[House Hearing, 110 Congress]
[From the U.S. Government Printing Office]




                               BEFORE THE

                         AND HOMELAND SECURITY

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION


                             MARCH 8, 2007


                           Serial No. 110-24


         Printed for the use of the Committee on the Judiciary

      Available via the World Wide Web: http://judiciary.house.gov


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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. SCOTT, Virginia            HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
MAXINE WATERS, California            DANIEL E. LUNGREN, California
MARTIN T. MEEHAN, Massachusetts      CHRIS CANNON, Utah
WILLIAM D. DELAHUNT, Massachusetts   RIC KELLER, Florida
ROBERT WEXLER, Florida               DARRELL ISSA, California
LINDA T. SANCHEZ, California         MIKE PENCE, Indiana
STEVE COHEN, Tennessee               J. RANDY FORBES, Virginia
HANK JOHNSON, Georgia                STEVE KING, Iowa
LUIS V. GUTIERREZ, Illinois          TOM FEENEY, Florida
BRAD SHERMAN, California             TRENT FRANKS, Arizona
ADAM B. SCHIFF, California           JIM JORDAN, Ohio

            Perry Apelbaum, Staff Director and Chief Counsel
                 Joseph Gibson, Minority Chief Counsel

        Subcommittee on Crime, Terrorism, and Homeland Security

                  ROBERT C. SCOTT, Virginia, Chairman

MAXINE WATERS, California            J. RANDY FORBES, Virginia
HANK JOHNSON, Georgia                Wisconsin
ANTHONY D. WEINER, New York          HOWARD COBLE, North Carolina
MARTIN T. MEEHAN, Massachusetts      DANIEL E. LUNGREN, California

                      Bobby Vassar, Chief Counsel
                    Michael Volkov, Minority Counsel

                            C O N T E N T S


                             MARCH 8, 2007

                           OPENING STATEMENT

The Honorable Robert C. Scott, a Representative in Congress from 
  the State of Virginia, and Chairman, Subcommittee on Crime, 
  Terrorism, and Homeland Security...............................     1
The Honorable J. Randy Forbes, a Representative in Congress from 
  the State of Virginia, and Ranking Member, Subcommittee on 
  Crime, Terrorism, and Homeland Security........................     3


Mr. Barry M. Sabin, Deputy Assistant Attorney General, U.S. 
  Department of Justice, Washington, DC
  Oral Testimony.................................................    14
  Prepared Statement.............................................    17
Mr. Andrew Weissmann, Partner, Jenner and Block, New York, NY
  Oral Testimony.................................................    24
  Prepared Statement.............................................    26
Mr. William M. Sullivan, Jr., Partner, Winston and Strawn, LLP, 
  Washington, DC
  Oral Testimony.................................................    33
  Prepared Statement.............................................    35
Ms. Karen J. Mathis, President, American Bar Association, 
  Chicago, IL
  Oral Testimony.................................................    45
  Prepared Statement.............................................    47
Mr. Richard T. White, Senior Vice President, Secretary, and 
  General Counsel, The Auto Club Group, Dearborn, MI
  Oral Testimony.................................................    75
  Prepared Statement.............................................    77


Prepared Statement of the Honorable Sheila Jackson Lee, a 
  Representative in Congress from the State of Texas, and Member, 
  Subcommittee on Crime, Terrorism, and Homeland Security........     4


Material Submitted for the Hearing Record........................   113



                        THURSDAY, MARCH 8, 2007

                  House of Representatives,
                  Subcommittee on Crime, Terrorism,
                              and Homeland Security
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 9:33 a.m., in 
Room 2141, Rayburn House Office Building, the Honorable Bobby 
Scott (Chairman of the Subcommittee) presiding.
    Mr. Scott. The Subcommittee will come to order.
    I am pleased to welcome you today to this hearing before 
the Subcommittee on Crime, Terrorism, and Homeland Security, on 
``The McNulty Memorandum's Effect on the Right to Counsel in 
Corporate Investigations.''
    As noted in the U.S. Supreme Court in Upjohn Company v. 
United States, the attorney-client privilege is the oldest of 
privileges for confidential communications known to common law. 
The purpose of the privilege is to encourage full and frank 
communications between attorneys and their clients, so that 
sound legal advice and advocacy can be given by counsel.
    Such advice of counsel depends upon the lawyer being fully 
informed by the client. And as the court noted in Trammel v. 
U.S. in 1980, the lawyer-client privilege rests on the need for 
the advocate and the counselor to know all that relates to the 
client's reasons for seeking representation, if the 
professional mission is to be carried out.
    And this purpose can only be effectively carried out if the 
client is free from consequences or apprehensions regarding the 
possibility of disclosure of the information.
    This is not the case when waivers are coerced or obtained 
under duress. And there is certainly a coercive situation where 
there is fear or concern by a defendant in a criminal case, 
that he or she may not receive full leniency without a waiver 
of attorney-client privilege.
    As long as there is reason for concern that full leniency 
may not be granted without a waiver of attorney-client 
privilege, the fact that the department does not specifically 
require a waiver is of little consolation.
    As the court noted in the Upjohn case, an uncertain 
privilege, or one which purports to be certain but results in 
widely varying applications by courts, is little better than no 
privilege at all.
    The attorney-client privilege is a privilege of the client, 
not the lawyer, and lawyers have an absolute responsibility to 
protect a client's privilege. Corporations are persons relative 
to constitutional rights of persons.
    Coercing waivers of corporate attorney-client privilege has 
not always been the practice among Federal prosecutors. 
Formerly, a company could evidence its cooperation with such 
prosecutors by providing insight and access to relevant 
information and to the company's workplace and employees. The 
definition of a company's cooperation did not entail production 
of legally privileged communications or attorneys' litigation 
work product material.
    Memoranda issued by the Department of Justice over the past 
several years, however, reveal that policies which suggest that 
corporations face an increased risk of prosecution, if they 
claim such constitutionally protected privileges.
    The first such memorandum was issued by former deputy 
attorney general, Eric Holder in 1999. That memorandum was 
designed to provide prosecutors with factors to be considered 
when determining whether to charge a corporation with criminal 
activity, and to specifically allow prosecutors engaging the 
extent of a corporation's cooperation to consider the 
corporation's willingness to waive attorney-client and work 
product privileges.
    The Holder memorandum was then superseded in 2003 by 
another memorandum issued by former deputy attorney general, 
Larry Thompson. The Thompson memo contained the same language 
regarding the waiver of attorney-client and work product 
privileges and also addressed the adverse weight that might be 
given to a corporation's participation in a joint defense 
agreement with its officers or employees and its agreement to 
pay their legal fees.
    Today, the current department policies relating to 
corporate attorney-client and work product privilege waivers 
are embodied in the McNulty Memorandum issued in December of 
2006 by current deputy attorney general, Paul McNulty.
    So, this new memorandum does state that waiver request be 
the exception rather than the rule. It continues to threaten 
the viability of the attorney-client privilege in business 
organizations by allowing prosecutors to request a waiver of 
privilege upon finding of legitimate need.
    I fully recognize that the department faces many hurdles 
when undertaking the investigation and prosecution of corporate 
malfeasance. We only need to look at victims of the Enron 
collapse, where nearly 10,000 individuals lost their jobs, 
their pensions, their plans for the future. And we know that it 
is vital that prosecutors have the tools necessary to prosecute 
these crimes and hold accountable wrongdoers who profit at the 
expense of ordinary working Americans.
    I also know, however, that facilitating and encouraging 
such investigations must not occur at the cost of vital 
constitutional rights of corporations or their employees.
    I firmly believe that by protecting these well established 
and essential constitutional interests, we can only facilitate 
legitimate investigations by encouraging corporate offices and 
employees to consult with their attorneys regarding corporate 
wrongdoing in a confidential setting, but also ensure fairness 
of our criminal justice system for all Americans.
    It is now my privilege to recognize my colleague from 
Virginia, the Ranking Member of the Committee, Randy Forbes, 
for his opening statement.
    Mr. Forbes. Thank you, Chairman Scott. And I want to thank 
you for scheduling this important hearing.
    I also want to thank our distinguished panel of witnesses 
for taking your time and giving us your expertise and advice 
    One year ago, on March 7, 2006, this Subcommittee conducted 
an oversight hearing on just this issue. At first glance, the 
landscape surrounding the issue of corporate waivers of 
attorney-client privilege appears to have changed with the 
Justice Department's issuance of the so-called McNulty 
Memorandum governing criminal prosecutions of corporations.
    But a closer examination of the McNulty Memorandum shows 
that many of the same questions and concerns that were raised 
at last year's hearing remain. This is disturbing to all of us.
    I remain concerned that prosecutors may be overreaching by 
demanding that corporations waive their attorney-client 
privilege as a condition of cooperation and a decision not to 
indict a company.
    The attorney-client privilege is deeply rooted in our 
jurisprudence and the legal profession. It encourages frank and 
open communication between clients and their attorneys, so that 
clients hopefully can receive effective advice and counsel.
    In the corporate context, as we saw in the case of Arthur 
Andersen, the life of a corporation can turn on a prosecutor's 
exercise of discretion whether or not to charge a corporation. 
That decision can have profound consequences to our economy, 
the employees and the community, and should not turn on whether 
or not a company waives its attorney-client privilege.
    I know that cooperation of the criminal justice system is 
an important engine of truth. To me, the important question is 
whether prosecutors seeking to investigate corporate crimes can 
gain access to the information without requiring a waiver of 
the attorney-client privilege. There is simply no reason for 
prosecutors to require privilege waivers as a routine manner.
    I look forward to hearing from today's witnesses and to 
working with my colleague, Mr. Scott, on this important issue, 
and I yield back the balance of my time.
    Mr. Scott. Thank you.
    Without objection, all Members may include opening 
statements in the record at this point.
    We have been joined by the Chairman of the full Committee, 
Mr. Conyers, and also Mr. Coble, Mr. Sensenbrenner and Mr. 
Chabot, at this point.
    And, without objection, Members may include opening 
    [The prepared statement of Ms. Jackson Lee follows:]
       Prepared Statement of the Honorable Sheila Jackson Lee, a 
    Representative in Congress from the State of Texas, and Member, 
        Subcommittee on Crime, Terrorism, and Homeland Security

