Corporate Prosecution Guidelines Under Review

The U.S. Justice Department announced this week that it was reviewing its guidelines for determining when to prosecute corporations for corporate wrongdoing.

The guidelines which were announced in 2003 describe nine factors that prosecutors must consider when weighing whether to indict a company for corporate misconduct.  One criterion is whether the company has cooperated with prosecutors by waiving the attorney-client privilege and disclosing confidential legal communications to investigators.  Another is whether the company has stopped paying legal fees of employees caught up in the investigation.

These two guidelines have been sharply criticized recently by a federal judge overseeing the trial of former KPMG employees, by the former director of the Justice Department's Enron task force, and by leaders of the American Bar Association.  Critics of these guidelines contend that they promote coercive practices and undermine long-established legal doctrines such as the attorney-client privilege, the work-product doctrine, the presumption of innocence, and the right to legal counsel.

Critics of the guidelines, including Senate Judiciary Committee Chairman Arlen Spector and the Committee's ranking Democrat Senator Patrick Leahy, have suggested that Congress may have to pass legislation eliminating these two guidelines if the Department of Justice itself is unwilling to modify them.