What’s The Impact Of The Yates Memo In The Real World?

September 24, 2015 by

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Heralded in a DOJ press release as the key to increased prosecutions of high-level corporate executives who have otherwise allegedly “insulated” themselves from criminal responsibility for corporate acts (presumably because they are, by definition, not involved in or even aware of criminal conduct by lower level employees), at least one aspect of the new DOJ policy on corporate “cooperation” has real-life consequences for how corporations respond to federal investigations in the future.

The Yates Memo, promulgated by DOJ on September 9, 2015, provides in paragraph 1 of its “six key steps” that “to be eligible for any credit for cooperation, the company must identify all individuals involved in or responsible for the misconduct at issue, regardless of their position, status or seniority, and provide to the Department all facts relating to that misconduct. If a company seeking cooperation credit declines to learn of such facts or to provide the Department with complete factual information about individual wrongdoers, its cooperation will not be considered a mitigating factor pursuant to USAM 9-28.700 el seq.

My partner, Chris Fialko, in a blog post the day after the Yates Memo was promulgated, discussed the effect this “step” may have on the Upjohn warnings that counsel conducting internal investigations are required to give to employees being interviewed. But the potential consequences of this “step” go further, and need to be carefully evaluated by counsel conducting such investigations, and by counsel representing individual employees.

For example, does step one of the Yates Memo, for all practical purposes, eliminate the attorney client privilege for corporate counsel if the corporation wants to be able to cooperate? Section 9-28.710 of the United States Attorney’s Manual, entitled “Attorney-Client and Work Product Protections,” explicitly states “waiving the attorney-client and work product protections has never been a prerequisite under the Department’s prosecution guidelines for a corporation to be viewed as cooperative.” But how does that square with the language (and the thrust) of the first “step” in the Yates Memo? How can a corporation “provide all facts relating to misconduct” if it does not fully waive all attorney client communications even tangentially touching on that misconduct?

And how does step one of the Yates Memo affect how counsel for individual employees represent their clients, while seeking to work cooperatively with corporate counsel? Can there be any joint defense agreements going forward, or does entering into such an agreement with counsel for an individual employee disqualify the corporation from cooperation credit – by potentially shielding certain facts or documents from disclosure?

If counsel for an individual advises his client not to be interviewed by corporate counsel, does the corporation have to fire the employee in order to preserve its cooperation credit? And if this is mandated by the government’s new policy, does this implicate Garrity issues if the employee makes a statement under threat of being terminated? Has the government, in essence, made counsel conducting an internal corporate investigation into federal agents? What must the corporation do to avoid being told that it “declined to learn” of such misconduct by not forcing its employees to waive their Fifth Amendment privilege or face termination?

Time will tell how the courts will deal with such issues. But in the interim, these and other potential consequences need to evaluated by all counsel involved in such investigations.