    Mr. Scott. We will now go on to our witnesses.
    Our first witness is Mr. Barry Sabin, from the Department 
of Justice. He is the deputy assistant attorney general in the 
Criminal Division for the United States Department of Justice. 
Since January of 2006, he has been responsible for overseeing 
the fraud, criminal appellate section, gang squad and capital 
case unit.
    Prior to his current appointment, he served as a chief of 
the Criminal Division's counterterrorism section and has been a 
Federal prosecutor since 1990. He received his bachelor's and 
master's degrees from the University of Pennsylvania, his law 
degree from New York University Law School.
    Our next witness will be Mr. Andrew Weissmann, a partner in 
the law firm of Jenner and Block's New York office, where he 
specializes in white-collar criminal and regulatory matters. 
Prior to his current position, he served for 15 years with the 
Department of Justice where he worked as assistant U.S. 
attorney and was selected to serve as the director of a special 
task force created to investigate the Enron corporate scandal.
    Previously, he was selected by the director of the FBI to 
be a special counsel, and served as chief of the Criminal 
Division of the U.S. Attorney's Office in the Eastern District 
of New York. In recognition of his efforts in the Department of 
Justice, he received numerous awards including the Attorney 
General's Award for Exceptional Service, the highest award 
given to Federal prosecutors.
    He is a graduate of Princeton University, a recipient of a 
Fulbright Fellowship at the University of Geneva and a graduate 
of the Colombia Law School.
    Next, William Sullivan, a litigation partner at the law 
firm of Winston and Strawn. In this capacity he concentrates on 
corporate internal investigations, white-collar criminal 
defense and complex civil and securities litigation. He 
previously served over 10 years as assistant U.S. attorney for 
the District of Columbia. He also worked in the Manhattan 
district attorney's office and in private practice as a 
litigator in New York City.
    He has spoken on the Government's insistence on the waiver 
of attorney-client privilege for corporations under 
investigation in front of the American Bar Association, and has 
also addressed the World Trade Organization on Sarbanes-Oxley 
issues. He received his bachelor's and master's degrees from 
Tufts University and his law degree from Cornell University.
    Next we have Karen Mathis, president of the American Bar 
Association, and partner in the Denver office of McElroy, 
Deutsch, Mulvaney and Carpenter.
    Prior to holding her current position with the ABA, she 
served as the association's second-highest elected office, the 
chair of its house of delegates, where she served as a member 
since 1982. She has been active in the Denver Bar Association 
and the Colorado Bar Association for many years, where she held 
offices in the young lawyers section in both associations and 
served as vice president of the Colorado Bar Association.
    She earned a law degree from the University of Colorado 
School of Law and bachelor's from the University of Denver.
    Our next witness will be introduced by the Chairman of the 
full Committee, Mr. Conyers.
    Mr. Conyers. Thank you. Good morning, ladies and gentlemen.
    It is great to see the president of the bar here again. She 
is becoming more and more regular in her appearances.
    I am delighted to just bring to the Committee's attention 
the presence of an old friend and a distinguished witness, 
Richard White.
    He currently is the general counsel for the Auto Club Group 
of Companies in Dearborn, Michigan, and was a founding partner 
in, I think, the largest, predominantly African-American firm 
in Michigan, Lewis, White and Clay. David Baker Lewis is still 
the head of that firm.
    And we are delighted that you are here today.
    He has come up from Morehouse College, Harvard University 
Law School, has been very active in the civil rights community 
in the State, and has also been commissioner of Foreign Claims 
Settlement Commission, and serves as a member of the executive 
committee and board of directors of the American Corporate 
Counsel Association.
    I am very happy to introduce to the Committee Richard 
    Glad you are here.
    And we look forward to some very important testimony on a 
subject that could be ignored. What we are finding out, 
Chairman Scott, is we are having legislation by memorandum, and 
we have gone through quite a few of them.
    And I think the combination of civil rights, civil 
liberties, chamber of commerce, defense lawyers all coming 
together makes this an obvious subject for our attention and 
your scrutiny. And I thank you for the opportunity to introduce 
Richard White.
    Mr. Scott. Well, thank you.
    Each of our witnesses' written statements will be made part 
of the record in its entirety.
    I would ask each of the witnesses to summarize his or her 
testimony in 5 minutes or less. To help you stay within that 
time, there is a timing light on the table. When you have 1 
minute left, the light will switch from green to yellow. And 
when finally the red light comes up, we would ask you to 
complete your testimony.
    Deputy Assistant Attorney General Sabin?


    Mr. Sabin. Chairman Scott, Ranking Member Forbes, Members 
of the Subcommittee, thank you for the opportunity to be here 
today to discuss the Department of Justice's corporate criminal 
charging policies and its respect for the attorney-client 
    These policies have been articulated in a memorandum issued 
by Deputy Attorney General Paul McNulty 3 months ago.
    In connection with my testimony today regarding the McNulty 
Memorandum, I would like to underscore five key points that are 
fundamental to the department's corporate criminal charging 
policies: one, the tone of the McNulty Memorandum and its 
respect for the importance of the attorney-client privilege; 
two, developing concrete data to uniformly consider and 
implement the McNulty Memorandum; three, establishing a 
legitimate need for requesting a waiver of the attorney-client 
privilege; four, instituting a meaningful consultation and 
approval process to ensure consistent application of department 
practices; and five, an incremental approach to seeking 
information--first factual information and then legal 
opinions--from the corporate entity, if appropriate.
    The tone of the McNulty Memorandum is critical to an 
understanding of the department's approach to corporate 
criminal charging policies. It is a tone of respect for the 
importance and longstanding nature of the attorney-client 
privilege. The department helps protect investors and ensure 
public confidence in business entities and the markets in which 
those entities participate.
    The Department shares this common goal with the vast 
majority of corporate leaders who believe in and work hard to 
maintain integrity and honesty in corporate governance.
    The attorney-client and work product protections serve an 
extremely important function in the U.S. legal system and can 
help responsible corporations in their efforts to comply with 
applicable law.
    At the same time, waiver of the privilege may advance 
important interests. As articulated in the McNulty Memorandum, 
a company's disclosure of privileged information may permit the 
Government to expedite its investigation. Indeed, this may 
assist the Government and the corporation.
    The principles of charging business organizations, now 
embodied in the McNulty Memorandum, establish a nine-factor 
test that prosecutors consider in determining, in their 
discretion, whether to charge a corporation.
    A prosecutor must consider and weigh all of the relevant 
factors. The issue regarding cooperation is one of nine 
factors, and the waiver issue is a subfactor of cooperation.
    It is important that this Subcommittee understand that the 
department has never instructed prosecutors to seek routine 
requests for waiver of privilege. Nor is waiver of privileged 
information a prerequisite to getting credit for cooperation by 
a corporation. Indeed, the policy now makes clear that legal 
advice, mental impressions and conclusions by counsel are 
protected and should only be sought in rare circumstances.
    Any request for such materials must be in writing and seek 
the least intrusive waiver necessary to conduct a complete and 
thorough investigation. This means that the request must be 
narrowly tailored to meet the specific investigation need. The 
United States attorney considers that request in consultation 
with the Assistant Attorney General of the Criminal Division. 
The request and approval must be in writing, and those records 
must be maintained.
    Prosecutors must establish a legitimate need for that 
specific information. The four-pronged test is set forth in my 
written statement.
    This test ensures that evaluating the need for waiver is a 
thoughtful process, and that prosecutors are not requesting it 
without examining the quantum of evidence already in their 
possession and determining whether there was a real need to 
request privileged information.
    Prosecutors must take preliminary investigative steps to 
determine whether a corporation and its employees have engaged 
in criminal activity before seeking waiver, thereby ensuring 
that prosecutors cannot seek waiver at the outset of the 
    To be clear, a prosecutor must take an incremental 
approach, first establishing a legitimate need and then 
submitting a narrowly tailored, written request.
    The United States attorney, in consultation with the 
assistant attorney general of the Criminal Division, approves a 
request for factual information; the deputy attorney general 
approves requests for legal information.
    In light of the substantial and thoughtful revisions 
contained in the McNulty Memorandum, the Department urges this 
Subcommittee, at a minimum, to allow the guidance a chance to 
work before considering any legislation.
    In the approximately 3 months since the memorandum was 
issued, the deputy attorney general's office has not received a 
single request seeking a waiver of legal advice and strategy. 
Moreover, the Criminal Division has only received a few 
requests to seek purely factual information. In each of these 
instances, the Criminal Division has engaged in a meaningful 
dialogue regarding the requests with the district.
    Our prosecution efforts confirm that corporate fraud is not 
a historical relic. The Department of Justice continues to 
devote significant time and resources to protecting our 
financial markets and the American investor. We remain 
committed to investigating and prosecuting corporate matters.
    The Department's past and current efforts to combat 
corporate fraud have assisted in some part, I believe, to 
supporting compliance in the business community. Since the 
president established the Corporate Fraud Task Force, many 
corporations have implemented effective compliance programs, 
and corporations are quicker to respond when they find fraud 
committed by the corporation.
    It is this common ground--prosecutors committed to the fair 
administration of justice and responsible business leaders 
fulfilling their duties of honest dealing to corporate 
shareholders--that unites us in our determination that 
eliminating fraud is good for business.
    We appreciate the opportunity to share our views with this 
    Thank you.
    [The prepared statement of Mr. Sabin follows:]
                  Prepared Statement of Barry M. Sabin

