[Congressional Record Volume 153, Number 1 (Thursday, January 4, 2007)]
[Senate]
[Pages S179-S183]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SPECTER:
  S. 186. A bill to provide appropriate protection to attorney-client 
privileged communications and attorney work product; to the Committee 
on the Judiciary.
  Mr. SPECTER. Mr. President, the legislation which I am introducing is 
the Attorney-Client Privilege Protection Act. This legislation was 
previously introduced in the 109th Congress.
  In 2003, the Department of Justice adopted the provisions of the so-
called Thompson Memorandum, which allowed prosecutors to request that 
companies under investigation waive their attorney-client privilege, 
and that, absent such a waiver, prosecutors may consider the company's 
refusal to waive privilege in the charging process. As a result, the 
legal and business community complained that, if the attorney-client 
privilege is not waived, the corporation and individuals may get a 
stiffer charge.
  The Department of Justice has recently revised the Thompson 
Memorandum, with Deputy Attorney General McNulty substituting what is 
now known as the McNulty Memorandum. Prior to the release of the 
McNulty Memorandum, I had a number of discussions with Department of 
Justice officials, and I thank the Department of Justice for the effort 
which they have made, but it is not sufficient. The new memorandum is 
inadequate in its protection of the attorney-client privilege.
  Although the McNulty Memorandum is inadequate in failing to protect 
attorney-client privilege, it does improve another part of the 
Department of Justice's prior procedure under the Thompson Memorandum, 
which effectively denied the payment of counsel fees so that people who 
were charged were unable to defend themselves without bankrupting 
themselves in defense. That provision of the earlier Thompson 
Memorandum was declared unconstitutional in a case in the Southern 
District of New York.
  Mr. President, again, I ask unanimous consent that the full text of 
my statement be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

            Attorney-Client Privilege Protection Act of 2006

       Mr. SPECTER. Mr. President, I seek recognition today to 
     introduce the ``Attorney-Client Privilege Protection Act of 
     2007,'' which remains necessary despite Deputy Attorney 
     General Paul McNulty's issuance of a new set of corporate 
     prosecution guidelines on December 12 of last year. Although 
     the new McNulty memorandum, which replaces

[[Page S182]]

