CORPORATE CRIME REPORTER
More
Than Half of Corporate Pre-Trial Agreements Violate U.S. Attorney’s Manual
18-Month Limit
20 Corporate Crime Reporter 22(1), May 23, 2006
More than half (14) of the 25 post-Thompson memo corporate pre-trial agreements
exceed the 18-month limit set by the U.S. Attorney’s manual for such settlements,
according to a study obtained by Corporate
Crime Reporter.
The study – Devolution of Authority: The Department of Justice’s
Corporate Charging Policies – was written by Lawrence D. Finder,
a partner at Haynes and Boone and Ryan D. McConnell, an associate at Baker Botts
– both of Houston, Texas.
The study will be published in the St. Louis University Law Journal
this coming fall.
The authors recommend that companies in negotiations with the Justice Department
advocate that the 18-month limit set in the U.S. Attorney’s Manual should
serve as a ceiling for the duration of the agreement.
In an interview with Corporate Crime Reporter, Finder said “deferred
prosecution agreements were given legitimacy by a few lines in the Thompson
memo that deal with pre-trial diversion.”
“If you go to the U.S. Attorney's Manual on pre-trial diversion, it states
very clearly that they are not supposed to last more than 18 months,”
he said. “And yet we have deferred prosecution agreements that last three
years.”
But Finder and McConnell warn that an agreement that extends beyond the 18-month
limit might be better than no agreement at all.
“While the best outcome for a company which is a target of a criminal
probe is a declination of criminal prosecution, the worst outcome is a never-ending
agreement to cooperate with the government,” Finder and McConnell wrote.
“While 18 months should be the maximum period of cooperation under a pre-trial
agreement, a company should insist on some agreement with a definite end date
before agreeing to provide cooperation for an extended period of time.”
In an interview with Corporate Crime Reporter, Finder said that he
has corporate clients today that are still cooperating with the government in
investigations that started in 2002.
“The government has never made a public announcement that this corporation
or that corporation is not going to be prosecuted,” Finder said.
The study also found that of the 25 agreements, 14 required a compliance monitor
and 18 included privilege waivers.
The authors write that corporate attorneys may request from prosecutors that
there be no waiver of privilege, no changes in the company's business, and no
independent monitor included in the agreement.
In the interview with Corporate Crime Reporter, McConnell said that
“in the two most recent deferred prosecutions that we've seen –
BankAtlantic and HVB – privilege waivers were not included in the agreements.”
“So, maybe there is some sense in the Department of Justice that we need
to backtrack a little bit on this issue,” McConnell said.
And Finder said that the recent trend by corporate lawyers to give up individual
executives to save the corporation might be unethical.
“You have to represent your client to the best of your ability,”
Finder said. “When you represent the company, you do everything you can
to make sure the company is not indicted – within the bounds of the law
and ethics. One could argue that hanging the employees out to dry is unethical.
And this is where the Thompson memo has driven a wedge between not only corporations
and their employees, but also between practitioners in the criminal defense
bar.”
(For a complete question/answer format of the “Interview with Lawrence
D. Finder and Ryan D. McConnell," see 20 Corporate Crime Reporter 22(9),
May 29, 2006, print edition only.)
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Crime Reporter
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