The Government Really Means It This Time (Part II)

By Anne K. Walsh & John R. Fleder –

As we reported in September, DOJ’s Deputy Attorney General Sally Quillian Yates released a seven-page memorandum announcing DOJ’s reinforced efforts to bring cases against individuals. She anticipated that DOJ would revise the U.S. Attorney’s Manual (USAM) to implement these principles. On November 16, 2015, again via a speech by Ms. Yates, this time before a group of bankers, DOJ announced the issuance of the revisions to the USAM.

For those who do not have prosecutor backgrounds, as Ms. Yates explained, the USAM is “one of the most important documents within the Justice Department community.” It sets forth guidance on how decisions are made within DOJ, and is used to detail DOJ policy and principles.

The Yates memorandum is mostly cut and pasted into various sections of the USAM, either revising existing sections (e.g., in the “Principles of Federal Prosecution of Business Organizations”) or creating wholly new sections (e.g., addressing the pursuit of claims against individuals in civil litigation). Highlights include the following:

• Section 1-12.000 has been updated to specifically identify the Yates “policy statement” emphasizing the importance of parallel civil and criminal investigations seeking to hold individuals accountable. It requires that coordination occur unless there are circumstances where the secrecy of an investigation is “paramount to the success of the investigation” or if compliance with the policy is “impractical.” This section cautions government lawyers, however, to avoid allegations of improper release of grand jury material or abuse of civil process.

• Section 4-3.100 is a new section that sets forth the same six factors Ms. Yates outlined in her original memo, that must be considered before resolving a case with a corporation. (Curiously these points are reordered from the original memo.) Like section 1.12.000, this section also advises the use of caution in sharing evidence in parallel proceedings that was obtained via the grand jury process or Civil Investigative Demands.

• Section 9-28.000 includes sections that have been newly drafted, revised, or simply renumbered. The policy underlying the Yates memo is interspersed throughout. The most significant change is the bifurcation of one of the nine factors used to determine whether to charge a corporation, into two separate factors: one focused on the company’s timely and voluntary disclosure, and the second on its cooperation. This change is intended to recognize the significant value of, and encourage, prompt voluntary disclosure by a company.

Ms. Yates announced in her more recent speech that DOJ was adding new “internal reporting and approval requirements” designed to ensure consistency within DOJ and to track how the policies are implemented. Although there may be other requirements, the USAM now prohibits a prosecutor from closing an investigation without bringing civil or criminal charges against individuals without the express approval of the U.S. Attorney or Assistant Attorney General who handled the investigation. Although declination memoranda are not atypical, this mandatory requirement to prepare and obtain approval of declination will almost certainly impact the decision-making and workload of government prosecutors.

Our firm has already seen evidence from conversations with prosecutors that they are taking the Yates memorandum to heart. Government investigations of companies will be getting much more complicated as companies and their counsel will need to carefully weigh the impact of their interactions with prosecutors on potential cases that may be brought against the company’s current and former officials. Whether to get individuals separate counsel will be just one of many thorny issues that companies will need to address when they learn of a government investigation.

The government enforcement world is getting more and more complicated every day.