporate counsel wants to get the Government inquiry off itself as 

soon as possible, and they will come in and they will speak to the 

Government, and they will turn over large amounts of information 

if requested, or perhaps not even if requested, because the quicker 

this moves on, the better for shareholders, the better for corporate 

counsel. 

I would also like to point out that any of the proposed legislative 

proposals do nothing in any explicit or, I think, practical way to 

protect officers and employees who regularly will speak to corporate counsel, will not have the protection of the attorney-client 

privilege for themselves, and will be subject to whatever corporate 

counsel wants to do to advance the corporate interests. And in 

13

many cases, as I have said, corporate counsel will waive the privilege. This might well be a problem in significant ways for individual employees. That is something that needs to be considered. 

That is something that I think courts are beginning to focus on, 

and appropriately so. 

As for cases where counsel will not come in and make the waiver, 

we should look at those. First, there will be the cases that the Government does pursue. Those will be a lot more expensive and intrusive to pursue. One thing that we really need to consider is what 

can the Government do if it wants to investigate alleged corporate 

misconduct. Perhaps it can go through counsel. It would be nice if 

they could have a textured discussion with counsel. That would involve counsel turning over documents. In the absence of that, 

should counsel not go forward and cooperate, I guess there will be 

search warrants, there will be grand jury subpoenas, at some point 

electronic surveillance. There is a whole range of spectacularly expensive, intrusive measures that can be done, but that the Government generally avoids doing in the corporate context. I would like 

to say that should this legislation pass Congress, or even without 

it, frankly, I think Congress should be putting a lot more money 

into white-collar enforcement. 

As I have noted in my written testimony, I am not qualified to 

really assess the reports coming out about underfunding of whitecollar enforcement, but it is of grave concern to a number of people, 

and to me in particular. 

With respect to cases that do go forward, I have got to say that 

if this legislation passes, this will be really interesting. A pre-trial 

hearing has got to go into prosecutorial motivation. Every time a 

corporation is charged, no matter what happened in the U.S. Attorney’s Office, corporate counsel will claim that the decision was 

made, in whole or in part, by improper consideration of their failure to waive. So we will have some interesting hearings. We will 

get prosecutors on the stand. I have no idea what will happen. I 

do know that it will be messy. I also know that it will deter prosecutors from moving forward on these cases. 

Then we have the classic cases that the legislation will affect and 

will not be prosecuted. What is that classic like? I do not know, and 

I really do not think anyone knows. The fact is what we are doing 

is essentially guessing as to how zealous, how committed, and with 

what integrity defense attorneys for corporations pursue their job. 

I know many who have just those qualities. I suspect there are a 

number who do not. 

Then we get to the question of is there a culture of waiver. Well, 

yes, I suppose there might be a culture of waiver. The Federal 

criminal justice system is based on a culture of waiver. No one 

from the Department can say that as clearly at some point as a 

professor can, but the fact is that is what happens. Defendants 

waive their rights under threat of severe sanctions. They waive 

their constitutional rights. They waive privileges. And there is 

nothing special about the Elizabethan origins of this or the constitutional origins of the Fifth Amendment. Rights get waived regularly to suit the Government’s purposes, to suit defense counsel’s 

purposes. 

14

Moving past the rhetoric, the question becomes: Is there a risk 

of abuse here? Well, yes, there is risk on both sides. I think there 

are times when U.S. Attorneys will be far too quick to ask for a 

waiver. One thing I think we can be confident about, though, is 

where they are, where there is an overly zealous loose cannon that 

starts being too quick to demand, we will hear corporate counsel 

arguing up the chain of command and being heard. This Committee 

and the Justice Department will not hear people from the other 

side where information was not turned over to the Government and 

shareholders’ or workers’ interests were hurt. 

So, in closing, I would just—oh, my time is up. I am sorry. I will 

rely on the rest of my written statement, and I would be happy to 

answer any questions. 