                 JENNER AND BLOCK, NEW YORK, NY

    Mr. Weissmann. Good morning, Chairman and Members of the 
Subcommittee and staff. I will make three points regarding the 
McNulty Memorandum.
    The memorandum leaves completely intact the Government's 
ability to penalize a company that does not take punitive 
action against employees for the mere assertion of their 
constitutional right to remain silent.
    Under the McNulty Memorandum, companies may be deemed by 
the Department of Justice as uncooperative, simply because they 
do not fire employees who refuse to speak with the Government, 
based on the fifth amendment.
    By contrast, the Senate bill reintroduced this past January 
would appropriately prohibit the Government from considering an 
employee's assertion of the fifth amendment in evaluating 
whether to charge the individual's employer.
    The issue raised by current DOJ policy is not about how so-
called ``big business'' behaves; it is about how the Government 
does. Indeed, the current DOJ policy was recently found by 
Judge Lewis Kaplan, in the so-called KPMG tax shelter case, to 
be constitutionally impermissible. And the factual situation in 
KPMG is not unique.
    Across the country, numerous corporations have instituted 
strict policies that call for firing employees who do not 
``cooperate'' with the Government.
    Ironically, now that the McNulty Memorandum has largely 
eliminated the ability of prosecutors to weigh in on an 
employer's decision to advance legal fees, but left intact the 
ability to reward a company that fires employees who assert the 
fifth amendment, the Government can encourage employers to take 
the more draconian corporate measure against its employees, but 
not the lesser.
    As a simple policy matter, whether a company punishes 
employees who assert the fifth amendment is a poor proxy for 
determining whether the entire company should be charged with a 
crime. Other factors--such as the level and pervasiveness of 
wrongdoing, a history of recidivism--are far more accurate 
measures of corporate culpability.
    But more importantly, the DOJ policy should be altered, 
because the Government should not be fostering an environment 
where the employees risk losing their job merely for exercising 
their constitutional right.
    A second problem is that, although the McNulty Memorandum 
states that refusal to disclose legal advice and attorney-
client communications cannot count against a company, the same 
does not hold true for information the Government deems to be 
purely factual.
    But information that is deemed by the McNulty Memorandum to 
be allegedly purely factual is, in fact, usually clearly 
protected by the attorney-client privilege and/or work product 
privilege. The McNulty Memorandum's examples illustrate this 
    As examples they list as purely factual information, 
witness statements, factual interview memoranda and 
investigative facts documented by counsel.
    But who an attorney interviews, what questions an attorney 
asks and what information is chosen as important to memorialize 
can reveal significant information about the attorney's defense 
strategy. And for this reason, courts have repeatedly held--and 
I am quoting now from one of the cases--``how a party, its 
counsel and agents choose to prepare their case, the efforts 
they undertake and the people they interview, is not factual 
information to which an adversary is entitled.''
    The McNulty Memorandum simply ignores this case law and its 
unassailable logic and abrogates to itself the determination 
that material that has heretofore been widely deemed to be 
privileged is not entitled to protection under the memorandum.
    Finally, one of the main flaws in the McNulty Memorandum is 
that the decision to charge a corporation is not required to be 
reviewed by Main Justice. In practice, wide variations in the 
field currently exist regarding the United States Attorney's 
Office's corporate charging practices.
    But the lack of 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 corporation. And this lack of oversight is 
unfortunate, since there is considerable expertise at main 
justice in examining these issues.
    Again, it is ironic that one of the key innovations in the 
McNulty Memorandum was to have national oversight of decisions 
regarding requests for waiver of the attorney-client privilege 
in corporate investigations.
    Yet the final decision regarding whether to charge the 
company receives no such scrutiny.
    In conclusion, although DOJ has acted to remedy certain 
problems in its corporate charging policy, many remain. There 
is no reason to believe that those problems will disappear with 
the passage of time, since they are embedded in the McNulty 
Memorandum itself.
    Thank you for the opportunity to address this Committee.
    [The prepared statement of Mr. Weissmann follows:]
                 Prepared Statement of Andrew Weissmann

                  STRAWN, LLP, WASHINGTON, DC

    Mr. Sullivan. Good morning, Chairman Scott, Ranking Member 
Forbes and Subcommittee Members and staff.
    One year ago yesterday, this Subcommittee held hearings on 
this very issue. It stimulated an important dialogue. I was 
privileged to testify then.
    While the McNulty Memorandum is a commendable effort to 
regulate and, perhaps, restrict Government waiver requests, it 
remains to be seen whether it constitutes a real departure from 
existing practice. I am gravely concerned that the memorandum's 
nonbinding guidelines may only serve to entrench and expand an 
internal deliberative process, predisposed to request attorney-
client privileged information and attorney work product.
    I urge the Members of this Subcommittee to consider how 
these policies have given Government prosecutors unnecessary, 
unconstitutional and unfair advantages when pursuing corporate 
entities, and to perhaps craft an enforceable legislative 
response to not only restore balance, but to continue to foster 
an environment in which corporations can properly rely on 
counsel in order to follow the rule of law.
    The traditional protections for business organizations 
supported by the attorney-client privilege and work product 
doctrine are further eroding as prosecutors and regulators 
continue to demand participation in internal investigations and 
the submission of detailed reports in exchange for the mere 
prospect of leniency.
    In my experience, waiver requests are made even before I 
have completed my client's internal investigation and, thus, 
even before I have determined that a waiver is in my client's 
best interests.
    Prosecutors' requests for information in a factual road map 
form would also encompass a broad subject matter waiver, 
leading to possible disclosure of privileged information beyond 
the scope of the investigation, to not only law enforcement 
officials, but also to future third parties, including other 
Government agencies or opportunistic plaintiffs' attorneys.
    The corporate clients with whom I work unequivocally desire 
to identify and eliminate suspected criminal conduct occurring 
within their ranks. They come to me, their lawyer, seeking 
advice and guidance in abiding with internal corporate 
governance policies and external laws and regulations.
    In such discussions, I may be compelled to determine the 
existence, nature and extent of potential criminal activity. My 
obligation to the client is to make the best choice, based upon 
an informed understanding of the law and the facts.
    The presumption of innocence should never be forgotten or 
ignored. And counsel's first responsibility should be to 
inquire as to whether misconduct in fact took place, and if so, 
whether there might exist a credible defense.
    Naturally, clients are fearful of sharing all pertinent 
information when they believe that the details of an attorney-
client conversation may be turned over the Justice Department 
as part of a current or future investigation into these 
    In the worst cases, the current policies of the Department 
only serve to dampen the aggressive repression of criminal 
behavior within companies, because they, in fact, serve to 
inhibit the candid disclosure and remediation efforts by 
responsible corporate citizens and their counsel.
    In conclusion, while ultimately the McNulty Memorandum's 
limited revisions may have been designed to appease some 
critics and potentially forestall imminent judicial and 
congressional action, they do not demonstrate an earnest 
reevaluation of Department policies regarding corporate 
criminal enforcement.
    In fact, legislation such as the Attorney-Client Privilege 
Protection Act, recently introduced by Senator Specter, may now 
be required. But there is certainly something to be said for 
our elected representatives taking the laboring or in resolving 
policy questions.
    Senator Specter's bill seeks to protect the attorney-client 
relationship by prohibiting all Federal agents and attorneys in 
a civil or criminal case from demanding such waivers. While the 
idea encompassed by the bill is sound, it lacks an enforcement 
mechanism to ensure meaningful restraint.
    I encourage the consideration of a sanctions provision to 
deter the willful Government violator.
    Ultimately and finally, perhaps the time has come for us to 
expend the same amount of energy spent on this privilege 
dialogue in establishing the standards and means with which to 
measure corporate compliance, governance and ethics programs 
and their adherence to the objectives of the Federal sentencing 
guidelines as legitimate factors for purposes of determining a 
corporation's cooperation instead of its willingness to 
jeopardize its future ability to conform to law through its 
renunciation of the attorney-client and work product 
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. Sullivan follows:]
             Prepared Statement of William M. Sullivan, Jr.

    Mr. Scott. Thank you.
    We have been joined by the gentleman from California, Mr. 
Lungren, and the gentleman from Massachusetts, Mr. Delahunt. 
Thank you for joining us.
    Ms. Mathis?

                 TESTIMONY OF KAREN J. MATHIS, 

    Ms. Mathis. Thank you. Good morning, Chairman Scott, 
Ranking Member Forbes, Members of the Committee and, of course, 
your staff members.
    My name is Karen Mathis. I am the president of the American 
Bar Association. I practice law in Denver, Colorado, with 
McElroy, Deutsch, Mulvaney and Carpenter.
    It is a great pleasure to be back with you today and to 
speak on this very important topic to all of us, on behalf of 
the American Bar Association and its 413,000 members, who feel 
very strongly that we must support the attorney-client 
privilege and the work product doctrine.
    It is a concern that we have about the language of the 
Justice Department's new McNulty Memorandum, and other similar 
Federal policies, that have seriously eroded these fundamental 
rights about which I want to speak with you today.
    We are concerned about the separate provisions in McNulty 
Memorandum that erode employees' constitutional and other legal 
rights, including the right to effective legal counsel.
    We are working in close cooperation with a broad coalition 
of legal and business groups. They range from the United States 
Chamber of Commerce to the National Association of Criminal 
Defense Lawyers to the Association of Corporate Counsel. And 
this is in an effort to reverse what we feel are very damaging 
and harmful policies.
    The Government's policy was established in 2003 in the 
Thompson Memorandum, modified, as you said, in 2006 in the 
McNulty Memorandum. And it does erode the attorney-client 
privilege and the related work product doctrine by pressuring 
companies to waive these protections--in most recent cases, in 
order to receive cooperation credit during investigations.
    The ABA is concerned that the Department's new policy will 
continue to cause a number of profoundly negative consequences, 
and I would like to list some of those.
    First, it will continue to lead to the routine compelled 
waiver of the attorney-client privilege and the work product 
protections. Instead of eliminating the improper practice of 
forcing companies to waive in return for cooperation credit, 
the McNulty Memorandum still allows prosecutors to demand 
waiver after receiving high-level Department approval.
    And, like the Thompson Memorandum, it gives these companies 
credit, if they voluntarily waive without being asked.
    Whether it is direct or indirect, these waiver demands are 
unjustified, as prosecutors only need the relevant facts to 
enforce the law, not the opinions and the mental observations 
of corporate counsel.
    Second, the McNulty Memorandum continues to seriously 
weaken the confidential attorney-client relationship in the 
corporate context, by discouraging companies from consulting 
with their lawyers and impeding the lawyers' ability to 
effectively counsel compliance with the law.
    Third, it will continue to undermine companies' internal 
compliance programs by discouraging them from conducting 
internal investigations designed to quickly detect and to 
remedy any misconduct.
    For these reasons, the new memorandum will continue to 
undermine, rather than enhance, compliance with the law.
    Last May, prior to the issuance of the McNulty Memorandum, 
the ABA sent a letter to Attorney General Gonzales, and we 
asked him to reform the Department's policies.
    Again, last September, such concerns were conveyed to the 
Department by former senior Justice Department officials. Both 
letters are attached to our written statement. And many 
congressional leaders have also raised the issue.
    Certainly in the hearings you referred to, Congressman 
Forbes, last March, virtually all the Members of this 
Subcommittee expressed strong concern about the preservation of 
the attorney-client privilege. And as you know, Senators 
Specter and Leahy have similarly echoed these concerns.
    It became clear that the McNulty Memorandum would not solve 
the problem the Government and we are calling--or I should say, 
we are calling--coerced waiver. And as you know, Senator 
Specter has introduced legislation in January, Senate Bill 186. 
The ABA and this coalition strongly support that measure.
    It is equally important that we enforce and protect 
employee legal rights, including the right to effective counsel 
and the right against self-incrimination. McNulty continues to 
erode these by pressuring the employers to take unfair punitive 
actions against employees during their investigations.
    While the new memorandum now generally bars prosecutors 
from requiring companies to not pay their employees' attorney 
fees, in many cases it does carve out a broad exception, which 
I would be happy to address in your questions. And by forcing 
companies to punish their employees long before their guilt has 
been established, the Department's policies continue to stand 
the presumption of innocence on its head.
    They overturn generally accepted corporate governance 
principles. And, as has previously been mentioned, they are 
constitutionally suspect under the KPMG case.
    For all of these reasons, we urge this Subcommittee to 
investigate and to promulgate proposed legislation, similar to 
S. 186.
    Thank you for your time.
    [The prepared statement of Ms. Mathis follows:]
                 Prepared Statement of Karen J. Mathis


