Federal Agency Privilege Waiver Policies

Overview

In recent years, many federal government agencies have adopted policies that erode the attorney-client privilege, the work product doctrine, and employee legal protections in the corporate context. Each of these policies—including the Justice Department’s 2006 "McNulty Memorandum" (PDF), the Securities and Exchange Commission's 2001 "Seaboard Report" (PDF), the Environmental Protection Agency’s "Audit Policy" (PDF), the Department of Housing and Urban Development’s “guidance” to public housing authorities, and similar policies by other agencies—pressure companies and other organizations to waive their attorney-client privilege and work product protections as a condition for receiving full cooperation credit during investigations or other benefits from the agency. Some of these agency policies also contain separate provisions that weaken employees’ Sixth Amendment right to counsel, Fifth Amendment right against self-incrimination, and other fundamental legal rights by pressuring the entities not to pay their employees’ legal fees during investigations, to fire them for not waiving their rights, and to take other punitive actions against them long before any guilt has been established.

Status

The ABA has been working closely with a broad coalition of business and legal groups—ranging from the U.S. Chamber of Commerce to the American Civil Liberties Union—and with many state and local bar associations in an effort to reverse these government policies. The Senate and House Judiciary Committees held four separate hearings on this issue since early 2006 and the coalition testified and/or submitted written statements at each hearing. The ABA also sent letters to the Justice Department (May 2006, PDF), the U.S. Sentencing Commission (March 2006, PDF), the Commodity Futures Trading Commission (July 2006, PDF), the Department of Housing and Urban Development (December 2006, PDF and February 2011, PDF), the Securities and Exchange Commission (February 2007, PDF), the General Services Administration/FAR Councils (June 2008, PDF), and the Treasury Department's Office of Foreign Assets Control (November 2008), urging them to reverse or modify their respective waiver policies.

After considering the concerns raised by congressional leaders, former Justice Department officials and many in the legal and business communities, the Sentencing Commission and the Commodity Futures Trading Commission voted to reverse their privilege waiver policies in April 2006 and March 2007, respectively. In addition, the Justice Department replaced the McNulty Memorandum with revised corporate charging guidelines (PDF) in August 2008 stating that while prosecutors may require companies to produce relevant facts during investigations in return for cooperation credit, they can no longer require or even ask companies to waive their attorney-client privilege or work product protections or to forego paying their employees’ legal fees. The SEC also issued a revised Enforcement Manual (PDF) on January 13, 2010 that provides additional guidance for agency staff but does not formally change the SEC's waiver policy outlined in the Seaboard Report. Although the Manual generally directs agency staff not to request waiver of the privilege during most investigations, the Manual contains several significant exceptions and does not provide adequate protection for the privilege and employee legal rights.

In November 2007, the House overwhelmingly approved comprehensive legislation known as the “Attorney-Client Privilege Protection Act” (H.R. 3013) that would prevent the government from pressuring companies and other organizations to waive their attorney-client privilege, work product, or employee legal protections during investigations. Many of the bill’s reforms were later adopted by the Justice Department in its revised corporate charging guidelines. But unlike the limited scope of the revised DOJ policy, the reforms in the House bill—sponsored by Representatives John Conyers (D-MI), Bobby Scott (D-VA), and Lamar Smith (R-TX)—would apply to all federal agencies. A Senate companion bill, S. 3217, sponsored by Senators Arlen Specter (D-PA), (Vice President) Joseph Biden (D-DE) and 12 other Senators from both parties, was also introduced in the 110th Congress but failed to receive a vote. Senator Specter and Representative Scott reintroduced similar legislation, S. 445 and H.R. 4326, in the 111th Congress, but there was no further action on either bill.

While the revised Justice Department policy is a welcome and important improvement over its previous policy outlined in the McNulty memorandum, a comprehensive solution to the ever-widening problem of government-coered waiver is still critically needed. Therefore, the ABA and its coalition allies strongly support the adoption of a Presidential executive order applying the basic DOJ reforms to all federal agencies or the enactment of comprehensive federal legislation like the Attorney-Client Privilege Protection Act (ACPPA).