Senator SPECTER. Unlike the Supreme Court, Professor Richman, 

you may finish your sentence. 

Mr. RICHMAN. Oh, this is quite a thrill. 

[Laughter.] 

Senator SPECTER. As long as it is not too complex-compound. 

Mr. RICHMAN. I will keep it very short. I really do think that the 

fact that you have two professors here as the only people speaking 

up for the white-collar enforcement side speaks volumes of the odd 

political economy here. I do think shareholder interests and worker 

interests are very much affected by this. They do not have the mobilization that white-collar counsel do, and I think this Committee 

should think that through as well. 

Thank you. 

[The prepared statement of Mr. Richman appears as a submission for the record.] 

Senator SPECTER. Well, I do not want to unduly challenge your 

impartiality, but I did not note that you served as chief appellate 

attorney and Assistant U.S. Attorney for the Southern District of 

New York, notwithstanding your lofty professorial status. 

[Laughter.] 

Mr. RICHMAN. I am honored by the addition, Senator. 

Senator SPECTER. But you did go to the Yale Law School, so that 

is a countervailing mark. 

And Mr. Seigel, who is also a professor at the university of Florida, was the special attorney for the Department of Justice’s Organized Crime and Racketeering Section of the Philadelphia Strike 

Force, and believe me, they had and have a lot of work to do since 

my days as DA. The professorial status has some counterbalancing 

factor in you two men who have had prosecution experience, which 

is really to your credit as experts. 

Professor Seigel had the distinction of serving to Chief Judge 

Becker of the Third Circuit, one of America’s greatest jurists; 

magna cum laude from Princeton and magna cum laude from Harvard School. 

The floor is yours, Professor Seigel. 

STATEMENT OF MICHAEL L. SEIGEL, PROFESSOR, UNIVERSITY OF FLORIDA FREDRIC G. LEVIN COLLEGE OF LAW, 

GAINESVILLE, FLORIDA 

Mr. SEIGEL. Thank you very much, Senator Specter, Senator Sessions. Governor Thornburgh, I was special attorney prosecuting orVerDate 0ct 09 2002 14:35 Feb 14, 2008 Jkt 040629 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\40629.TXT SJUD1 PsN: CMORC
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ganized crime under your administration, among others, so I have 

worked for you as well. 

It is my privilege to testify here today. There can be no doubt—

nobody here doubts—that the attorney-client privilege is a central 

feature in the proper functioning of our system of justice. One of 

the things I want to point out is that nothing we are talking about 

here today has any impact on the attorney-client privilege of an individual person. That remains sacrosanct. We are only considering 

today the privilege of corporations that was created by the Supreme Court in the Upjohn case. 

Moreover, privilege, even though it may go back to Elizabethan 

times, is actually the exception. The rule is that the Government, 

standing in the shoes of the people, is entitled to every man’s evidence when attempting to uncover the truth. The question today, 

then, is whether S. 186, with its categorical prohibition of corporate 

privilege waiver, strikes the right balance between the protection 

of client confidences and the need for effective law enforcement. It 

does not. 

Although waiver of privilege should be sought by the Government only as a last resort, sometimes waiver is the only means by 

which Federal investigators and prosecutors can cut to the heart of 

the alleged corporate criminality in an efficient and timely manner. 

Moreover, the arguments against waiver do not withstand scrutiny. An examination of the issue starts with corporate criminal liability. Such liability provides prosecutors with leverage to encourage corporations to cooperate in administrative and criminal investigations. This is of critical importance. 

As a former first assistant overseeing the investigation of the Columbia Health Care case, one of the largest health care fraud cases 

in the United States, I can personally attest that the prosecution 

of white-collar crime is slow and resource-intensive. The crime is 

itself complex. It is characterized often by accounting tricks, fraudulent transactions, and deleted records. Investigators face millions 

of pages of documents. Now currently many of them are online. 