     the memorandum issued by former Deputy Attorney General Larry 
     Thompson, makes some improvements, the revision continues to 
     erode the attorney-client relationship by allowing 
     prosecutors to request privileged information backed by the 
     hammer of prosecution if the request is denied.
       This bill will protect the sanctity of the attorney-client 
     relationship by prohibiting federal prosecutors and 
     investigators from requesting waiver of attorney-client 
     privilege and attorney work product protections in corporate 
     investigations. The bill would similarly prohibit the 
     government from conditioning charging decisions or any 
     adverse treatment on an organization's payment of employee 
     legal fees, invocation of the attorney-client privilege, or 
     agreement to a joint defense agreement. This bill will 
     hopefully force the Department of Justice to issue a 
     meaningful change to its corporate charging policies beyond 
     the changes in the McNulty Memorandum, which came ``a day 
     late and a dollar short'' according to Frederick Krebs, the 
     president of the Association of Corporate Counsel.
       There is no need to wait to see how the McNulty memorandum 
     will operate in practice. The flaws in that memorandum are 
     already apparent. Moreover, before the issuance of the 
     McNulty memorandum last month, the Thompson memorandum has 
     been undermining the attorney-client relationship in the 
     corporate context for nearly 4 years. In January 2003, then-
     Deputy Attorney General Larry Thompson issued a memorandum to 
     all Justice Department components throughout the United 
     States entitled ``Principles of Federal Prosecution of 
     Business Organizations.'' This memorandum, which was prepared 
     on the heels of the establishment of the President's 
     Corporate Fraud Task Force, set forth various factors for 
     federal prosecutors to consider when deciding to prosecute 
     corporations or other business organizations. The so-called 
     ``Thompson memorandum'' lists a corporation's ``cooperation 
     and voluntary disclosure'' as one of the chief factors to be 
     considered in making a charging decision.
       Just as the Thompson memorandum was issued with laudable 
     goals in mind, the McNulty memorandum was, no doubt, the 
     product of good intentions. Nevertheless, it continues to 
     threaten the viability of the attorney-client privilege in 
     business organizations by allowing prosecutors to request 
     privilege waiver upon a finding of ``legitimate need''--a 
     standard that should guide the most basic of prosecutorial 
     requests, not sensitive requests for privileged information.
       Just as the standard is inadequate, so is the level of 
     internal review. Although the McNulty memorandum establishes 
     some internal review for such waiver requests, it does so in 
     a way that diminishes the importance of a corporate client's 
     ability to communicate with its lawyers. The memo creates two 
     different categories of privileged information and provides 
     very little protection to client communications to the 
     attorney while providing significant protection and DOJ 
     internal review for attorney communications to the client. 
     The memo identifies the two subcategories of privileged 
     information as: (1) ``purely factual information,'' which 
     consists of witness statements, interview memoranda, factual 
     chronologies and summaries, and reports containing 
     investigative facts documented by counsel; and (2) attorney 
     advice to the client, including attorney notes, memoranda, 
     and notes.
       The first category of information, formally labeled 
     Category 1 information by DOJ, may be requested with approval 
     at the U.S. Attorney-level with consultation with the 
     Assistant Attorney General for the Criminal Division. The 
     consultation requirement is not defined in any way in the 
     memo. By failing to define what it means ``to consult'' with 
     the Assistant Attorney General, the McNulty memo fails to say 
     whether the Assistant Attorney General can overrule the U.S. 
     Attorney's decision. Unless there is a meaningful review of 
     the U.S. Attorney's decision, it is difficult to see how the 
     McNulty memo provides better safeguards for Category 1 
     information than the interim-McCallum memo, issued in October 
     2005, which mandated a U.S. Attorney-level ``written waiver 
     review process'' for all attorney client privilege waiver 
     requests.
       As noted above, the new McNulty memo does provide greater 
     protections for attorney advice and communication to the 
     client, which the memo labels ``Category 2'' information. The 
     McNulty memo protects Category 2 information in the first 
     instance by making clear that it may be sought only if the 
     prosecutor thinks Category 1 information provides an 
     incomplete basis for the investigation. If such a request is 
     deemed necessary, the request for Category 2 information must 
     be approved by the Deputy Attorney General.
       Although the McNulty memo provides greater protection for 
     Category 2 information, the memo does not explain why such 
     information will ever be needed by prosecutors outside of 
     attorney advice in furtherance of a crime or fraud or 
     where the advice is subject to an advice of counsel 
     defense, both of which are expressly exempted from the 
     waiver request process outlined in the memorandum. Thus, 
     the only two types of attorney advice that are likely to 
     be relevant in a criminal investigation are exempted from 
     the memo's coverage. With that exception, I fail to see 
     why Category 2 information is needed at all. Prosecutors 
     do not need to know what attorneys are advising their 
     clients unless the advice is in furtherance of a crime or 
     the client puts the advice in issue by raising it as a 
     defense.
       No less than the Thompson memo, the new McNulty memo 
     discourages corporate employees from having frank 
     conversations with lawyers, which makes it difficult for 
     companies who desire to prevent possible corruption from 
     making appropriate remedies. The Department of Justice will 
     not prevent corporate misconduct if it continues to 
     inadvertently discourage the types of internal investigations 
     and dialogues corporate officials need to detect and prevent 
     corporate fraud.
       In the next rewrite of its corporate prosecution 
     guidelines, the Administration needs to look in the mirror. 
     If the President refused to disclose documents or information 
     after invoking a claim of executive privilege, it would not 
     consider itself to be ``uncooperative.'' Rather, the 
     executive would simply be doing its job in representing a 
     client. Yet, when the tables are turned, the Justice 
     Department has memorialized a policy instructing its 
     prosecutors to discourage attorneys from doing their job 
     effectively.
       The right to counsel is too important to be passed over for 
     prosecutorial convenience. It has been engrained in American 
     jurisprudence since the 18th century when the Bill of Rights 
     was adopted. The 6th Amendment is a fundamental right 
     afforded to individuals charged with a crime and guarantees 
     proper representation by counsel throughout a prosecution. 
     However, the right to counsel is largely ineffective unless 
     the confidential communications made by a client to his or 
     her lawyer are protected by law. As the Supreme Court 
     observed in Upjohn Co. v. United States, ``the attorney-
     client privilege is the oldest of the privileges for 
     confidential communications known to the common law.'' When 
     the Upjohn Court affirmed that attorney-client privilege 
     protections apply to corporate internal legal dialogue, the 
     Court manifested in the law the importance of the attorney-
     client privilege in encouraging full and frank communication 
     between attorneys and their clients, as well as the broader 
     public interests the privilege serves in fostering the 
     observance of law and the administration of justice. The 
     Upjohn Court also made clear that value of legal advice and 
     advocacy depends on the lawyer having been fully informed by 
     the client.
       As a former prosecutor, I am acutely aware of the enormous 
     power and tools a prosecutor has at his or her disposal. As 
     former Supreme Court Justice and then Attorney-General Robert 
     Jackson stated in his 1940 speech to U.S. Attorneys, ``The 
     prosecutor has more control over life, liberty, and 
     reputation than any other person in America. His discretion 
     is tremendous. He can have citizens investigated and, if he 
     is that kind of person, he can have this done to the tune of 
     public statements and veiled or unveiled intimations.'' Thus, 
     the federal prosecutor has enough power without the coercive 
     tools of the privilege waiver, whether that waiver policy is 
     embodied in the Holder, Thompson, McCallum, or McNulty 
     memorandum. I see no need to have the Justice Department 
     publicly express a policy that encourages waiver of attorney-
     client privilege, especially where the policy is backed by 
     the heavy hammer of possible criminal charges. Cases should 
     be prosecuted based on their merits, not based on how well an 
     organization works with the prosecutor. As Justice Jackson 
     warned in the same speech, ``the most dangerous power of the 
     prosecutor [is] that he will pick people that he thinks he 
     should get, rather than pick cases that need to be 
     prosecuted.''
       Just as the Holder and Thompson memoranda before it, the 
     McNulty memorandum embodies bad public policy by empowering 
     federal prosecutors at the expense of the attorney-client 
     relationship. Consequently, I echo the comments of the 
     following organizations and individuals who have criticized 
     the McNulty memorandum:

