Kaye Scholer Authors Treatise On Internal Investigations, Corporate Compliance And White Collar Issues

Thursday, November 1, 2007 - 01:00

Editor: What was the reason for creating the Deskbook on Internal Investigations, Corporate Compliance and White Collar Issues on behalf of PLI (The Practising Law Institute)?

Wallance: We wanted to create a single volume guide to white collar issues for both in-house counsel and white collar defense attorneys. The Deskbook accordingly covers a broad range of procedural and substantive issues. The 14 chapters include such topics as internal investigations and related privilege preservation issues, multiple representations in grand jury investigations, corporate compliance programs, leniency programs, deferred prosecution agreements, and such substantive topics as FCPA, defending drug and medical device manufacturers, money laundering, and perjury traps in grand jury investigations.

Editor: What kind of practical guidance does the Deskbook provide?

Wallance: Each of the chapters includes practical guidance, such as the dos and don'ts of negotiating deferred prosecution agreements or practical measures to avoid waiver of privilege in internal investigations. We also use high-profile cases - such as the Martha Stewart prosecution as regards assertion of the Fifth Amendment in SEC investigations, or the Kenneth Starr report regarding alleged perjury by President Clinton - to examine problems that can arise in representing clients in many white collar cases. At the same time, the Deskbook contains more than 400 legal citations, plus extensive appendices of documents, such as the Organizational Sentencing Guidelines and other useful resources for practitioners.

Editor: What hot topics in white collar representation does the Deskbook address?

Wallance: The Deskbook was originally scheduled for publication in mid-December 2006, but the McNulty Memorandum was promulgated on December 12, so we delayed publication to include a discussion of the McNulty Memorandum and whether it represented a significant change in the Department of Justice's charging policy.We had our doubts: "Whether the McNulty Memorandum, in fact, reduces the pressure on companies to waive privilege in order to benefit from cooperation remains to seen. Despite acknowledging the importance of attorney-client and work product protections, the DOJ nonetheless reserves the right to penalize companies who decline to produce the broadly-defined Category I information, while rewarding those companies that voluntarily produce Category II information." Notwithstanding the McNulty Memorandum, in Congress and in important segments of the legal community there has been significant concern that companies are still under pressure to waive these privileges and protections. Indeed, the fact that Congress may enact legislation to bar privilege waiver as a consideration in charging decisions suggests that our assessment was on the mark. We also devote a chapter to the emerging trend in favor of deferred prosecution agreements. and we discuss the impact of Sarbanes-Oxley on document retention policies, to cite just a few examples.

Editor: Why devote chapters to such issues as forfeiture and debarment, and part of the compliance program chapter to state employment laws? Aren't those topics of principal interest to specialists?

Wallance: The overarching theme of the Deskbook is that white collar attorney's representation - of corporations, especially - is multi-disciplinary. An internal investigation cannot be undertaken without a thorough understanding of privilege issues; a compliance program cannot be established without understanding state employment laws governing such matters as background checks on job applicants or whether an arrest record can be ground for refusing employment; and a plea cannot be negotiated or a corporation risk a trial without understanding the consequences of debarment and how to ameliorate such a risk.

Editor: We noticed that the Deskbook is critical of deferred prosecution agreements ("DPAs"). Why is that?

Wallance: In the last several years, prosecutors have started using DPAs aggressively. Moreover, companies have increasingly complied with the structural reform demands set forth by prosecutors in the DPAs in order to avoid the negative publicity and possible criminal and civil liability that a formal indictment may invite. The problem with the aggressive use of DPAs is that it gives prosecutors a greater role in corporate governance than they were ever intended to have. Prosecutors are trained to prosecute criminal cases - they make allegations and attempt to prove their case in a court of law. They do not have the expertise or the same type of responsibility that corporate directors have for corporate governance. Laying out a detailed and onerous plan for reform, particularly in the corporate context, should be a rare occurrence reserved for the courts (both criminal and civil) and, of course, the corporate directors and officers.

Editor: Would a prosecutor find anything useful in the Deskbook?