And there are sophisticated criminal defense attorneys who are 

hired by white-collar criminals and corporations to frustrate the 

prosecution at every turn. As a result, a typical case might take a 

matter of years to bring to fruition. Corporate cooperation reverses 

this dramatically. No longer foes, the corporation and the prosecution can team up to unmask the individuals who were at the center 

of the criminal activity. With corporate cooperation, the successful 

completion of a complex case can be reduced from a matter of years 

to a matter of months. This huge efficiency gain represents a significant public good. 

One argument against privilege waiver is that it will discourage 

companies suspecting internal criminality from conducting an investigation in the first place. This is unlikely because of the risks 

of regulatory and third-party liability. Inaction is simply not an option. 

Corporate officials also have a very personal reason to investigate allegations of criminal activity amongst their subordinates. 

If they do not, they could be open to personal criminal liability and 

time in jail. 

16

A related argument against waiver is that it causes in-house 

counsel to generate less paper in the course of an internal investigation. In complicated cases, of course, counsel has no real choice 

but to retain sufficient records to support her findings. More important, this situation was created by Upjohn because corporate counsel can never predict, after Upjohn, whether otherwise privileged 

documents will be released in the future. Thus, if she is prudent, 

counsel will always attempt to minimize records generated by an 

internal investigation, regardless of DOJ waiver policy. 

The most troubling argument against privilege stems from the 

impact it is said to have on corporate employees who face questioning. If they are potentially guilty, they have a dismal set of options: silence, and likely termination; cooperation, and likely sanctions; and lying, avoiding potential liability in the short term, but 

having worse outcome in the future. 

Caught in this situation, the employee definitely needs good legal 

advice. If she is unsophisticated, she may think she is going to get 

that advice and that her communication with corporate counsel is 

privileged. Of course, that is not the case. To the extent that the 

law is lacking here, the culprit is not DOJ waiver policy. Instead, 

it is with the rules and regulations regarding when and how corporate counsel must advise an employee of her Upjohn rights. In 

my opinion, that is where the rules need to be examined and the 

protection strengthened. 

The bottom line is this: The attorney-client privilege waiver 

should be a last resort. I would prefer to see the McNulty Memorandum specifically state that. It comes close. I think it should specifically state that it is effectively a last resort. But it has taken 

a significant step in that direction, and I think it should be given 

a chance to work. 

Thank you. 

[The prepared statement of Mr. Seigel appears as a submission 

for the record.] 

Senator SPECTER. Thank you, Professor Seigel. 

Mr. Andrew Weissmann is a partner in the law firm of Jenner 

& Block. He was the Enron Task Force Director overseeing the 

prosecution of more than 30 individuals, selected by the Director of 

the FBI to be his special counsel; bachelor’s degree from Princeton 

and law degree from Columbia. 

Thank you very much for joining us today, Mr. Weissmann, and 

we look forward to your testimony. 

STATEMENT OF ANDREW WEISSMANN, PARTNER, JENNER & 

BLOCK, NEW YORK, NEW YORK 

Mr. WEISSMANN. Good morning, Senators Specter and Sessions, 

members of the Committee, and staff. 

The advisability of a statutory solution to the infringement of the 

attorney-client privilege by DOJ must be examined in the context 

of the unique nature of corporate criminal law. 

First, the mere indictment of a company risks a death sentence 

as well as severe consequences to hundreds or even thousands of 

innocent people. Indeed, a criminal indictment carries the risk that 

the market will impose a death sentence—even before the company 

can go to trial and have its day in court. One of the lessons corVerDate 0ct 09 2002 14:35 Feb 14, 2008 Jkt 040629 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\40629.TXT SJUD1 PsN: CMORC
17

porate America took from the Arthur Andersen case, where I served 

as the lead trial attorney, is to avoid an indictment at all costs. 

Second, a corporation of any significant size will inevitably be 

subject to criminal investigation at some point during its existence. 