     ``The Justice Department's new corporate charging guidelines 
     for federal prosecutors fall far short of what is needed to 
     prevent further erosion of fundamental attorney-client 
     privilege, work product, and employee protections during 
     government investigations.''--Karen Mathis, ABA President.

     ``While containing some improvements, this new policy does 
     not adequately protect the right to attorney-client 
     privilege, and unwisely ignores many of the recommendations 
     of former senior Justice Department officials, the American 
     Bar Association, and a massive coalition of some of the 
     nation's most prominent business, legal, and civil rights 
     groups.''--Stanton Anderson, U.S. Chamber of Commerce.

     ``The McNulty Memorandum still falls short of protecting the 
     attorney-client privilege, and the related work product 
     doctrine, which derives from it.''--Martin Pinales, 
     President, National Association of Criminal Defense Lawyers.

     ``[T]his memo is a day late and a dollar short. Asking 
     prosecutors to get permission before formally requesting that 
     companies waive their attorney-client privilege will not put 
     an end to the `culture of waiver' that exists within DOJ. Our 
     research shows that more often than not, requests for waiver 
     are not asked for outright, but are coercively inferred.''--
     Frederick Krebs, President, Association of Corporate Counsel.

     ``Deputy Attorney General Paul McNulty's memorandum is a 
     disappointment. It perpetuates the dynamic that compels 
     companies to ``voluntarily'' waive their rights in order to 
     get favorable treatment or to avoid the

[[Page S183]]

     death penalty of a federal indictment.''--Caroline 
     Fredrickson, Director, ACLU Washington legislative office; 
     George Landrith, President, Frontiers of Freedom; Stephanie 
     A. Martz, Director, White Collar Crime Project, National 
     Association of Criminal Defense Lawyers; Daniel J. Popeo, 
     Chairman, Washington Legal Foundation, in a letter to the 
     editor of USA Today.

       My bill amends title 18 of the United States Code by adding 
     a new section, Sec. 3014, that would prohibit any agent or 
     attorney of the United States government in any criminal or 
     civil case to demand, request or condition treatment on the 
     disclosure of any communication protected by the attorney-
     client privilege or attorney work product. The bill would 
     also prohibit government lawyers and agents from conditioning 
     any charge or adverse treatment on whether an organization 
     pays attorneys' fees for its employees or signs a joint 
     defense agreement.
       While I am glad that the Justice Department revised the 
     Thompson memorandum, I am hopeful that the Department will 
     act again to reform the McNulty memorandum. In the absence of 
     such action, this legislation is needed to ensure that basic 
     protections of the attorney-client relationship are 
     preserved.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 186