    Mr. White. Good morning, Mr. Chairman, and thank you, 
Chairman Scott, Ranking Member Forbes, and Members of the 
Subcommittee and your staffs assembled. I want to thank you for 
the opportunity to appear before you this morning.
    I am testifying both as general counsel and on behalf of 
the more than 20,000 in-house counsels from around the world 
who are my colleagues as members of the Association of 
Corporate Counsel.
    The Association of Corporate Counsel members represent more 
than 9,000 corporate entities in the United States and in 55 
countries abroad, including public and private companies, large 
and small, profit and non-profit.
    I want to provide you the perspective of an in-house legal 
community on the current debate about Government policies that 
are eroding the attorney-client privilege, work product 
protections and individual rights in the corporate context. In 
particular, I want to make the following basic points.
    First, these protections are crucial to effective corporate 
compliance and ethics programs. Second, the McNulty Memorandum 
does not substantively change the Department of Justice's abuse 
of practices that have eroded these protections. And third, in 
the face of the DOJ's repeated refusal to fix these problems, 
legislation is indeed warranted.
    Mr. Chairman, from where I sit, these protections are 
essential to corporate compliance initiatives. As in-house 
counsel, we must gain the trust of employees and encourage them 
to routinely seek and follow our legal advice.
    Certainly, when it comes to compliance, we all want lawyers 
actively engaged in counseling employees. If employees believe 
that corporate counsel are simply conduits for delivering 
confidential information to prosecutors, attorney-client 
communications will be chilled, and compliance will ultimately 
    For this reason alone, preservation of these fundamental 
protections and rights should be non-negotiable. Unfortunately, 
I believe that recent Government policies have given rise to a 
culture of waiver that has put the continuing vitality of these 
longstanding doctrines in serious jeopardy.
    As noted in my written testimony, ACC finds fault with the 
McNulty Memorandum in the following respects.
    One, the memorandum's focus on formal written waiver 
demands essentially misses the point. My corporate colleagues 
know from experience that many Federal enforcement officials 
rely almost exclusively, in practice, on informal demands to 
persuade--indeed, at times to coerce--corporations to waive the 
attorney-client and work product protections.
    No formal demand is necessary, given this culture of waiver 
that the DOJ and other agencies have fostered in the past few 
    Two, the McNulty Memorandum's modest changes regarding 
reimbursement of attorneys' fees do not protect employees. As 
Karen has pointed out, the prosecutors are still permitted to 
trample on employee rights when it comes to effective 
assistance of counsel, when it comes to denying employees 
information for their defense, and the refusal to allow joint 
defense arrangements with employees.
    Three, the McNulty Memorandum's internal DOJ authorization 
procedures do not constitute meaningful and acceptable 
safeguards. On the rare occasion a prosecutor ever makes a 
written waiver demand, merely requiring authorization from 
another prosecutor in the same Department does not constitute a 
meaningful protection of the attorney-client and work product 
    Despite the desire and efforts of ACC members to have the 
Department of Justice itself fix the problem it created, the 
Department repeatedly has refused to address or even 
acknowledge that the problem exists.
    Notably, even today, reports from in-house and outside 
counsel suggest that a prosecutor's conduct has not changed 
during the months since the issuance of the McNulty Memorandum. 
These reports at this juncture are anecdotal, but, indeed, from 
our standpoint, persuasive.
    They suggest that there have been statements from a 
prosecutor that the request for a waiver predates the McNulty 
Memorandum and, therefore, is sort of grandfathered under 
Thompson. We do not believe that such artful dodges should be 
part of the system of justice that we all know and respect.
    Above all, we strongly support a legislation that would 
prohibit Government officials from formally or informally 
requesting a waiver of these protections. There has been 
reference to Senate bill S. 186, which, as part of the 
coalition, we indeed support.
    In the final analysis, whether the McNulty opinion and 
memorandum stands will depend on how you balance the real 
voluntary nature of the privilege in the first place. It is 
either voluntary or it is not, and should not be given up 
simply because the memorandum says that it is a precondition to 
    Thank you very much.
    [The prepared statement of Mr. White follows:]
                 Prepared Statement of Richard T. White

