Editor: Mr. Sullivan, please tell us about your background and professional experience?
Sullivan: I have been practicing law for 20 years. I began with a large firm in New York. One of my mentors there had been an Assistant United States Attorney for the Southern District of New York, and his enthusiasm for the experience prompted me to look at the position as a way to refine my litigation skills. The largest U.S. Attorney's Office in the country was the one in Washington, DC, which handled federal, state and local criminal matter, and I joined because of the opportunities it offered to investigate and then try cases early in my career. I was there for 11 years.
Editor: How did you come to Winston & Strawn? What were the things that attracted you to the firm?
Sullivan: Winston & Strawn has an international reputation, and The American Lawyer has ranked it among the top three or four firms in the country for litigation. Dan Webb, the head of the firm's litigation practice, has an exceptional talent, and the chance to work with him, and from a platform such as Winston's, was a great opportunity.
Editor: How has your practice evolved since reentering private practice?
Sullivan: Upon leaving the U.S. Attorney's Office, I had the opportunity to compete to represent the Special Committee on Accounting of the Board of Directors of Global Crossing. This entailed conducting an internal investigation of Global Crossing in light of representations made by former employees as to purported accounting irregularities. This occurred at the same time that Sharon Watkins testified on similar issues in the Enron case, and I came to represent one of the senior Enron executives in investigations undertaken by the SEC and the Department of Justice. Neither investigation ultimately implicated my client.
Since these matters, I have continued to receive calls from colleagues and from corporate counsel who have come to know of my work, and my practice has grown accordingly.
Editor: This past March you testified before the House Judiciary Committee's Subcommittee on Crime, Terrorism and Homeland Security on the attorney-client privilege and work product protection. For starters, what was the origin of your invitation to testify?
Sullivan: As I mentioned, my practice has evolved to include a considerable number of corporate representations, particularly with respect to SEC and DOJ investigations. One of my contacts - we worked together at the U.S. Attorney's Office - is chief legislative counsel for the House Judiciary Committee. He was aware of my work and thought it would be a good idea if I could share my views with the Committee. I accepted that invitation.
Editor: Would you give us some background on the Department of Justice's policies with respect to the attorney-client privilege and work product protection?
Sullivan: These policies originated in the Holder Memorandum, named for Eric Holder, U.S. District Attorney for the District of Columbia and subsequently Deputy Attorney General during the Clinton Administration. That evolved into the Thompson Memorandum, named for Larry Thompson, the subsequent Deputy Attorney General. These memoranda were instituted for the purpose of providing guidelines to federal prosecutors across the country in connection with the prosecution of business corporations. The most significant aspect of the guidelines had to do with the evaluation of cooperation from the company under investigation. One of the factors to be considered in determining cooperation was whether the company would waive the work product and attorney-client privileges to enable the government, at least in its view, to fully understand the transactions being reviewed. Needless to say, this generated a great deal of criticism and intense discussion.
There have been instances of companies waiving these privileges and being perceived to have cooperated with the investigation. Commentators, myself among them, have pointed out, however, that the waiver issue is but one of a series of considerations for prosecutors to evaluate for purposes of cooperation. Even if a company waives the privilege, there is no guarantee that it will thereby be deemed cooperative and avoid indictment.
Editor: Is it fair to say that a corporation is not necessarily being uncooperative if it chooses not to give up the privilege?
Sullivan: Absolutely. That was the gist of my testimony before the House Judiciary Committee. In my view, there are times when a company should cooperate. Defense counsel's primary consideration is to proceed in the best interests of his client, and there are times when that entails cooperation. Sometimes it is better to defend than to cooperate - the burden of proof and the presumption of evidence should not be overlooked in making this determination - but that appears to be lost in the message that the Department of Justice is sending here.
It is always critically important to evaluate whether a crime has been committed. If the attorney's judgment is that the client is well advised to cooperate, that can be accomplished without providing work product or attorney-client privileged communications. He can provide a factual outline of what he believes occurred, a list of those to be interviewed and key documents, but this can be done without handing over documentation on privileged internal discussions or memoranda containing legal impressions or conclusions. The key reason, of course, is that if this information is handed over, then the privilege is waived for third parties and hence becomes fodder for class-action attorneys to pursue derivative suits. Handing such material over also harms the ability of the company to self-police. If employees come to view in-house counsel as an arm of the government, they are not going to seek the advice of the legal department on any variety of sensitive issues. It also hinders the necessary candid relationship between in-house and outside counsel on how to advise the client.