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Attorney-Client Privilege 
     Protection Act of 2007''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds the following:
       (1) Justice is served when all parties to litigation are 
     represented by experienced diligent counsel.
       (2) Protecting attorney-client privileged communications 
     from compelled disclosure fosters voluntary compliance with 
     the law.
       (3) To serve the purpose of the attorney-client privilege, 
     attorneys and clients must have a degree of confidence that 
     they will not be required to disclose privileged 
     communications.
       (4) The ability of an organization to have effective 
     compliance programs and to conduct comprehensive internal 
     investigations is enhanced when there is clarity and 
     consistency regarding the attorney-client privilege.
       (5) Prosecutors, investigators, enforcement officials, and 
     other officers or employees of Government agencies have been 
     able to, and can continue to, conduct their work while 
     respecting attorney-client and work product protections and 
     the rights of individuals, including seeking and discovering 
     facts crucial to the investigation and prosecution of 
     organizations.
       (6) Despite the existence of these legitimate tools, the 
     Department of Justice and other agencies have increasingly 
     employed tactics that undermine the adversarial system of 
     justice, such as encouraging organizations to waive attorney-
     client privilege and work product protections to avoid 
     indictment or other sanctions.
       (7) An indictment can have devastating consequences on an 
     organization, potentially eliminating the ability of the 
     organization to survive post-indictment or to dispute the 
     charges against it at trial.
       (8) Waiver demands and other tactics of Government agencies 
     are encroaching on the constitutional rights and other legal 
     protections of employees.
       (9) The attorney-client privilege, work product doctrine, 
     and payment of counsel fees shall not be used as devices to 
     conceal wrongdoing or to cloak advice on evading the law.
       (b) Purpose.--It is the purpose of this Act to place on 
     each agency clear and practical limits designed to preserve 
     the attorney-client privilege and work product protections 
     available to an organization and preserve the constitutional 
     rights and other legal protections available to employees of 
     such an organization.

     SEC. 3. DISCLOSURE OF ATTORNEY-CLIENT PRIVILEGE OR 
                   ADVANCEMENT OF COUNSEL FEES AS ELEMENTS OF 
                   COOPERATION.

       (a) In General.--Chapter 201 of title 18, United States 
     Code, is amended by inserting after section 3013 the 
     following:

     ``Sec. 3014. Preservation of fundamental legal protections 
       and rights in the context of investigations and enforcement 
       matters regarding organizations

       ``(a) Definitions.--In this section:
       ``(1) Attorney-client privilege.--The term `attorney-client 
     privilege' means the attorney-client privilege as governed by 
     the principles of the common law, as they may be interpreted 
     by the courts of the United States in the light of reason and 
     experience, and the principles of article V of the Federal 
     Rules of Evidence.
       ``(2) Attorney work product.--The term `attorney work 
     product' means materials prepared by or at the direction of 
     an attorney in anticipation of litigation, particularly any 
     such materials that contain a mental impression, conclusion, 
     opinion, or legal theory of that attorney.
       ``(b) In General.--In any Federal investigation or criminal 
     or civil enforcement matter, an agent or attorney of the 
     United States shall not--
       ``(1) demand, request, or condition treatment on the 
     disclosure by an organization, or person affiliated with that 
     organization, of any communication protected by the attorney-
     client privilege or any attorney work product;
       ``(2) condition a civil or criminal charging decision 
     relating to a organization, or person affiliated with that 
     organization, on, or use as a factor in determining whether 
     an organization, or person affiliated with that organization, 
     is cooperating with the Government--
       ``(A) any valid assertion of the attorney-client privilege 
     or privilege for attorney work product;
       ``(B) the provision of counsel to, or contribution to the 
     legal defense fees or expenses of, an employee of that 
     organization;
       ``(C) the entry into a joint defense, information sharing, 
     or common interest agreement with an employee of that 
     organization if the organization determines it has a common 
     interest in defending against the investigation or 
     enforcement matter;
       ``(D) the sharing of information relevant to the 
     investigation or enforcement matter with an employee of that 
     organization; or
       ``(E) a failure to terminate the employment of or otherwise 
     sanction any employee of that organization because of the 
     decision by that employee to exercise the constitutional 
     rights or other legal protections of that employee in 
     response to a Government request; or
       ``(3) demand or request that an organization, or person 
     affiliated with that organization, not take any action 
     described in paragraph (2).
       ``(c) Inapplicability.--Nothing in this Act shall prohibit 
     an agent or attorney of the United States from requesting or 
     seeking any communication or material that such agent or 
     attorney reasonably believes is not entitled to protection 
     under the attorney-client privilege or attorney work product 
     doctrine.
       ``(d) Voluntary Disclosures.--Nothing in this Act is 
     intended to prohibit an organization from making, or an agent 
     or attorney of the United States from accepting, a voluntary 
     and unsolicited offer to share the internal investigation 
     materials of such organization.''.
       (b) Conforming Amendment.--The table of sections for 
     chapter 201 of title 18, United States Code, is amended by 
     adding at the end the following:

``3014. Preservation of fundamental legal protections and rights in the 
              context of investigations and enforcement matters 
              regarding organizations.''.
                                 ______