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DOJ Edict Muddies Roles

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In September, Deputy Attorney General Sally Yates issued a now-famous “Yates Memo” in response to criticism that the Department of Justice was too easy in its treatment of corporate employees in criminal prosecutions. In the memo, the DOJ requires a corporation to assist in the prosecution of its employees, in essence, requiring “scalps” before it grants a corporation favorable treatment in plea negotiations. A key component of the memorandum focuses on corporate “internal investigations,” basically co-opting these investigations as vehicles for the prosecution of individuals. The goal is more people in prison.

Before the Yates memo, corporations undertook internal investigations for a variety of reasons, including misconduct, but the prosecution of individuals was never the primary focus of the investigation. By making the internal investigation an instrumentality of the government, the Yates memo fundamentally alters the purpose of the internal investigation. It undermines the traditional and constitutional rights associated with criminal prosecution. It also increases the inherent conflict of interest a corporate attorney faces when dealing with corporate employees.

“Internal investigations” are of relatively recent origin. It was not until the Sarbanes-Oxley Act in 2002 that publicly traded companies were required to have audit committees to investigate complaints. This investigative requirement gave rise to the “internal investigation.” There have been issues with internal investigations since their inception, however. They altered the role of the attorney in a potential criminal matter from that of defender to quasi-prosecutor. The Yates memo takes that change one step further. The corporate defense counsel is now the agent of the federal prosecutor. Not only does this undermine the adversarial system that has been the bedrock of the Anglo-American justice system for the past 800 years, it completely confuses and undermines the rights of the employee who is the subject of the investigation.

When an FBI agent or a prosecutor wants to speak with a potential individual, the individual knows that he or she is meeting with a representative of the government there to protect the interest of the government. When the employee of a company is summoned to appear before an “independent” counsel working for the company, roles are far less clear. Employees may have a feeling of loyalty and trust to the company. Under the Yates memo, the corporation is best served if corporate counsel exploits that loyalty causing the employee to forgo important constitutional rights, including the right to counsel or the right to remain silent. The unprotected individual is far easier for the government to prosecute, even if he or she is innocent.

If the individual has the presence of mind to request counsel, he or she will usually be referred to another attorney who will represent him or her at the corporation’s expense. These referrals are problematic. The corporation’s attorney cannot refer the individual to an aggressive attorney who is going to undermine the investigation. That would result in a denial of the benefits of cooperation under the Yates memo. On the other hand, it is in the best interest of the individual to have an aggressive attorney who will contest the internal investigation and develop a defense without regard to what happens to the corporation. The mere act of referral under these circumstances creates a conflict of interest.

The use of private agents to avoid constitutional rights and conflicts of interest are serious matters that can result in the conviction of the innocent. In an ideal world, criminal investigations should be the purview of DOJ, acting directly through federal investigators and prosecutors, and defense counsel should be allowed to be defense counsel. Realistically, this is unlikely to happen. Therefore, employees should understand that the corporation for whom they work may be their prosecutors.