This is so because under the current standard of corporate criminal 

liability, a company can be found liable based on the actions of a 

single, low-level employee where only two conditions are met: the 

employee acted within the scope of her employment, and the employee was motivated, at least in part, to benefit the corporation. 

If an employee commits such a crime, then no matter how many 

policies the company has to thwart the criminal conduct, the company can be prosecuted. This standard I note of vicarious liability 

is not the creation of congressional statute, nor, indeed, of a Supreme Court ruling, which has never addressed this issue. It is the 

product of a series of appellate rulings that have defined the scope 

of corporate criminal law. 

In light of these precepts, prosecutors have enormous leverage. 

To avoid indictment, corporations will go to great lengths to be 

deemed ‘‘cooperative’’ with a Government investigation. KPMG is a 

prime example, as Judge Kaplan found. The Bristol Myers case is 

another example. There, the company agreed, among other things, 

to endow a chair at the prosecutor’s alma mater in order to resolve 

an investigation short of indictment. 

The pressures on a company are, accordingly, not analogous to 

those on an individual in our criminal justice system. An individual 

is subject to liability for conduct that she controls absolutely; not 

so, a corporation. A company can face indictment based on the conduct of any one of thousands of employees, and regardless of its efforts to detect and deter the conduct at issue. An individual also 

does not risk a death sentence before she ever stands trial. And the 

potential collateral consequences to an individual, although they 

can be severe, can pale in comparison to the scope of such consequences in a corporate setting. 

Let me turn to some of the DOJ policies that I believe have been 

wanting and how the Senate bill will fix those. 

The McNulty Memorandum does not require the decision to 

charge a corporation to be viewed at Main Justice. Such a lack of 

national 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 company. It is 

ironic that one of the key innovations in the McNulty Memorandum was oversight of the decisions regarding requests for waiver. Yet, the ultimate decision regarding whether to charge a company receives no such scrutiny. 

Moreover, although the theory of the McNulty Memorandum is 

a good one, in practice individual prosecutors interpret its factors 

markedly differently. There is reason to believe that little has been 

done to train prosecutors on the McNulty Memorandum’s dictates 

and to measure diligently compliance with its provisions. My own 

experience suggests as much. In one case, I was told that a company would be deemed cooperative by waiving the privilege and 

disclosing the material without making the prosecutor jump 

through the McNulty Memorandum hoops. 

18

Further, the McNulty Memorandum leaves intact the Government’s ability to penalize a company that does not take punitive action against employees who are invoking the right to remain silent. 

By contrast, the Senate bill would prohibit the government from 

considering an employee’s assertion of the Fifth Amendment. 

Ironically, then, the Government can encourage employers to 

take the more Draconian corporate measure against its employees—namely, firing them—but not to weigh in on the decision 

whether to advance legal fees. 

Finally, the McNulty Memorandum continues to exert undue 

pressure on companies to waive the privilege because prosecutors 

can still penalize a company for refusing to waive. Although refusal 

to disclose legal advice cannot account against a company, the 

same does not hold true with respect to ‘‘purely factual information.’’ But the McNulty Memorandum’s examples of purely factual 

information illustrates the problem. The memorandum defines as 

‘‘purely factual’’ witness statements, interview memoranda, and 

factual summaries and reports documented by counsel. But those 

specific matters have been found by numerous courts to be precisely what is protected by the attorney-client and work product 

doctrines. 

My own experience prosecuting corporate crime belies the notion 

that a prosecutor must have such waivers in order to prosecute 

successfully such cases. There are myriad ways for a company that 

seeks to cooperate to provide the Government with valuable information without waiving the privilege. A company can direct the 

Government to documents and witnesses who will further its investigation. It can also give the Government an attorney proffer of salient facts. None of that requires the company to waive the attorney-client privilege. 

Thank you. 

[The prepared statement of Mr. Weissmann appears as a submission for the record.] 

