McNulty Machine-Guns the Thompson Memo: Death or Just a Flesh Wound?

Abstract

Federal prosecutors have long wielded enormous power in their discretion to charge a corporation with a crime based on the illegal acts of its employees, officers, or directors; power that is virtually unchallengeable in a court of law. And while the theory of vicarious criminal liability for corporations has changed little since its inception, aggressive prosecutorial tactics adopted in the late twentieth and early twenty-first centuries in response to two Department of Justice memoranda have caused many in the academic, legal and political world to cry out that the government has gone too far. On December 12, 2006, in response to growing criticism, Deputy Attorney General Paul J. issued a revised memorandum (the McNulty memo) reigning in prosecutorial discretion in two key areas - requests for privilege waivers and consideration of advancement of legal fees in the charging decision. The question remains, however, whether the memo will change the culture among federal prosecutors charged with pursuing corporate crime, or whether it will simply result in a ask, don't tell policy that drives the privilege waiver and legal fees issues underground. This paper will consider the implications of the aggressive tactics adopted by federal prosecutors in response to what the government perceived as increasing criminal conduct committed by or on behalf of corporations. Part II discusses a brief history of corporate vicarious criminal liability, the development of federal law governing criminal liability for corporations, and some of the arguments for and against vicarious liability. Part III documents the move toward more aggressive prosecutorial tactics in fighting corporate crime, beginning in the 1990s, including the use of pressured privilege waivers and consideration of whether the corporation has advanced legal fees to its employees in the decision whether to charge the corporation itself. Part IV focuses on two of the more important corporate criminal cases in recent memory, the conviction - and ultimately the reversal of the conviction - of Arthur Andersen LLP after the collapse of Enron, and the pending case against employees of KPMG International for orchestrating allegedly illegal tax shelter schemes. Finally, Part V considers the backlash from what many perceive to be prosecutorial abuse aimed at legitimate privileges and unconstitutional interference with the criminal defendant's right to counsel and due process. This section will consider proposed legislation to protect the attorney-client privilege and work product doctrine and whether the memo is really a step in the right direction or just more of the same.