    Mr. Scott. Thank you, Mr. White.
    We will proceed under the 5-minute rule with questions, and 
I will begin. I recognize myself for 5 minutes.
    Mr. Sabin, should a corporation be punished for exercising 
its constitutional right to attorney-client privilege?
    Mr. Sabin. No.
    Mr. Scott. If there is a difference in consideration for 
those that waive and those that do not, isn't there, therefore, 
a punishment for those that do not waive their right?
    Mr. Sabin. No, it is a voluntary decision by the corporate 
entity whether or not to waive and disclose that information.
    Mr. Scott. And will they be given positive, beneficial 
consideration for waiving their right to attorney-client 
    Mr. Sabin. Yes. A corporate entity that cooperates with the 
Government investigation and waives that privilege, as one 
subfactor of the nine factors set forth in the McNulty 
Memorandum, that would be positively considered as part of the 
overall analysis of corporate criminal charging policies.
    Mr. Scott. And those that do not waive are not given that 
consideration, that little subfactor consideration?
    Mr. Sabin. The distinction between category one and 
category two information, the----
    Mr. Scott. But, I mean----
    Mr. Sabin [continuing]. The declination of a corporate 
entity not to provide legal analysis or opinions or mental 
impressions, explicitly stated in the McNulty Memorandum, will 
not be considered against that corporate entity.
    Mr. Scott. But, I mean, those that waive the privilege will 
be given beneficial consideration. Those that do not will not 
be given beneficial consideration. Therefore, there is a 
differential in consideration between those who waive and those 
who do not.
    Mr. Sabin. The fact that----
    Mr. Scott. So, those that do not are, in effect, punished.
    Mr. Sabin. I disagree with that conclusion.
    We consider positive cooperation as part of the analysis in 
the McNulty Memorandum as to whether, in the totality of the 
circumstances, how the Government should decide whether to 
charge or not charge a corporate entity.
    Mr. Scott. Do you ever ask individuals to waive attorney-
client privilege for the purpose of getting beneficial 
    Mr. Sabin. The McNulty Memorandum addresses the corporate 
context. It is separate relating to the individuals. I believe 
that practice has occurred, yes.
    Mr. Scott. Did people get beneficial consideration for 
waiving their attorney-client privilege in a criminal case?
    Mr. Sabin. I cannot speak to that, you know, grounded in 
any particular experience. But the fact that, say, a person in 
a drug case and we are investigating the extent and 
pervasiveness of that activity, or in a mafia prosecution and 
that is waived, I think that that would be a positive 
consideration for that individual, again, distinct from a 
corporate analysis.
    Mr. Scott. If there is beneficial consideration, why would 
that not be considered coercion to waive your privilege?
    Mr. Sabin. Because the privilege is the corporate entity's 
whether to waive or not. It is within their discretion whether 
to proceed in that fashion or not. It is not the Government 
either routinely asking for it or demanding it. That is not our 
guidance; that is not our practice.
    Mr. Scott. Thank you.
    Ms. Mathis, you indicated that you wanted some time to 
address the exception?
    Ms. Mathis. Thank you, Congressman.
    If your staff and you would take a look at footnote three, 
which appears on page 11 of McNulty Memorandum, you will find 
that, when the totality of the circumstances show that a 
corporation's advancement of its employee's legal feess is 
intended to impede a criminal investigation, then the 
attorney--the U.S. attorney--may, on the U.S. attorney's own 
say-so, direct a corporation not to pay those attorneys' fees.
    The effect of this footnote, sir, is that you have a back 
door to stopping a corporation from paying an employee's legal 
fees that is big enough to fly a C-140 through.
    All you have to do as a U.S. attorney is say that, looking 
at the totality, there was intent to impede a criminal 
investigation, and then the employee's legal fees cannot be 
    So, in this particular instance, one has to really question 
whether McNulty has advanced the cause of an individual's 
constitutional rights to legal counsel or not.
    Mr. Scott. Thank you. I yield back.
    Mr. Forbes?
    Mr. Forbes. Thank you, Mr. Chairman.
    Again, I want to thank each of you for taking your time and 
being here today. We wish we had the time to chat with you 
individually, because you bring so much expertise to the table, 
but we are limited to 5 minutes.
    You know, one of the issues that we hear raised here this 
morning--there is a little bit larger issue that I have been 
concerned about. And that is kind of the abuse of prosecutorial 
discretion we have seen that--and it is not just on the Federal 
level, it is on the State level.
    We have a lot of wonderful prosecutors, just like we have a 
lot of wonderful law enforcement officers, but we have to 
always look at those abuses in those situations where it is not 
justice we are looking at, it is just more prosecutions.
    And the weight of the resources that can be brought against 
a corporation or an individual can just have enormous 
intimidation factors, and sometimes we do not always get to 
    Mr. Weissmann, that is why I was really interested in one 
of your comments about the need for us to have more oversight 
in the charging decisions against corporations and individuals. 
I wonder if you could just elaborate on that just a moment for 
    Mr. Weissmann. Yes. First I should say, as an assistant 
United States attorney for 15 years and serving on the Enron 
task force for about 3.5 years, I got to see first hand an 
enormous array of talent at main justice and people who have 
experience in making the determination about how to treat 
    The problem of white-collar crime is, in many districts, 
relatively new in light of what happened at Enron, so that you 
have a number of U.S. attorneys offices now wading into a field 
that they frankly did not have a lot of experience in prior to 
    I think it is important to have a system where people at 
Main Justice are evaluating how those decisions are made, 
because corporations are largely national, if not 
international, in scope. And it should not be the case that a 
company has to worry about the vagaries of whether a prosecutor 
in one part of the country is going to be applying a very 
different standard than in another part of the country.
    In many ways this applauds the Thompson memo and the Holder 
memo before it and the McNulty memo, because it is saying that 
there are valuable aspects to those policies, but I think, if 
you ask practitioners, they will tell you that they are not 
applied uniformly, by a long shot, around the country.
    Mr. Forbes. Mr. Sullivan, I was interested in your 
testimony where it seemed to indicate that prosecutors were 
actually requesting a waiver before there was even a 
determination as to whether or not there was a crime that was 
    Has that been your experience?
    Mr. Sullivan. In all fairness, Mr. Forbes, prior to the 
promulgation of the McNulty memo, I had been in the first meet-
and-greet meetings with representatives of the Government upon 
my first engagement, when I was asked if I would be sharing the 
results of my internal investigation.
    And the questions went so far as to ask whether or not I 
was representing the corporation, or whether I was a third-
party investigator, suggesting that from the very first, even 
if I were paid by the corporation, that I would be an 
individual who would not have a privilege relationship with 
that corporation. And the suggestion was it might be better if 
I was an independent contractor, as opposed to an advocate.
    I took great pains in those discussions to explain to the 
Government that I could be forthright and candid with them, 
that I would proffer to them hard, factual information, that I 
would not try to spin the story, but I could do that as being 
an advocate for the corporation itself.
    Mr. Forbes. And you could always deal with getting around 
the problem, if you wanted to, by offering the proffer in a 
situation like that, without having to provide a waiver.
    Mr. Sullivan. I began most of these discussions by 
proffering as an attorney.
    Post-McNulty, I have still been badgered by the Government 
demands that my corporation, my client, my company compel the 
provision of witness statements from employees under threat of 
    Now, this is in direct opposition to the Garrity case, 
which compels that the Government cannot pursue such leverage 
or intimidation tactics with their own employees. Someone who 
refuses to speak or invoke is not going to be threatened with 
    I have had such requests literally within the past month.
    Mr. Forbes. My time is about up, but Ms. Mathis and Mr. 
White, in case we do not get another round, could you follow 
up, maybe, with something in writing if you have experienced 
the kind of prosecutorial abuse in certain situations, and what 
your recommendations might be on how we can get a balance on 
that, and suggestions for that.
    It is something we are very much concerned about, and I do 
not know if I will have time to get your answers in, but you 
can try.
    Ms. Mathis. Congressman, let me just, if I may, reflect on 
something that Mr. Sabin said earlier. And that is that, since 
McNulty, there have been no formal requests.
    And what we think is happening, but there is no hard 
evidence, because it is not being kept by DOJ, is that what is 
happening now is it has gone underground, and there now are 
implicit requirements that they be waived.
    And as the Chairman said earlier, if you are both at a 
standstill, but one person is given an advantage, whether it is 
in a golf game or around an oval track, then somebody has got 
an advantage. And the person who is left back here is left in 
the dust. And that is one of the main problems with McNulty.
    We would be happy to supplement our testimony.
    Mr. Forbes. Thank you.
    Mr. White. We will be happy to do so.
    We are getting anecdotal calls and reports from some of our 
members, who are saying that the practice is vastly different 
from the language of the McNulty Memorandum. It is more 
informal than formal.
    Mr. Forbes. Well, thank you. My time is out.
    Thank you, Mr. Sabin. I hope I will get some more questions 
later for you.
    Mr. Scott. Thank you.
    Mr. Conyers?
    Mr. Conyers. Thank you, Mr. Chairman.
    You know, this is a pretty one-sided hearing, in a way, for 
Mr. Sabin. You see, when bipartisanship comes together, things 
get pretty rough, don't they? Because, this is pretty----
    Mr. Sabin. I appreciate the opportunity to be here and have 
that dialogue.
    Mr. Conyers. Yes. Well, I want to try to lighten the 
environment for you, because I kind of sense which way this 
train is moving here.
    And before we start, I think we are in an almost corporate 
crime wave. There is nobody that wants to get on top of some of 
the criminal activity that has been going on the last, past 
number of years than I do.
    But the advantages and the below-the-radar activity that 
the Department can engage in is pretty clear. You can write 
this in red letter law all you want.
    But it is what--you know, when the U.S. attorney sits down 
with an attorney defending someone, they do not read back the 
Federal Code to each other. ``You get the drift,'' as they say 
on the streets.
    And so, what is happening right now is that we are 
overtaking a small, but important part of creating the level 
playing field. And that is what interests me so very, very 
    When you get the American Bar Association and dozens of 
organizations--progressive, conservative, corporate, civil 
rights--it seems to me--and I listen to the tenor of the 
discussion among our colleagues--we do not always get this kind 
of bipartisanship in the Judiciary Committee.
    So, I would just like to ask Mr. White and the president of 
the Bar, is there some way we can take this medicine, you know, 
calmly and understand? Why doesn't the attorney general see the 
light here? Or will this hearing help him?
    Mr. Sabin. Can I address that, sir?
    Mr. Conyers. Sure.
    Mr. Sabin. The attorney general actually spoke at the ABA 
white-collar crime gathering, conference, in San Diego last 
week and discussed the McNulty Memorandum with them.
    I am a member of the ABA. I am going down to chat with 
their litigation section next month. We appreciate the 
opportunity to talk through these issues.
    Mr. Conyers. That is great.
    Mr. Sabin. We are not----
    Mr. Conyers. Whereas, the president is right here three 
seats down from you. [Laughter.]
    Mr. Sabin. Okay. Well, I would say that, to the extent that 
there are suggestions that practice is different from reality, 