Editor: What is driving the government's demand for waiver?
Sullivan: It is a post-Enron phenomenon. In recent years we have seen a number of companies engaged in illegal activities, including accounting frauds, huge financial restatements, embezzlement, self-dealing on the part of corporate insiders, corporate loans to insiders with no provision for repayment, stock option timing issues, and so on. The government was in a strong position when the initial investigations seemed to reveal corporate malfeasance, and in these circumstances, it appeared to be in the company's best interests to fully cooperate and disclose the findings of their internal investigations. After that information had been disclosed, the government took the position that it would be necessary to see documentation relating to discussions with counsel and interview notes to evaluate the thoroughness of the internal investigations. And, for the most part, the companies under such scrutiny complied.
Editor: What is at stake here? If the government succeeds in effectively forcing defense counsel to waive the attorney-client privilege what does the legal process lose?
Sullivan: The legal process loses the ability of counsel, both in-house and outside, to effectively counsel the corporation in the evaluation of critical issues and problems. If there is no confidence that the discussion between attorney and client is going to remain privileged, there will be no candor in the relationship. In order for the attorney to counsel his client effectively, he must be able to have a full and thorough discourse with his client, and that can only happen if it is privileged and remains so. That is what is at stake here.
In addition, the corporation must be able to self-police. That entire process is lost if it is open to scrutiny because no one is going to come forward to speak to counsel knowing that the discussion is potentially unprotected.
Finally, corporations would be unfairly subject to third party suits because, having opened their files to the government, those files are now available to all the world. Steven Cutler of the SEC proposed legislation providing for limited waivers, but it failed in Congress.
My idea would be to provide government investigators with a factual roadmap, including detailed information on documents and key players, but to leave the privilege in place. I believe that the government should be compelled to formulate their own legal arguments.
Editor: Is this what you meant, in your testimony before Congress, about "striking the proper balance?"
Sullivan: Everyone has an interest in seeing that criminal activity is investigated, pursued and prosecuted. Those who commit fraud injure a large number of people. On the other hand, there are ways to address this without exposing the company - its innocent employees, shareholders and corporate officers who have done no wrong - to potential catastrophe. Our entire sense of justice is offended when the entire group is punished for the misdeeds of a few, and by striking the proper balance - by providing government investigators with a roadmap that permits them to draw fair and full conclusions without providing work product or waiving the attorney-client privilege - we can avoid such an outcome and protect and ensure the benefits of corporate compliance in the long run.
By the same token, employees are often compelled to waive their Fifth Amendment rights - their Constitutional rights - by the employer on pain of termination. Although the government does not require its own employees to self-incriminate or face dismissal, it says such a step is appropriate in the corporate world. I do not believe that is correct. A balance should be struck between the government's interest in prosecuting criminal activity and the rights of individual employees which are entitled to Constitutional protection.
Under applicable rules of professional responsibility, corporate counsel has a duty to the company and to the employee, and when a conflict arises, I believe there is an obligation to advise the employee as to the conflict and to afford him his own counsel. That is essentially in the interests of basic fairness, and it is another aspect of what I mean by striking the proper balance.
Editor: How do you see this discussion evolving over the next few years?
Sullivan: The balance is starting to shift. Many have come forward to oppose the Justice Department's position, including the American Bar Association and the National Association of Criminal Defense Attorneys. The United States Sentencing Commission recently voted unanimously to eliminate language in the commentary to the Federal Sentencing Guidelnes that encourages corporations to waive attorney-client and work product protection to earn credit for cooperation. Based on that determination, I believe we are seeing a retreat on the government's part already. In my practice, I have begun to see government investigators less insistent with respect to the waiver. I believe we are headed toward a dynamic where the focus will be on getting the factual information the government needs, through the assistance of the corporation, without the disclosure of internal privileged information. In light of the very important step the Sentencing Commission has taken, I am hopeful that the Department of Justice will eventually follow suit.