Key Points

  • The revised DOJ policy, standing alone, does not provide a comprehensive solution to the problem of government-coerced waiver. Under the Justice Department’s revised policy, issued in August 2008, companies are required to provide all relevant facts to government investigators in order to receive full cooperation credit, but they cannot be asked or required to waive their attorney-client privilege or work product protections. In addition, the policy specifically bars federal prosecutors from pressuring companies, as a condition for receiving cooperation credit, not to pay their employees’ attorneys fees or to take other unfair actions to undermine their employees’ rights and ability to mount a legal defense. Although these reforms are promising and constitute a significant improvement over DOJ’s previous policy, the revised policy only covers DOJ prosecutors and does not alter the harmful waiver policies that have been adopted by numerous other federal agencies.
  • The revised SEC Enforcement Manual also contains several exceptions and does not fully protect the attorney-client privilege, work product and employee legal rights during investigations. Although Section 4.3 of the SEC Manual states that agency staff should not directly ask companies to waive the attorney-client privilege or work product, it permits the staff to demand waiver if approved by the Director or Deputy Director. The SEC Manual also continues to pressure companies to “voluntarily” waive the privilege—and to take punitive actions against employees who decline to waive their legal rights—in return for full cooperation credit. Thus, the revised Manual does not provide adequate protection for the attorney-client privilege, the work product doctrine, or employee legal rights.

  • Government-coerced waiver has become a multi-agency problem that requires a multi-agency solution. In addition to the SEC, many other federal agencies have adopted policies that erode the attorney-client privilege, the work product doctrine and employee legal rights. For example, HUD continues to issue “guidance” to public housing authorities (PHAs) urging them to include language in their legal services contacts that restricts the ability of PHA lawyers to assert the privilege in connection with HUD information requests, investigations, or enforcement proceedings.  Similarly, the EPA’s “Audit Policy” continues to authorize agency officials to pressure companies to waive their attorney-client privilege and work product protections during investigations. In addition, the Treasury Department’s Office of Foreign Assets Control (OFAC) and other agencies have adopted policies that threaten to erode not only the attorney-client privilege and the work product doctrine, but also employees’ Sixth Amendment right to counsel and Fifth Amendment right against self-incrimination. As more and more federal agencies adopt similar waiver policies, broad administrative or legislative reform is still needed to protect these fundamental rights and reverse the “culture of waiver.”

  • A Presidential executive order applying the Justice Department’s recent reforms to all federal agencies—or new comprehensive legislation like the ACPPA—would protect fundamental attorney-client privilege, work product, and employee constitutional rights during investigations. An executive order prohibiting all agencies from seeking any waiver of the privilege or work product or the disclosure of any protected information or materials during investigations in return for full cooperation credit or other agency benefits would prevent further erosion of these bedrock legal rights. Such an order also would help protect employees’ Sixth Amendment right to counsel and Fifth Amendment right against self-incrimination by preventing federal officials from pressuring companies not to pay employees’ legal fees during investigations, to fire employees for not waiving their rights, or to take other punitive measures against the employees before their guilt has been established under law. Enactment of comprehensive legislation like the ACPPA would offer similar benefits to an executive order, with the added advantage of making these critical reforms permanent and enforceable in a court of law.

  • An executive order or comprehensive legislation would both strike the proper balance between effective law enforcement and the preservation of essential attorney-client privilege, work product and employee legal protections. Adoption of the executive order—or passage of legislation like the ACPPA—would prevent all agencies from forcing companies and employees to waive their fundamental legal rights while preserving the ability of prosecutors and other agency officials to obtain the important, non-privileged factual materials they need to punish wrongdoers and enforce the law.

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ABA Policy

The ABA supports the preservation of the attorney-client privilege and work product doctrine and opposes governmental policies, practices, and procedures that erode these protections, including the routine practice by government officials of seeking to obtain a waiver of the attorney-client privilege or work product doctrine through the granting or denial of any benefit or advantage. The ABA also favors governmental policies, practices, and procedures that recognize the value of the attorney-client privilege and the work product doctrine. In addition, the ABA opposes governmental policies that have the effect of eroding the constitutional and other legal rights of employees by encouraging law enforcement officials to pressure companies and other organizations to take certain punitive actions against the employees in return for cooperation credit. The ABA's views on government-coerced waiver are summarized in its recent Fact Sheet (PDF). In addition, the complete text of the ABA's privilege waiver and employee rights policies, letters to Congress and various federal agencies, and other related materials are available at ABA Privilege Waiver Materials.

Updated as of:

March 2014

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