Wallance: I think many prosecutors are still prone to misinterpret company responses to a criminal investigation. The Deskbook might help them better understand, for example, that indemnifying employee legal costs or asserting privilege is not necessarily a reflection of an unwillingness to address the prosecutor's concerns in a responsible way. The indemnification of employees may be required by law or the company's by-laws, but even when it's not, it may only reflect the company's own sense that, as a matter of fairness, its employees should have adequate counsel. Asserting privilege usually reflects the company's legitimate concern that a waiver will only enable plaintiffs' lawyers, not known for their altruistic motives, to obtain leverage over the company.

Editor: What is the most important ethical issue addressed by the Deskbook?

Wallance: There are a number of ethical issues addressed in the Deskbook that frequently arise in white collar representations, but one of the most important ones is the issue of multiple representation by one lawyer or law firm of the company and one or more of its employees.The multiple representation issue is especially tricky at the outset of the representation when the facts may not suggest wrongdoing by the employee - i.e., there are no apparent diverging interests between the employee and the company - and dual representation can avoid substantial legal fees.But, no one can predict the twists and turns that an investigation may take that could lead to diverging interests further down the road and leave the unwary attorney with a conflict of interest and possible disqualification. The Deskbook discusses the ethical considerations that an attorney must address before undertaking a multiple representation and provides a number of ethical resources, including a leading opinion by the Committee on Judicial and Professional Ethics of the Association of the Bar of the City of New York that I think is one of the best guides in this area.

Editor: Is the Deskbook of any interest to foreign white collar attorneys?

Wallance: In fact, we have gotten quite a few inquiries about the Deskbook from foreign companies and the Deskbook has been favorably reviewed by an English legal publication. As a result of globalization, there has been a convergence in legal systems - and in the legal problems faced by foreign corporations. The techniques largely developed in the United States for conducting internal investigations and implementing corporate compliance programs are being emulated in foreign countries, and therefore the Deskbook is a resource for attorneys in other countries. As well, the discussion of the U.S. Foreign Corrupt Practices Act and the Foreign Convention on Bribery and our chapter on money laundering issues will also be of practical use to foreign attorneys in this field.

Editor: What kind of a response has the Deskbook received thus far?

Wallance: We are very gratified by the response. It's one of the Practising Law Institute's best selling treatises. The Deskbook has gotten excellent reviews in numerous publications, both here and, as we mentioned, in the U.K. The response suggests that there is an increasing sensitivity on the part of practitioners in this area to ever broadening theories of criminal liability, increasingly draconian sentences and corporate criminal fines, and more aggressive prosecutions.

Gregory J. Wallance is a former Assistant U.S. Attorney, U.S. Attorney's Office for the Eastern District of New York, former member of the ABSCAM prosecution team and former member of the Ad Hoc Advisory Group to the U.S. Sentencing Commission on the Organizational Sentencing Guidelines; Paul J. Curran is a former U.S. Attorney, U.S. Attorney's Office for the Southern District of New York, former Special Counsel to the U.S. Department of Justice, former Special Consultant to the Secretary of Defense for Intelligence Matters, and former Chairman, New York State Commission of Investigation. Chairman, Supreme Court, Appellate Division, First Judicial Department, Departmental Disciplinary Committee. A Fellow of the American College of Trial Lawyers; Jane W. Parver is a former Executive Assistant U.S. Attorney, former Chief, Public Corruption Unit, and former Chief, Major Crimes Unit, Criminal Division, U.S. Attorney's Office for the Southern District of New York, recipient of the Director's Award for Superior Performance as an Assistant U.S. Attorney, former member of the Liman Commission investigating NYC Medical Examiner, and former member of the NYC Conflicts of Interest Board; Daniel R. Alonso is a former Chief of the Criminal Division in the U.S. Attorney's Office for the Eastern District of New York, former Assistant District Attorney in the Frauds Bureau, New York, former Assistant District Attorney in the Frauds Bureau, New York County District Attorney's Office, and the current Chair of the New York City Bar Association's Council on Criminal Justice, and Michael A. Rogoff former Assistant U.S. Attorney, U.S. Attorney's Office for the Southern District of New York and recipient of Director's Award for Superior Performance as an Assistant U.S. Attorney. To order the Deskbook on Internal Investigations, Corporate Compliance and White Collar Issues, call PLI's Customer Service Department at 800-260-4754, or go to www.pli.edu.

Please email the interviewee at gwallance@kayescholer.com with questions about this interview.