we have not heard about that. So, if there are specific 
    Mr. Conyers. Let me recognize her with the couple minutes I 
have left.
    Are there any ways that this different--everybody is 
supporting--I mean, you support the McNulty. But the fact of 
the matter is, it is not sufficient. Is that the correct 
    Ms. Mathis. Congressman, the American Bar Association 
believes, number one, in the basic jurisprudence concept of 
attorney-client privilege and all that in the common law it has 
done to backstop our judicial system and to provide very 
limited privileges.
    But the privilege is not that broad. It does not cover 
facts. It does not cover a number of things.
    And we think that within that privilege, and the way it has 
been structured and reviewed by our judicial officers--mainly 
judges--that it is sufficient for the purposes of Department of 
    It is so central to our system of Government that people be 
entitled to that, that to the extent McNulty and its 
predecessors violate those precepts, that they must be amended, 
and that, clearly, the way to do that at this point is through 
congressional legislation.
    Mr. Conyers. Absolutely.
    Richard White, would you like the last word?
    Mr. White. I certainly would agree with the ABA on that 
point, and would suggest to you that the attorney-client 
privilege is a privilege that should not be for sale, either 
for positive incentives or punitive responses. It is that basic 
to our system of justice and fairness.
    And it sort of hits me as somewhat peculiar that we would, 
under Sarbanes-Oxley and other appropriate legislative 
initiatives, require codes of conduct and ethical behavior in 
corporations and allow behavior that could be, under some 
circumstances, unethical and inappropriate to go on.
    Legislation is not only warranted, it is absolutely 
    Mr. Conyers. Thank you.
    Mr. Scott. Thank you. Thank you. The gentleman's time has 
    The gentleman from California, Mr. Lungren?
    Mr. Lungren. Thank you very much, Mr. Chairman.
    I mean, this issue came up about 2 years ago when Mr. 
Delahunt and I were concerned about it in the context of the 
Sentencing Commission's recommendations, where, even though I 
believe it was a footnote, nonetheless, it was very obvious 
that there were going to be consequences as far as judges were 
concerned, following the Sentencing Commission guidelines as to 
whether or not a corporation basically gave it up--I mean, gave 
up the attorney-client privilege.
    And we joined together, along with others, to make our 
views known to the Sentencing Commission, and the Sentencing 
Commission basically decided that they would not do that 
    So, the second phase of it is the Justice Department. And I 
see we have one, two, three, four separate memoranda that have 
been in succession on this--Mr. Holder's, Mr. Thompson's, Mr. 
McNulty's, Mr. McCallum's.
    And I guess I would ask one question to the four non-DOJ 
representatives here, and just, hopefully, a very short answer, 
because I only have 5 minutes, as well.
    Is there any improvement that you see as a result of the 
memorandum? That is, is the McNulty iteration of these 
memoranda an improvement for the Department?
    Mr. Weissmann?
    Mr. Weissmann. The short answer is that, in theory, it is 
an improvement; and in practice I have seen no change at all.
    Mr. Lungren. Mr. Sullivan?
    Mr. Sullivan. Frankly, it is a little early to tell.
    On the waiver side, there has not been any specific 
request. On the indemnification side there have been requests 
made to me to retain employees under threat of termination in 
order to compel their statements. That is a violation, 
    Mr. Lungren. Ms. Mathis?
    Ms. Mathis. It is not an improvement, Congressman. And one 
particular reason that it is not is, it has taken what might 
have been a formal request of a waiver--in other words, in the 
light of day--and it has put it back into an implicit request 
for waiver, where it is not as clear to see, nor will data be 
kept on it.
    But as the other witnesses have indicated, it is still 
ongoing, it is still pervasive.
    Mr. Lungren. Mr. Weissmann?
    Mr. Weissmann. I would agree with Ms. Mathis, that it is 
not an improvement. It is an attempt, but that is about all 
that it is. And our feedback is from our folks out in the 
field, that the practice continues underground.
    Mr. Lungren. Mr. Sabin, I mean, based on that I have got 
one person who believes it is an improvement in words, but not 
in theory, another who said it's being violated, one who said 
it is not an improvement and another one who said it is not an 
    The very fact that Mr. McNulty felt it necessary to issue a 
new memorandum, and then, with the memorandum that accompanied 
the memorandum from Mr. McNulty, in which he said, we have 
heard from responsible corporate officials recently about the 
challenges they face in discharging their duties to the 
corporation, while responding in a meaningful way to a 
Government investigation.
    Many of those associated with the corporate legal community 
have expressed concern that our practices may be discouraging 
full and candid communications between corporate employees and 
legal counsel.
    To the extent this is happening, it was never the intention 
of the Department for our corporate charging principles to 
cause such a result. And then indicates that they are, 
therefore, promulgating this new memorandum.
    What was the purpose of the memoranda? That is, the new 
memoranda? What do you say about those who say that, either it 
is insufficient, or that, while sufficient on its terms, it is 
being violated in its practice, or thirdly, that all it has 
done is driven these decisions underground?
    And I guess the last way to ask that last part is, what are 
you doing to enforce this? If, in fact, you believe in this 
memorandum, what would you do to respond to the complaint that, 
in fact, the memorandum is being observed in its breach?
    Mr. Sabin. We believe that the McNulty memorandum strikes 
the right balance with respect to our ability to thoughtfully 
and aggressively investigate corporate wrongdoing. We believe 
that it is an improvement.
    And back to Congressman Conyers' point, in terms of the 
long view of history, I believe that the Department's attempts 
to transparently and thoughtfully articulate the manner in 
which it goes about its corporate criminal charging decisions 
will be viewed as sound and well-placed and well-grounded.
    The prosecutors around the country--not only in Main 
Justice, but in the 93 U.S. attorneys offices--take their 
duties and responsibilities to enforce those laws and protect 
the American investing public extremely seriously.
    We are not seeking to obtain waivers as a routine matter. 
We are not seeking to abrogate constitutional violations.
    We are seeking to ensure that we have full and complete 
understanding of a factual nature, in order to make appropriate 
charging decisions as to the corporate and business entity.
    With respect to our means of enforcing it, we have had 
training and guidance, and continue to have such distributed to 
prosecutors, investigators and regulators around the country. 
Indeed, today, out in Salt Lake City, the securities fraud 
working group that is discussing with those entities how to 
ensure that there is complete and full and accurate compliance 
with it.
    Prosecutors understand those duties and responsibilities. 
And when guidance is provided by the Department's leadership, 
it is expected to be followed.
    To the extent that folks here have suggested that it has 
gone underground, or that there is something going on below the 
radar screen, we welcome the referral of those specific matters 
to obtain concrete, specific data to address that kind of 
either implicit or ``wink-wink, nod-nod'' activity.
    To the extent that what we have had in terms of specific 
data, is that prosecutors do care about what has been said--the 
career prosecutors around the country in economic crime 
sections and fraud sections, in the Criminal Division's Fraud 
Section, at Main Justice--the ability to enter into a real 
understanding of how to implement it and enforce it.
    We ask for that time to make sure that it is done 
thoughtfully and appropriately.
    We have had five matters where we have had specific 
requests for factual information, category one type, narrowly 
tailored requests for the waiver of information. And we have 
had that meaningful dialogue between the Criminal Division and 
the respective U.S. attorneys office.
    Mr. Lungren. Thank you, Mr. Chairman.
    I would just say that, I think you understand there is a 
bipartisan concern that, as we go after corporate corruption, 
we do not in any way create a prosecutorial culture of coerced 
waiver, because we happen to believe, on a bipartisan basis, 
that the attorney-client privilege is so important to the 
working of justice, the protection of American citizens, but 
also to promote actual legal compliance within a corporate 
    And I think you are going to find, on a bipartisan basis, 
we are going to continue to look at this and to see how it 
falls out. So, I thank you.
    Mr. Sabin. I appreciate those comments, Congressman. And we 
agree. I agree absolutely with what you just stated.
    Mr. Scott. The gentleman from Massachusetts?
    Mr. Delahunt. I thank the Chairman.
    And I, again, concur with the observations by the gentleman 
from California. I am sure you are aware that Mr. Lungren and I 
actually penned an opinion piece.
    But he has asked the questions--he has preempted me, 
because those really were the questions that I was going to 
    Let me acknowledge to Mr. White and Ms. Mathis that, from 
my perspective, you know, the attorney-client privilege is such 
a core value of American jurisprudence, that even if it should 
lead to great frustration, it has to be respected. This is so 
vital to our system of justice.
    But let me pursue with Mr. Sabin. I mean, as a prosecutor--
and I know that Mr. Lungren was a former attorney general--we 
are very familiar with human nature.
    And human nature being what it is, aggressive prosecutors, 
who are passionate about a particular case or an investigation, 
eventually, in my opinion, will slip into that gray area where 
all of the training and all of the guidance simply do not, will 
not accomplish the kind of enforcement that I am sure you would 
like to see in terms of compliance. So, that is my problem.
    Now, if you want to talk about a sanction and maybe civil 
liability, personal liability, the ability to sue the 
Government, you know, that is a different kind of enforcement.
    Guidance and training is wonderful. But when there is a 
clear sanction--and I am not talking an administrative 
sanction, necessarily, but a sanction that could be brought in 
a court of law by a corporation--for those cases that seem to 
drift away from the explicit guidelines enumerated, now, that 
is a different situation.
    I would suggest that, if you went back to Justice and did a 
survey of assistant U.S. attorneys and others that are involved 
in this decision-making process, there would be real reluctance 
to accept that sanction--again, a real sanction. Because, I 
think it was Mr. White that--well, maybe it was actually 
yourself--that talked about, you know, reality and practice, 
there is a divergence there.
    And that is what I am particularly sensitive to, and I am 
sure members of this panel are, and as Mr. Lungren indicated, 
we will continue to monitor. But my own initial inclination is 
that--without revealing it in detail--is that Senators Specter 
and Leahy have an answer that I think respects the history of 
American jurisprudence.
    Mr. Sabin, you are more than welcome to comment. The last 
time I think you were here, we were discussing cockfighting, if 
I remember. [Laughter.]
    Mr. Sabin. Mr. Delahunt, you have a good recollection.
    Mr. Delahunt. Right. You were rather well-informed on 
that---- [Laughter.]
    Mr. Sabin. Well, I actually came up on a different topic. 
But since the other panel members were engaging in that, I 
think the Committee----
    Mr. Delahunt. You are a renaissance man in terms of---- 
    Mr. Sabin. I appreciate the kind words that you say there.
    The Department appreciates that concern. I am aware of your 
op-ed with Congressman Lungren. I am aware of your prior 
prosecutorial background, as well as Congressman Lundgren.
    We respect and understand the concern that has been 
    I would suggest that, let us look at the concrete, tangible 
data. Let us look at how it is implemented. Let's look----
    Mr. Delahunt. I understand. But, you know what? I mean, 
again the reality is, this data will only come in anecdotal 
form. And you welcome--and I am sure of your bona fides--
    But in the real world with defense counsel to make those 
references, there is a variety of motives that would dictate 
against that.