Senator SPECTER. Thank you very much, Mr. Weissmann. 

We will admit, without objection, three statements in support of 

S. 186 from the American Bar Association, former Delaware Chief 

Justice Veasey, and from the Coalition to Preserve Attorney-Client 

Privilege. 

Governor Thornburgh, it has been a long time since I was a prosecutor, but you served as Attorney General through 1991. What is 

the origin, the genesis of all of this activity by the Department of 

Justice to extract waivers of the privilege? 

Mr. THORNBURGH. I do not know. I have been curious about that 

myself. I would doubt that any of my distinguished colleagues with 

experience in the Department of Justice, including Senator Sessions, ever had occasion to request waiver of the attorney-client 

privilege in the course of white-collar crime investigations. As I 

said, that was not an item on the checklist of prosecutors when I 

served in the Department of Justice. But somehow or other, during 

the 1990s and resulting in the Holder and Thompson Memorandums, it became a practice that was frequently indulged in. And 

to a certain extent, I suppose, regardless of what legislative remedies might be undertaken, the genie is already out of the bottle, 

and it will be difficult to constrain the far-flung apparatus of FedVerDate 0ct 09 2002 14:35 Feb 14, 2008 Jkt 040629 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\40629.TXT SJUD1 PsN: CMORC
19

eral prosecutions totally from sneaking in a request of this kind or 

making a threat of the type that has been envisioned as time goes 

on. 

As I said, I think that the attorney-client privilege has been 

upheld for corporations in these types of investigations in very express language in the Supreme Court in the Upjohn case, with a 

notation that it must be clearly understood that that privilege exists, and that if it is rendered uncertain, it vitiates its usefulness. 

Senator SPECTER. I think you are right on the genie being out 

of the bottle. Once it is in use, the tremendous power of the prosecutor arises largely from his charging authority. 

Mr. THORNBURGH. Yes. 

Senator SPECTER. A judge cannot add charges. 

Professor Seigel, you comment about exceptions. The Government is entitled to everyone’s evidence. We are all familiar with 

that. But there are many limitations on that besides the attorneyclient privilege, husband-wife privilege, coerced confessions since 

Brown v. Mississippi in 1938, Miranda we all know about, privilege 

against self-incrimination. A defendant does not have to testify. No 

comment about it. 

I think that what the Committee may be most interested in, and 

the Senators, is how tough it would be on the prosecution to convict 

the guilty without this waiver approach. 

Mr. Weissmann prosecuted 30 individuals in the Enron case. 

Were you able to do that without extracting waivers, Mr. 

Weissmann? 

Mr. WEISSMAN. Well, there were some waivers in connection with 

the Enron case, but that was under the Thompson Memorandum 

where it was actually affirmatively encouraged to exact such waivers. But I think the result in those cases would have been exactly 

the same. 

Senator SPECTER. Could you have had the same success? Well, 

that is the question. Maybe you have already answered. I guess 

you have already answered. Could you have gotten the success 

without the waiver? 

Mr. WEISSMAN. I believe so. 

Senator SPECTER. Professor Richman, you have been very candid 

in saying that the enactment of S. 186, as you put it, would not 

change much, that there would be invasive procedures, and you 

listed search warrants and subpoenas and surveillance. Well, that 

is all part of the existing process. But what leads you to the conclusion so that I can quote you more elaborately when we have the 

markup on the bill that, as you put it, the passage of 186 would 

not change very much? 

Mr. RICHMAN. Senator Specter, I think there is a very large 

range of cases where the Government either comes calling to defense counsel or defense counsel comes to the Government, assuming that there eventually will be Government action, and wants to 

get this matter moving as soon as possible. There has been—

Senator SPECTER. Well, if the corporation comes or the individuals come and they say, ‘‘We want to waive it,’’ that is fine. 

