House Subcommittee Hears Testimony on McNulty Memorandum

On March 8, 2007, the House Judiciary Committee's Subcommittee on Crime, Terrorism and Homeland Security (Subcommittee) heard testimony on the McNulty Memorandum's effect on the right to legal counsel in corporate investigations.

The McNulty Memorandum, entitled "Principles of Federal Prosecution of Business Organizations," revised a January 20, 2003 memorandum of the same name, which was issued by then U.S. Deputy Attorney General Larry D. Thompson (Thompson Memorandum).  The Thompson Memorandum identified 9 factors for prosecutors to consider when deciding to charge a company with a criminal offense. One of those factors calls for a company's willingness to cooperate in the government's investigation.

The Thompson Memorandum created significant controversy because, in deciding whether a company was cooperating with an investigation, prosecutors could consider a company's willingness to waive attorney-client privilege and work product protections, and a company's support of employees, including the advancement of attorneys' fees. The McNulty Memorandum reportedly placed restrictions on such considerations.  For instance, when prosecutors seek privileged attorney-client communications or legal advice from a company, the McNulty Memorandum requires that prosecutors establish a legitimate need for the information and obtain written approval from the Deputy Attorney General.

In testimony before the Subcommittee, the Chairman of the Board of Directors for the Association of Corporate Counsel (ACC) indicated that "reports from in-house and outside counsel in the months since the issuance of the McNulty Memorandum suggest that prosecutors who were likely to request or demand privilege waivers under Thompson, continue to make these demands under McNulty." 

Further, the ACC claims that "the McNulty Memorandum does not substantively change DOJ's policies" and states in testimony that "the in-house legal community has reluctantly reached the conclusion that legislation is now necessary to stop the harmful erosion of attorney client privilege, work product protections, and individual rights in the corporate context."  During the hearing, the Department of Justice presented testimony urging the Subcommittee to give the McNulty Memorandum a "chance to work before considering any legislation."