    I guess what I am suggesting is that it is really 
impossible in terms of defining a methodology that would give 
us that accurate data. And my own sense is that we just have to 
go on our sense of what the reality is and trying to understand 
human nature.
    Mr. Sabin. And I believe that prosecutors will follow 
Department directives, consistent with their ethical duties and 
responsibilities, to uphold the highest traditions and 
principle of the Justice Department.
    Mr. Delahunt. And I am sure the vast majority will. I am 
not suggesting otherwise.
    But we all know that there is always a percentage that will 
be so aggressive, that will extend--will go beyond the 
parameters and the boundaries that have been defined.
    And in our system of justice, the one thing that we cannot 
compromise is the integrity of the system, because when we 
begin to do that, we erode the confidence of the American 
people in our justice system.
    Mr. Sabin. Don't disagree, sir.
    Mr. Scott. Thank you. Thank you.
    The gentleman from Texas, Mr. Gohmert?
    Mr. Gohmert. Thank you, Mr. Chairman. I appreciate the 
opportunity for having this hearing. And I appreciated the 
Chairman of the full Committee's comments about the 
bipartisanship here in this Committee. We are pleased the 
Democrats would join us on this issue. And, anyway--a little 
inside joke. [Laughter.]
    Mr. Scott. Moving right along----
    Mr. Gohmert. But moving right along.
    Mr. Delahunt. That was a very futile attempt at humor from 
somebody from Texas. [Laughter.]
    Mr. Gohmert. But one of the things that has concerned me 
the last week is noting that perhaps just an inquiry about 
anything that may have to do with cases pending may be deemed 
as an ethics violation, or perhaps an obstruction of justice.
    So, I hope that the holding of this hearing does not rise 
to that level that we are all potentially obstructing.
    But, anyway, I have been concerned about the sentencing 
guidelines. Some of us remember when those were put in place, 
and the Supreme Court held that, absolutely, of course they are 
    And some of you, I am sure, remember an awful lot of 
Federal judges were very upset about that, but they got used to 
them. And then I did not hear a lot of complaints.
    And then the Supreme Court, since it is so consistent and 
they are so magnanimous in their incredible view of the law, 
came back and said, well, I do not know what we were thinking 
before, but it does not look constitutional to us now.
    But the problem is, you know, is the right of waivers were 
exacerbated in 2004. To have that even come up as a 
consideration, a waiver of the attorney-client privilege come 
up in a sentencing scenario--well, you talk about a chilling 
effect on the claiming of attorney-client privilege.
    And so, I have been a little out of the justice loop over 
the last few years, running for Congress and being here, and I 
am not familiar with whether or not there has been any effect, 
been any consideration at all, in the sentencing aspects, 
especially in view of Booker throwing out the guidelines.
    As you are probably aware, we have considered the last 
couple of years, some people have been proponents of inserting 
legislative guidelines. I have been one of those that were 
encouraging, when we were in the majority, let us hold up. I am 
hearing Federal judges say they are not sure they need them. 
Let us see how the data goes from the sentencing, and determine 
whether or not we really need to interpose like that.
    I still am not sure about that.
    I would like, maybe starting right to left.
    Mr. White, any comments, anything of which you are aware, 
cases in which you are aware, that the non-waiver of attorney-
client privilege may have been considered in any way in the 
sentencing aspect, because I am sure you would agree, that 
would have a dramatic chilling effect if it were. Right?
    Mr. White. Well, it would.
    But, Congressman, from a practical standpoint, the chilling 
effect occurs long before sentencing. From a practical 
standpoint, the chilling effect occurs when I have employees 
who are reluctant to come forward in a code of conduct, ethical 
program, because they are concerned that what they say to me 
will be silver-plated over to----
    Mr. Gohmert. Well, and I understand that. A lot of people 
have covered those issues. And I only have a few minutes, and I 
was wanting to get to the sentencing guidelines aspect.
    Mr. White. I think there are probably----
    Mr. Gohmert. But has it been----
    Mr. White. Sorry. I think there are probably others who, on 
the group here. I have not gotten directly involved in the 
sentencing aspect. And I think that Ms. Mathis and, perhaps, 
some of the outside counsel would have more to say about that.
    Mr. Gohmert. Thank you for your candor, Mr. White.
    Mr. White. I will just pass to them. Thank you.
    Mr. Gohmert. Thank you.
    Ms. Mathis?
    Ms. Mathis. Congressman, I think it is instructive to note 
that, after the U.S. Sentencing Commission decided to 
voluntarily withdraw their guidelines about privilege waiver, 
that the Commodity Futures Trading Commission did the same 
    So, I will tell you that my sense is that, by not coercing 
or asking for the voluntary waiver of the privilege, that it 
has not had a deleterious effect on the Sentencing Commission.
    The other point that I would make is that this is a little 
bit like shadow boxing, if I may, because the Department has 
said that, since McNulty, there have only been five requests 
for category one waivers, and there have been no requests for 
category two waivers.
    Now, if no one is asking for these waivers, then the 
question really does arise: What is wrong with legislation, 
which straight-out says that no agent or attorney of the United 
States may pressure a company or another organization to 
disclose confidential information protected by the attorney-
client privilege or work product doctrine, or to take some of 
these very draconian measures against its own employees?
    It is a rhetorical question.
    Mr. Gohmert. Well, my time is up and I still have not 
gotten an answer on whether or not--because, even though it is 
not a part of the guidelines, the guidelines are affected, as 
we have heard before. It doesn't mean that it is not being 
utilized. And so, maybe, if we have another round, I can get 
somebody to answer my question.
    Mr. Scott. Did you want to continue responding?
    Mr. Sullivan. I am happy to continue. I second what Ms. 
    Mr. Gohmert. Thank you, Mr. Chairman.
    Mr. Sullivan. I second what Ms. Mathis has said about the 
guidelines and the CFTC. I had a role in submitting information 
for purposes of the CFTC's report.
    I will try to directly answer your question by saying, in 
my experience, the sentencing guidelines, by virtue of the 
revision, there has not been a significant, or any impact, 
frankly, on any clients that I have had.
    If I may say one more thing. I am very aware of the buzzer. 
I have heard that before. I think we may be able to simplify 
this dialogue from the perspective of outside counsel.
    I am not here to suggest--and I don't think any of my 
brethren are, either--that waiver is not sometimes good and 
useful. The 1989 Salomon Brothers case, where the law firm of 
Wachtell Lipton decided to waive, in the face of pervasive and 
horrific facts, began the process.
    There are times to waive. If you have got a billion-dollar 
restatement and you represent the corporation, you might want 
to assist the Government for purposes of finding the 
individual, culpable wrongdoers.
    My point is, it is the corporation's privilege. It should 
be the corporation's decision. There should be no attempt to 
coerce on the part of the Government, and there should be no 
penalty for not waiving. It should be neutral, except if you 
choose to voluntarily waive; then you should be provided a 
    Mr. Weissmann. I have nothing to add, because I agree with 
Mr. White. The issue for corporate criminal liability is one 
that arises at the charging phase, because for a company it is 
all about not being charged.
    And given the enormous hammer that the Government has, if 
there is a factor, whether it is to penalize or to reward based 
on a waiver, whether it be category one or category two, they 
are going to waive, because it is not viewed as voluntary. They 
are going to do everything they can to get every possible 
benefit, because the indictment can kill the company.
    Mr. Sabin. One aspect that has not been discussed is 
deferred prosecution agreements, that the idea that there is 
this kind of cooperation, voluntary disclosure, or even limited 
disclosure with respect to the privilege, allows the Government 
to make informed decisions and to address not necessarily in 
charging with an actual criminal charge, but to have a deferred 
prosecution agreement as a result of that voluntary 
    So that addresses sort of the sentencing phase, which never 
actually gets to a sentencing phase, because you have a 
compliance agreement, you have a monitor. Depending upon the 
specific circumstances of a deferred prosecution agreement, 
that is one of the sort of spans between the charging nature 
and the sentencing phase.
    And the Department is continually working through those 
relationships with experienced and sophisticated corporate 
defense counsel.
    Mr. Scott. Thank you.
    Mr. Forbes and I had about one additional question, and 
then part of my question.
    Let me just make a statement that, Mr. Sabin, I think you 
indicated that there is, in fact, a difference in treatment 
between those who waive and those who don't, creating a 
    And that did not come as a surprise to everybody, because 
everybody knew that to begin with.
    And I have always been intrigued by the idea that you 
cannot charge extra for using a credit card. However, you can 
give a cash discount if you pay cash, creating a differential 
between those who pay cash and those who use credit cards.
    But somehow you eliminate that problem by, if you call it a 
discount, it is okay. If you call it a punishment or a 
surcharge, then that is not okay.
    The fact of the matter is, so long as there is a 
differential, you can call it what you want. The people who do 
not get--who do not waive are, in fact, put at a disadvantage, 
and some would call that punishment for not having waived.
    And if everybody knows that that differential is there, you 
do not have to say it, that's pressure.
    Now, my question is, to kind of put these kind of things in 
perspective, what difference does it make to a corporation to 
get the cooperation? How much less of a penalty may they get? 
What are we talking about in terms of qualifying for the 
    Mr. Sabin. Again, I reiterate, we are not--the Department 
of Justice is not pressuring corporations into waiving the 
privilege. We respect the privilege----
    Mr. Scott. Everybody knows there is a differential between 
those who do and those who do not.
    Mr. Sabin. We reward cooperation for category one 
information that has been provided, voluntary disclosure 
information that has provided.
    In many instances, that is crucial information to ferret 
out the wrongdoing that is undertaken by individuals in the 
corporate entity.
    Again, I go back to the larger picture. It is a nine-factor 
analysis, and cooperation is just one factor. And the waiver of 
the privilege and the shielding of culpable agents and 
employees are subparts of that totality of the circumstances 
    So, all those factors go into informed prosecutorial 
    Mr. Scott. I guess my question was, what difference does it 
make to a corporation to get that cooperative designation, as 
opposed to not getting that designation? How much benefit is it 
to the corporation?
    Mr. Sabin. And again, that is going to be fact-dependent 
    Mr. Scott. Well, I mean----
    Mr. Sabin [continuing]. Specific facts----
    Mr. Scott. Are you talking about the fine will be cut in 
half, they will not get time in jail? I mean, what difference 
does it make for----
    Mr. Sabin. I am not going to make a broad assertion as to 
the nature and extent of that.
    Mr. Scott. Okay, well, then let me----
    Mr. Sabin. It is going to depend upon the specific facts 
and circumstances involved. And then you go to the 
pervasiveness of the misconduct, the complicity of management 
in the misconduct, the history of the corporation relating to 
that. All those factors go into the prosecutorial decision-
    Mr. Scott. Let me hear from some of the corporate counsel, 
because those are the ones that are considering whether or not 
it is worth waiving.
    Mr. Sullivan?
    Mr. Sullivan. Thank you, Chairman Scott.
    The key issue for corporate counsel, for purposes of 
engaging with the Government in the light of potential 
misconduct, is to avoid a corporate indictment.
    My testimony did not discuss, but written materials do, why 