Mr. RICHMAN. Yes. That is what I was—the only point I was 

making is I think that class of cases is very large, and what is 

more, the class of cases not included, the ones where corporations 

20

do not waive for their own reasons, I am worried about those. I 

think that is a considerable group of cases. I think those are precisely the ones where defense counsel may either have conducted 

no investigation or be not very candid with the Government. 

I would not want the Government to be very quick to take his 

word for it, and the problem that this proposal will create is there 

will be this choice that the Government has of investing massive 

resources into the investigation or taking his word for it. 

Senator SPECTER. There is no duty to be candid with the Government. 

Mr. RICHMAN. No, there is not, but there also is exposure to 

criminal liability. One of the odd things about the Federal system 

or any criminal justice system, as you know better than anyone, is 

the threat of prosecution goes far. 

Senator SPECTER. Well, you let the chips fall where they may. 

Our focus is very narrow on the attorney-client privilege. 

How about it, Professor Seigel? You have heard Prosecutor 

Thornburgh testify. You have heard Prosecutor Weissmann testify, 

Prosecutor Richman testify. Are you going to file a dissent that this 

bill’s enactment would not impede convicting the guilty? 

Mr. SEIGEL. Yes, I do disagree with that, for a couple of reasons. 

First, I think that although right now under the existing dynamic 

with McNulty, a lot of corporations do come in, and because there 

has been criminality in their midst at relatively high levels, and 

they look at the other McNulty factors, they are likely to be 

charged, and so they have a large incentive to cooperate. And if the 

only way they can provide the information necessary to cooperate 

is to waive privilege, that is what they do. 

What I think—and I think maybe I disagree here with Professor 

Richman a little bit—is that the proposed legislation would change 

that dynamic and that a fair number of those companies would realize that an alternative potentially successful strategy would be to 

stonewall because without the ability of the Government to say 

give me more or we need more before we can give you credit for 

cooperation, the company is going to say we will give you everything that is not privileged, which might be very little, and now 

that we have fully cooperated you cannot charge us. And when the 

prosecution goes forward—and I think Professor Richman was referring to this in his testimony. If the prosecutor decides to charge 

a company—

Senator SPECTER. There is no basis for their saying the prosecutor cannot charge them because they view their cooperation as 

full. 

Mr. SEIGEL. But if they get charged, Senator, they will presumably, if there is any teeth in the legislation, be able to file a motion 

to dismiss based upon their view that the prosecutor charged them 

because they refused to turn over attorney-client privilege. 

Senator SPECTER. They can say whatever they like, but they cannot necessarily prove it. 

Senator Sessions? 

Senator SESSIONS. I do not understand what we are doing here. 

Mr. Seigel, I will ask you, we have got a lot of laws, and maybe 

this is just one too many. I think Mr. Richman suggested it is going 

to cause more litigation and hearings and appeals than we can 

21

imagine for not much benefit. But I will ask maybe the two of you 

here. Whose rights are we talking about being violated? 

As you raised, Mr. Seigel, the only question that comes to my 

mind is that perhaps a corporate employee being interviewed by 

corporate counsel might not assert privileges that he would otherwise assert if he were being interviewed by the FBI and somehow 

give up information that incriminates him-or herself. But I do not 

see this problem with the corporation. It seems to me that the gist 

of this legislation is to say that if the corporation wants to go to 

the prosecutor and offer to give up all their material as a good-faith 

statement that they are determined to eliminate fraud and corruption and the chips fall where they may, which is what we want corporations—

Mr. SEIGEL. All of which is a public good. 

Senator SESSIONS. I mean, I do not see how—but this legislation 

would simply say the prosecutor could not initiate it. The prosecutor could not say let me tell you what you really need to do, because we are heading toward charges against you, is come on forward and tell us—you have done an internal investigation, you give 

us all that, and we will take that as a good-faith effort and try to 

consider that as we go forward. 

