State Bar Group Takes Aim At Thompson Memo

Lawyers in Michigan have opened a new front in the battle against Department of Justice demands that companies waive their attorney-client and work-product privileges to get credit for being cooperative, with a first-of-its-kind ethical rule to prohibit government attorneys in that state from demanding such waivers.

Samuel Damren, a Detroit lawyer who chairs the State Bar of Michigan’s task force on the waiver of the attorney-client privilege, contends that when government prosecutors come to Michigan, “they’re subject to Michigan rules. The rules of professional conduct apply to prosecutors.”

Damren

Damren, a former federal prosecutor and now partner at the law firm Dykema Gossett, notes that the DoJ has refused to back down on its waiver policy—articulated in the now-notorious Thompson Memo from 2003—despite opposition from the American Bar Association, the U.S. Chamber of Commerce, former U.S. attorneys general, and corporate counsels galore. “Thus far the Justice Department has been very stubborn,” he says. “If the [government] isn’t going to back down on this policy itself, the bar should take the decision out of the [government’s] hands.”

Whether Damren’s idea can be enforced is another question. Milton Ferrell, a veteran criminal lawyer in Miami who is also a harsh critic of the Thompson Memo, believes the Michigan initiative won’t change anything.

“My guess is that the DoJ will ignore Michigan’s ethical rule” the same way it has ignored similar moves in California, Florida, and other states that wanted to curb perceived abuses by federal prosecutors, he says. “The attorney general says they have the right to do what’s necessary [regardless of state ethical rules] and no state bar has challenged it or pressed it to the extent of disbarring or disciplining a lawyer practicing for the DoJ.”

The Justice Department did not respond to a request for comment on the Michigan initiative when contacted by Compliance Week.

Multi-Front War

The proposal in Michigan is the result of a recent directive from the American Bar Association asking every state to take a look at the issue of the attorney-client privilege in the context of corporate litigation.

Damren’s plan, published in an October article in the Michigan Bar Journal, would amend state ethics rules to say that a lawyer “shall not … when representing a government or governmental agency in a criminal or civil enforcement matter, obtain from an individual or entity any material protected by work product or the attorney-client privilege in exchange for the grant or denial of any benefit or advantage regarding: (1) whether to proceed against the individual or entity; (2) the nature of the proceeding; (3) the severity of the charges and the extent of sanctions sought; or (4) plea and settlement offers.”

The proposed rule change goes on to say that a government attorney “may request that an individual or entity offer proof of factual assertions that the person has made to the government attorney without violating this prohibition.”

Damren acknowledges that trying to change state ethical rules “can be time-consuming” and that the Michigan Supreme Court, which has final say over any rule change, may well balk at this idea. But he insists such drastic action may be necessary to back up the “bedrock” principle that the attorney-client and work-product privileges should not be disturbed. “If relationships between attorneys and company employees become chilled, that impedes our ability to practice law and represent companies,” he says.

PROPOSAL

Below is an excerpt from attorney Samuel Damren’s proposal to amend Michigan’s rules of professional conduct regarding Thompson-type waivers.

Company attorneys, whether outside counsel, like me, or in-house counsel, do not support a world where cheats and crooks can operate with impunity from the boardrooms and management offices of corporate America. We want prosecutors and regulators to catch the cheats and crooks for reasons that include pure self-interest. We compete everyday in a difficult and hardball environment, but we play by the rules and we want prosecutors and regulators to ensure that our competitors play by the same rules. We want a fair competition.

What we demand of ourselves as company counsel and from government attorneys is that we all play by the rules that circumscribe and form the bedrock of our profession. Thompson-styled waiver requests confound these obligations. In my view, they should be prohibited through an amendment to the Michigan Rules of Professional Conduct.

This proposal would add a new paragraph (g) to Michigan Rule of Professional Conduct 3.4 (Fairness to Opposing Party and Counsel) as follows:

A lawyer shall not:

(g) when representing a government or governmental agency in a criminal or civil enforcement matter, obtain from an individual or entity any material protected by work prod- uct or the attorney-client privilege in exchange

for the grant or denial of any benefit or advantage regarding:

whether to proceed against the individual or entity;

the nature of the proceeding;

the severity of the charges and the extent of sanctions sought; or

plea and settlement offers.

A government attorney may request that an individual or entity offer proof of factual assertions that the person has made to the government attorney without violating this prohibition.

Source

Proposal To Amend Professional Conduct Rules To Prohibit Thompson-Styled Waivers, By Samuel Damren

McGuinness

William McGuinness, a partner with the law firm Fried, Frank, Harris, Shriver & Jacobson, calls the Michigan Bar proposal “a creative idea in a war that’s being waged on a number of fronts, a war in which significant battles are being won.”

McGuinness notes that “extreme and mounting criticism” led the U.S. Sentencing Commission to back away recently on a Sentencing Guidelines provision that gave cooperation credit as defined in the Thompson Memo. And watching a recent congressional hearing on the subject, McGuinness says, “It struck me that the DoJ is becoming a lone voice in the wilderness.”

DoJ’s Heels Dug In

Sullivan

William Sullivan, a partner with the law firm Winston & Strawn, calls the current momentum against the Thompson Memo “refreshing” and believes the DoJ at least hears the message. “I think the government is going to be hard-pressed to continue this course,” he says. “The momentum is clearly on the side of those who seek to protect the attorney-client privilege in the corporate context.”

Rebekah Poston, a criminal lawyer with the law firm Squire, Sanders & Dempsey, sees the Michigan effort as “part of the snowballing of what’s going on” in the movement against the Thompson Memo.

Poston

“I think that [Michigan] proposal is aggressive—it’s right in line with what’s happening,” she says. “It’s the state’s way of saying, ‘Hey government. You’re not going to be able to give a benefit to someone in exchange for waiving a privilege that we hold near and dear.’”

Poston also notes that if DoJ lawyers ever were to be bound by ethical rules in Michigan or any other state, they could try to “forum shop,” bringing cases in states without such rules.

Even if the Michigan proposal is adopted, however, Poston doesn’t anticipate that the DoJ will bother to forum shop because Justice Department officials simply won’t abide by it. “I think the DoJ is going to say, ‘You don’t tell us what our policies are.’ They are not going to back down,” she says.

Ferrell is even more pessimistic that the Justice Department will change its application of the Thompson Memo—at least before January 2009, when a new administration comes to power and presumably a new attorney general takes the reins.

“It’s extremely unlike there will be a change with this administration,” he says. “If you look at everything from their position on torture to their disregard for the judicial process of obtaining warrants, even in a secret court, I don’t think this is an administration that is particularly concerned for the rights of any individual or corporation.”