I think--and this is probably a topic for another hearing--my 
corporation should only in exceedingly rare circumstances ever 
be indicted.
    But nevertheless, the corporate company's indictment has 
dramatic, draconian ramifications. Its business suffers. Its 
stock price falls. Employees leave--well before conviction, 
well before there has been a determination of guilt beyond a 
reasonable doubt.
    So, that is the dynamic that corporate counsel fight to 
preclude, almost at all costs.
    And as I said before, if bad facts are pervasive, you need 
to engage to avoid an indictment. That is the Wachtell-Salomon 
    If there is gray area, as I said in my opening statement, 
my obligation is to understand that the preponderance of--I am 
sorry--that the guilt beyond reasonable doubt and the 
presumption of innocence still applies in these contexts. And I 
need to understand the facts and to establish a credible 
    It is the gray area cases where, if I choose not to waive, 
I should not be penalized.
    Mr. Scott. Mr. White?
    Mr. White. Mr. Chairman, if a company is asked to waive, 
even before the investigation is complete, the value or the 
differential that you were talking about of waiving or not, 
cannot even be assessed by the company.
    So a knowing and/or intelligent waiver really does not take 
place at that level. You just waive or you do not get the 
benefit slash punishment.
    Mr. Scott. Thank you.
    Mr. Forbes?
    Mr. Forbes. Thank you, Mr. Chairman.
    Once again, I just want to thank all of you.
    And, Mr. Sabin, thanks for holding up under fire here. We 
want to make sure you know that we appreciate the great job 
that you and your office do in so many areas. We are just 
trying to get that balance and make sure we are protecting 
these rights.
    Mr. Sullivan gave a great summary of the whole waiver 
issue, I think, just a few moments ago.
    Mr. Sullivan. Thank you, Mr. Forbes.
    Mr. Forbes. And we really thank you for that.
    And I think what Mr. White and you are both saying is that, 
really, in a corporate situation the indictment really is the 
sentence. And so, by the time you get there, the game is pretty 
much up.
    Mr. Sabin, we have talked about the concrete evidence that 
you would like to have, and I think everybody knows, they are 
not going to be able to get you that. And maybe that is 
something that your office could look at. Maybe you are doing 
    But even getting data like the number, or keeping track of 
the number of waivers that are taking place, and doing them by 
district, so that maybe that gives us some patterns we can look 
at. And maybe you are doing that. I don't----
    Mr. Sabin. That is explicit in the memorandum----
    Mr. Forbes. That was the----
    Mr. Sabin [continuing]. To maintain written records and to 
have those records available----
    Mr. Forbes. Maybe----
    Mr. Sabin [continuing]. Both in the U.S. Attorney's 
    Mr. Forbes. If we could get a look at those at some point 
in time, maybe that kind of could help us, sir, see----
    Mr. Sabin. Well, I am not going to----
    Mr. Forbes [continuing]. The numbers. I understand.
    Mr. Sabin. But I am----
    Mr. Forbes. I am just throwing it out, what helps.
    Ms. Mathis, a final question for you. We are trying to get 
that pendulum swing right. We do not want to go as far as our 
friend, Mr. Delahunt, was raising in terms of civil penalties.
    I know the ABA supports Senator Specter's legislation.
    What is the mechanism for enforcement in that legislation, 
and what does the ABA recommend as an enforcement mechanism 
that strikes that proper balance?
    Ms. Mathis. Congressman, let me talk about it in general 
principles, because my understanding is that Senate bill S. 186 
does not specifically have an enforcement mechanism.
    Mr. Forbes. But are you okay with that? I mean, do you feel 
that just having it in the legislation will be enough without 
any enforcement mechanism?
    Ms. Mathis. The ABA's position is that, it is important for 
the Congress, both houses, to put their own stamp on 
legislation, and that what you feel comfortable with is what 
you should do.
    But with regard to these types of prosecutorial misconduct, 
the common law has handled them often, by allowing the judicial 
officer--the judge in the case--to determine. And so, that is a 
general precept that the ABA is supportive of.
    However, if your legislation provides specific sanctions, 
we would be happy to work with your staff to look at what would 
fit within the normal contextual balance, as you point out, 
between the prosecutorial duties, and also the attorney-client 
    Mr. Forbes. But you are pretty comfortable with leaving it 
up to the way the common law has handled it with discretion to 
the judge.
    Ms. Mathis. Yes, so the judge could deal with it, yes.
    Mr. Forbes. Thank you all so much. Mr. Chairman, thank you.
    Mr. Scott. Thank you.
    Mr. Gohmert, do you have other questions?
    Mr. Gohmert. Yes.
    Mr. Scott. Okay, thank you.
    Mr. Gohmert. Thanks.
    I thought the gentleman's analogy about gas prices with use 
of credit card, use of cash, was a great illustration.
    And I guess what I was trying to get to earlier, I 
understood all the other testimony. But if it were to come up 
at all in sentencing that this person either waived or didn't 
waive, then there's potential for effect there.
    But just quickly, on the issue of sanctions, and Ms. 
Mathis, I think you made a great point that, it seems in so 
many areas of the law, if you just give the judge the power of 
enforcement, then it takes care of itself.
    In Texas, several--and I had felonies and I had major civil 
litigation as a judge. But I liked the discovery rule that 
finally it came to, because there had been so much abuse.
    But a discovery rule that gave the judge latitude to either 
prevent witnesses from testifying as a form of sanction, 
prevent certain evidence from coming in as a form of sanction, 
or in the worst case scenarios, forcing--just outright 
    What do you think about some form of sanction in a rule 
like that? If I could get comments.
    Ms. Mathis?
    Ms. Mathis. Congressman, it seems that those are exactly 
the kind of sanctions in terms of increasing bad effects, 
consequences, of the request for a waiver or the use of 
material that came from a waiver.
    I also concur with the statements that Mr. Sullivan has 
made earlier. It may well be in a corporation's best interest, 
but it should be in their interest to waive.
    But if a judge were to find that there was pressure for 
them to waive, then it would need to be done early. And I think 
that is something we have to remember, that it may not be at 
the point of going into a trial. It may be at the point of 
    And so, we would have to think about how would a judicial 
officer be involved prior to that indictment coming to the 
    Mr. Gohmert. Well, if it were prior to indictment, or at 
the time of potential indictment, I am not sure I can envision 
different degrees. You know, either you get to indict or you do 
not. And I understood the great point about sometimes an 
indictment is a death penalty to a corporation.
    Do you agree that different degrees of sanctions would be 
good for the judge to have?
    Ms. Mathis. In general, I am all for the judicial officer 
being able to have the full spectrum of opportunities for 
    Mr. Gohmert. Yes. Not just a death penalty, throw the case 
out or leave it. Yes.
    But at the time of potential indictment, do you see any 
other degrees that I am missing, other than either you don't 
get to return the indictment or you do? Are there any other 
measures that could be taken?
    Ms. Mathis. I am going to pass that one, if I may, to Mr. 
    Mr. Gohmert. Mr. White?
    Mr. White. Thank you, Karen.
    I am not sure I appreciate the pass, but I will give a pass 
at it. [Laughter.]
    Again, I will hearken back to one thing that Karen did say, 
and that is that we believe--I believe--that there is enough 
not only intellect, but commitment--and apparently bipartisan 
commitment--to establish an appropriate enforcement principle, 
whether the principle is one of referring to the discretion of 
the court to do certain things on a pre-indictment basis, 
should it be found that there's been some form of coercion, and 
that a right as trusted and as vulnerable as the right to 
attorney-client confidentiality has been breached.
    It would seem to me that that could become even a separate 
matter for inquiry in an appropriate prosecutorial way.
    And I would suggest to you that there may even be ethical 
requirements for prosecutors who are aware that another 
prosecutor may have violated a constitutional right of someone 
to have the duty to step forward and do something about it. 
That is on a pre-indictment basis.
    On a post-indictment basis, you know, the bell has already 
rung. And it would seem to me that a court could take notice of 
inappropriate behavior and act accordingly, either suppress 
certain evidence or impose certain sanctions, or some of the 
other things that you mentioned.
    Mr. Gohmert. Mr. Sabin, do you see different degrees of 
potential sanction, even at the early indictment stage?
    Mr. Sabin. I would not concede that there is factual 
evidence that prosecutorial misconduct is occurring in this 
area, such that there should be a need for sanctions to be in 
    We have the Office of Professional Responsibility for 
egregious misconduct violations, if and when they should occur.
    But to go back to the premise, I would strongly disagree 
that there is, as suggested here, some kind of concerted or 
widespread prosecutorial misconduct, requiring this Congress 
    Mr. Gohmert. And I appreciate that, Mr. Sabin.
    And I understand that. And I actually appreciate the DOJ 
taking this effort in order to try to minimize the potential 
for that kind of problem.
    But it still did not answer my question of whether or not, 
given that is the position, I do not have anything factual to 
start at this point.
    I am just saying, if there were a rule, would you like to 
have input? Are there different degrees of sanctions at the 
indictment stage?
    Mr. Sabin. Sure, in the theoretical----
    Mr. Gohmert. Do you realize you may not be in the DOJ come, 
you know, January or February of 2009.
    Mr. Sabin. I am a career prosecutor, sir. So, I look 
forward to a long----
    Mr. Gohmert. Well, you must have missed the hearing that 
was going on this week. [Laughter.]
    But that potential is out there.
    Mr. Sabin. The ability to link it to a judicial officer, 
when that, I do not see in the pre-indictment stage, other than 
in a grand jury context with a judge overseeing the grand jury 
having authority for some kind of misconduct, would have a 
triggering mechanism for a judicial officer to be involved.
    Absent that, how does a court get involved in something 
that is merely an ongoing investigation? I do not see how you 
can link those two, at that investigatory phase, link it up 
with a judicial officer.
    Mr. Sullivan. Mr. Gohmert, if I may?
    Mr. Gohmert. Well, I have to yield back to the Chairman at 
this point. I am out of time. But if the Chairman allows.
    Mr. Sullivan. Thank you, Mr. Chairman.
    In answer to your question and Mr. Sabin's response, I 
think at the pre-indictment phase, if there were a sanctions 
provision and it can be showed that an aggressive prosecutor 
violated that sanctions provision, you could move to dismiss 
the indictment.
    You could allege in that motion that improper 
considerations were undertaken and adverse inferences were 
drawn by the refusal of the corporation to waive, that the 
request to waive itself was improper.
    You could submit that, even post-indictment, if such a 
motion would fail, that information obtained, or potentially to 
be obtained, through that request would be excluded for 
purposes of the prosecution's case in chief.
    You could also suggest that the violating prosecutor be 
subjected to OPR--internal OPR investigatory review--as well as 
Bar sanctions, in accordance with the Bar jurisdictions where 
that person is admitted.
    So, I think there are a variety of efforts to be undertaken 
for purposes of chilling a willfully aggressive prosecutor who 
seeks to violate Senator Specter's proposal.
    Mr. Gohmert. Thank you, Mr. Sullivan. Appreciate that 
    Mr. Scott. I would like to thank the witnesses for their 
    Members will have an additional--if they have additional 
written questions, we will submit them to you, and ask you to, 
if we submit any additional questions, respond as quickly as 
    Without objection, the hearing record will remain open for 
1 week for the submission of additional materials.
    And without objection, the Committee stands adjourned.
    [Whereupon, at 11:10 a.m., the Subcommittee was adjourned.]
                            A P P E N D I X


               Material Submitted for the Hearing Record