Isn’t that the only difference in—do they—

Mr. SEIGEL. The prosecutor could not initiate it, and as I understand the bill, the prosecutor could not take into account the failure 

of the company not to do that when weighing their cooperation, 

which is odd because the way—the cooperation is information. So 

whether they have parted with information, the information the 

corporation has is likely privileged because the corporation chose to 

have lawyers do their investigation. So by saying that you cannot 

weigh whether or not they have given over privileged information 

I do think shifts the balance of power back to corporations to hold 

that information and still claim cooperation. 

Senator SESSIONS. What if the prosecutor just looked at them 

with steely eyes and said, I know you have done an investigation, 

we have got 150 subpoenas ready to issue, we have got a grand 

jury that is ready to hear that, and that is what our plans are right 

now? 

Mr. SEIGEL. Yes, right. And I think—

Senator SESSIONS. And then you end up with a—this is a threat. 

Mr. SEIGEL. Well, I think it could be—

Senator SESSIONS. This was a request for the documents. 

Mr. SEIGEL. That is right. It could—

Senator SESSIONS. We could have hearings and appeals of all of 

that. Is that possible? 

Mr. SEIGEL. That is possible. Or either the corporation will get 

the message and hand this stuff over, anyway, in which case this 

was all pretty much a waste. Or it will hold tight, and if it gets 

indicted, we will have to have hearings over the motivation of the 

prosecution, which seems to be something that we always try to 

avoid if we can. 

Going back to the individual employees, my point is there ought 

to be—the ABA Rules of Responsibility are not very well written 

in this area, and there ought to be—if we are worried about the 

little guy—which is, frankly, who I am worried about, the taxpayer, 

22

the shareholder. If we are worried about the little guy, then we 

need to look at the rules regarding when corporate counsel advises 

the individual employee, look, I do not represent you, what you say 

to me is not held in confidence vis-a-vis you, it is not your choice, 

it is the corporation’s choice; and if you have anything that is going 

to incriminate yourself, go get yourself a lawyer. That to me is 

where the rules potentially—

Senator SESSIONS. And that is not required by lawyer ethics 

clearly at this point in—

Mr. SEIGEL. Not clearly. I think most—

Senator SESSIONS. Mr. Weissmann, I will just give you a chance 

to respond to any of that, and also the question: In most corporate 

counsel investigations, do they give those kind of warnings to the 

employees, that I am not your lawyer, that what you tell me, if the 

corporation decides, could be given to the authorities? 

Mr. WEISSMAN. Yes, that is standard. Those are so-called Upjohn

warnings and every employee is told that. 

I think the issue, though, here is that the Senate bill certainly 

leaves a company free to voluntarily turn over whatever it wants 

to the Government on its own. The problem here is that the current status is that even without a request—and certainly there are 

requests, but even without one, companies read what was the 

Thompson Memo and now the McNulty Memo, and they know exactly what they have to do. That is precisely what Judge Kaplan, 

a distinguished jurist, found in the KPMG case, which was that 

KPMG, although it was clearly on notice from the Southern District of New York prosecutor as to what it needs to do, it did not, 

in fact, need to even be told because it could read the memo and 

realize that its only way out of the situation, before the Government even said it had a case, was to turn over everything it could. 

And so what happened there is Judge Kaplan equated the actions of the company with the actions of Government because it 

found that the company was merely an amanuensis of the Government and was just doing its bidding. 

So what I would say here is that while there has been a lot of 

talk about the damage to shareholders and to the little guy, that 

equally weighs in on the other side, which is that there is nothing 

worse for shareholders and the low-level employee than a baseless 

civil suit and an unwarranted criminal investigation. 

So I think if you are looking out for the small player in this, you 

can equally view this as a very bad thing that is going on right 

now. 

