1. ACC/Drake University Corporate Counsel Forum
The DOJ’s New Enforcement Landscape from the Perspective of a Former U.S. Attorney
ACC/Drake University Corporate Counsel Forum
Nick Klinefeldt
June 3, 2016

2. The Yates Memo
“[N]othing discourages corporate criminal activity like the prospect of people going to prison.”
Deputy Attorney General Sally Yates announcing new Department of Justice Guidance regarding individual accountability for corporate misconduct on September 10, 2015, aka “The Yates Memo”

3. The Yates Memo – Six Steps
Cooperation credit only available if companies provide “all relevant facts” about individuals involved in corporate misconduct
Criminal & civil investigations should focus on individuals at outset
Criminal & civil attorneys should be in routine communication with one another
No more releases/immunity for individuals from criminal and civil liability as part of corporate settlement
Corporate cases cannot be resolved without clear plan for resolving related individual cases before statute of limitation expires
Individual ability to pay no longer a threshold factor in civil cases

4. Impact on Internal Investigations
Takeway#1: Internal investigation findings will be second-guessed, so cooperation must be full and complete
“Department attorneys will be vigorously testing information provided by companies and comparing it to the results of our own investigation to ensure that it is indeed complete and that it doesn’t seek to minimize the role of any one person or group of individuals.”
DAG Sally Yates, September 10, 2015 (emphasis added)
Proactive vs. reactive cooperation
Cooperation is “all or nothing” when it comes to individuals

5. Impact on Internal Investigations
Takeway #2: Getting “all the relevant facts” about individual misconduct will be even more difficult
Diffuse nature of the corporate structure
Even DOJ, despite its best efforts, has been unable to identify individual wrongdoers in many cases
Internal investigations will be less efficient and more costly
Scope and duration will increase
More employees asking for counsel

6. Impact on Internal Investigations
Scope and duration of investigations may increase
DAG Sally Yates: doesn’t expect companies to “boil the ocean” in their investigation, but if they don’t, will their findings satisfy DOJ?
How do you assess the scope of your investigation?
E.g., if you identify an issue in US, did you have to investigate abroad?

7. Impact on Internal Investigations
Lawyering up, early and often
Increased focus on individuals = more requests for counsel
Both in criminal and civil cases
More lawyers = less efficiency
Potential issues with more requests for counsel
Prepared to terminate upon request for counsel?
What are criteria for separate counsel?
Indemnified v. non-indemnified
Pool counsel?

8. Potentials Pitfalls: Warnings & Agreements
Upjohn warnings: should employees now be warned about potential disclosure of their information to government?
Properly given and memorialized
Should employees now be warned about potential disclosure to the government?
Is the government already investigating conduct?
Is it likely that the witnesses’ information will be disclosed to government?
Joint Defense Agreements
What about information regarding individual misconduct obtained from JDA?
Communication with current employees who have individual counsel

9. Potential Pitfalls: Lack of Independence
State Actor/Agency Issues: If you’re cooperating with the government, don’t take any actions that suggest you’re acting as its agent, including:
Asking government for approval/disapproval about the steps you take in your investigation
Asking government which documents to review
Asking government which witnesses to interview, and what questions to ask
Inviting government agents to your witness interviews
Bottom-line: When cooperating, be polite and courteous with the government, but always maintain your investigation’s independence

10. Potential Pitfalls: Privilege & Work Product
Conducting the interview
Use of outside counsel
Have a witness
Memorializing the interview
Explain work product
Not a verbatim transcript
Disclosure to the government
Cooperation without waiving the privilege
Civil discovery requests
Selective waiver

11. Corporate Issues Code of conduct D&O insurance policy
Requirements to report wrongdoing and cooperate with internal investigations
But will there be a chilling effect with incentive to disclose individual misconduct?
D&O insurance policy
Is coverage amount sufficient?
Does protection begin upon commencement of investigation?