On Sept. 9, 2015, the Department of Justice (DOJ) announced new measures to fortify its pursuit of corporate wrongdoing in criminal and civil matters. The policy shift, set forth in a memorandum from Deputy Attorney General (DAG) Sally Yates, seeks to hold individuals accountable for corporate wrongdoing and ensure full cooperation by corporations in "ferreting out" individual misconduct. As Deputy Yates explained in a speech delivered on Sept. 10, the DOJ seems to now believe it has placed too much emphasis on extracting large amounts of money in corporate investigations and not enough emphasis on bringing charges against individuals.

The DAG's Memorandum

The DAG's Memorandum enumerated six measures that it intends to implement in corporate investigations:

1. To be eligible for any cooperation credit, corporations must provide to the Department all relevant facts about the individuals involved in corporate misconduct. The DAG's Memorandum explains that corporations must be forthright and timely in turning over all non-privileged information "relating to the [corporate] misconduct," and identify the individual wrongdoers regardless of their "position, status, or seniority." If a corporation either "declines to learn" or to provide to the DOJ complete factual information about individual wrongdoers, the corporation will not receive any credit for cooperation. "The rules have just changed,'' Yates said in her speech. "Effective today, if a company wants any consideration for its cooperation, it must give up the individuals, no matter where they sit within the company.''

2. Both criminal and civil corporate investigations should focus on individuals from the inception of the investigation. According to the DAG's Memorandum, a focus on individual culpability is the most effective way to determine the facts and encourage individuals with knowledge of misconduct to cooperate with the government and provide information that allows the DOJ to prosecute others higher up in the organization. The focus on individuals will also "maximize the chances" that individuals will be subject to criminal and civil charges in addition to the corporation.

3. Criminal and civil DOJ attorneys handling corporate investigations should be in routine communication with one another. Criminal attorneys handling corporate investigations are expected to notify civil attorneys "as early as permissible of conduct that might give rise to potential individual civil liability, even if criminal liability continues to be sought." Likewise, civil attorneys are expected to notify criminal attorneys when they believe the conduct under investigation should be subject to a criminal inquiry.

4. Absent extraordinary circumstances, no corporate resolution will provide protection from criminal or civil liability for any individuals. DOJ attorneys are directed not to agree to a corporate resolution that includes an agreement to dismiss charges against, or provide immunity for, individual officers or employees, except in extraordinary circumstances. Any such agreement must be approved by an Assistant Attorney General or United States Attorney.

 5. Corporate cases should not be resolved without a clear plan to resolve related individual cases before the statute of limitations expires and declinations as to individuals in such cases must be memorialized. DOJ attorneys typically prepare an internal memorandum when seeking authorization to resolve a case against a corporation. The new policy requires that each such memorandum also address the investigation of potentially liable individuals and set an "investigative plan" for resolving potential charges against individuals prior to the expiration of any relevant statute of limitations. The Memorandum further directs that "every effort should be made to resolve a corporate matter within the statutorily allotted time" and that tolling agreements should be the "rare exception."

6. Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual's ability to pay. An individual's ability to pay "should not control" the evaluation of whether to bring a civil case. DOJ attorneys should also consider the seriousness of the misconduct, the individual's misconduct and past history, the circumstances relating to the misconduct, and the provability of the claims through admissible evidence, among other factors. Deputy Attorney General Yates stated during her Sept. 10 comments that these policy changes are "effective immediately." Indeed, the DAG Memorandum explains that these new policies should apply not just to future investigations, but also to matters currently pending "to the extent practicable to do so."


To a large extent, the DAG's Memorandum builds on, and is consistent with, recent pronouncements from high-ranking DOJ officials emphasizing the Department's intention to focus on the prosecution of individuals in investigations of corporate misconduct. Much of the new policy relates to internal practices within the DOJ designed to further that goal. However, the DAG's Memorandum significantly departs from prior policy in announcing that no credit for cooperation will be given to corporations that fail to satisfy prosecutors that they have cooperated "completely" with respect to individuals. The new standard for full cooperation requires corporations to identify the individuals who are responsible for the misconduct the government is investigating--to "learn" who they are--and provide that information to the prosecutors.

In the past, a corporation that did everything that prosecutors asked and more--not only responding to requests from the government but conducting wide-ranging and expensive internal investigations and reporting on the results--could receive cooperation credit even if the corporation was not able to uncover facts sufficient to justify charges against individuals. Under the new policy, corporations that might in the past have earned an "A for effort" may now receive a flunking grade and risk being charged criminally, civilly or both. To many, this will seem like an unduly harsh consequence of the failure of the corporation to identify criminally liable individuals, perhaps through no lack of trying. After all, the corporation, unlike prosecutors, cannot deploy the traditional tools of criminal investigation, such as the power to issue grand jury subpoenas to compel testimony or the production of documents, to immunize witnesses, to obtain wiretaps, or to enter into cooperation agreements that provide powerful incentives to individuals to confess and offer information that inculpates friends and colleagues.

Practitioners who recall the DOJ's fluctuating prior efforts to address questions relating to a corporation's attorney-client privilege in the context of cooperation will note with interest that the new policy requires cooperation "within the bounds of law and legal privileges." Although current policy generally prohibits the DOJ from punishing corporations that choose not to waive the attorney-client privilege or disclose attorney work-product, the heightened pressure on corporations to identify individual wrongdoers may cause corporations to waive these protections where doing so is the only way to fully spell out the facts relevant to individuals' culpability. From this perspective the DAG's Memorandum may signal a concerning step backwards in the years-long battle between the defense bar and the government over preserving the privilege and protecting the rights of companies and their officers, directors and employees in the context of a government investigation.

The DAG's Memorandum notably does not address the not uncommon circumstance in which prosecutors tell corporate counsel to refrain from interviewing certain witnesses, for fear (well-founded or not) that such an "internal" investigation will impede the government's ability to make a case. It also remains to be seen how the new policy will play out in the many situations where it is far from clear that there has been wrongdoing, including where the government and the company don't see eye to eye on that issue. Also unclear is how the new policy will be applied to ongoing investigations. Whether applying the new policy is "practicable" in the context of an ongoing cooperation effort, and how to apply it, are difficult questions that leave great room for disagreements between prosecutors and corporate defense counsel.

Only after the new policy has been in effect for a substantial period will it be possible to determine whether it will have its desired effect of facilitating successful prosecutions of individuals in investigations of corporate wrongdoing. There is, however, a possibility that the heightened cooperation standard will deter some corporations from heading down the road of cooperation, especially where the corporation is concerned that, despite significant effort and expense, it will fail in meeting the higher bar that the DOJ has now put in place.

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