Senator SESSIONS. Well, I would agree that an overaggressive 

prosecutor could perhaps utilize an intimidation factor, a threat of 

an indictment or publication of wrongdoing when there is not sufficient proof of it. That could hurt a corporation. It could hurt stockholders unfairly and unjustly. But my impression is that the 

McNulty Memo is really designed to deal with that in a real way, 

requiring approval all the way up the chain of command before 

anything like this could be done, and it certainly tightened up the 

procedure. But to deny—to create a statutory right in the middle 

of a corporate investigation that could cause all kinds of problems 

for not much benefit I am uneasy about. 

Thank you. 

23

Senator SPECTER. Thank you very much, Senator Sessions, and 

thank you, Governor Thornburgh and Professor Richman and Professor Seigel and Mr. Weissmann. I think the testimony has been 

very helpful. 

Mr. THORNBURGH. Could I add just one comment? I am somewhat puzzled that if the concerns are for all the trouble we are putting the prosecutors to, to make their case, the expense that is involved, the concern for the little guy, why is the Department so 

timid? Why don’t they just come forward with a proposal that 

would abolish the attorney-client privilege for corporations and get 

that result? 

It seems to me that is really what you are talking about here, 

is a kind of incremental process of nibbling away at a time-honored 

and sacrosanct privilege when the real desire is to expedite investigations, make the prosecutor’s job easier, and protect in so-called 

fashion the rights of the little guy, as they have been styled by this 

panel. I think that is something worth asking Judge Mukasey 

about when he appears before you. 

Senator SPECTER. I am meeting with him in a few minutes. 

Mr. THORNBURGH. Maybe he favors the abolishment of the attorney-client privilege for corporations. 

Mr. SEIGEL. I would go on the record not favoring that. I think 

it is in the hands of defense counsel, and that is where it should 

be. 

Senator SPECTER. It would not enhance his chances for confirmation if he adopted the bold Thornburgh approach. 

[Laughter.] 

Senator SPECTER. If he agreed to rescind the practice, I think it 

would enhance it. 

Mr. THORNBURGH. I quite agree. That is what I was getting at. 

[Laughter.] 

Mr. RICHMAN. Senator Specter, one note on that. Judge Mukasey 

is a man of extraordinary judgment, and I really think there are 

good reasons to wait and see how he runs this Department. It is 

a long-awaited arrival—at least for those of us hoping for his confirmation. 

Senator SPECTER. Well, I am not prepared to wait and see. We 

have been considering this matter at some length. There was a 

suggestion made that we defer this hearing until we had a new Attorney General, and that is going to take a long time, and it may 

not be a question of when but if, where you have a lot of demands 

made for production of a lot of records on the Terrorist Surveillance 

Program and the production of White House witnesses and all the 

records about the U.S. Attorneys. My experience, limited as it is, 

is not to wait but to try to make an analysis and come to a conclusion and to move ahead. 

But I think this hearing today provides us with a sufficient basis 

to make a judgment. We have had very distinguished witnesses on 

both sides of this issue. And I understand what Professor Seigel 

has said, but when Professor Richman testifies as he did and you 

have Mr. Weissmann’s experience on Enron and, candidly, most of 

all, what a prosecutor like Dick Thornburgh has had to say, with 

experience at all levels and a sense of wonderment, I have been in 

the Senate all during the period this program apparently was deVerDate 0ct 09 2002 14:35 Feb 14, 2008 Jkt 040629 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\40629.TXT SJUD1 PsN: CMORC
24

veloped and had not heard about it until the outcry has come up 

recently. And I think this is a matter for congressional judgment, 

and I intend to press it. 

Thank you very much—

Mr. RICHMAN. Senator, can I add one thing? I just want to clarify 

my testimony. I do not think that this measure will have no effect 

whatsoever. The point is that those who will avail itself of its protection are the guilty ones. 

Senator SPECTER. I do not consider your last statement recanting 

your earlier testimony. 

[Laughter.] 

Senator SPECTER. Thank you very much. 

[Whereupon, at 11:55 a.m., the Committee was adjourned.] 

[Questions and answers and submissions for the record follow.]

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