September 30, 2015 Practice Points

DOJ Announces New Policy on Corporate Misconduct Focusing on Individual Culpability

This shift in policy is shaking up the white-collar defense community

By James R. Wyrsch – September 30, 2015

On September 9, 2015, the Department of Justice issued a memorandum titled “Individual Accountability for Corporate Wrongdoing.” The memorandum emphasized the responsibility of individual corporate employees:

The guidance in this memo reflects six key steps to strengthen our pursuit of individual corporate wrongdoing, some of which reflect policy shifts . . . : (1) in order to qualify for any cooperation credit, corporations must provide to the Department all relevant facts relating to the individuals responsible for the misconduct; (2) criminal and civil corporate investigations should focus on the individuals from the inception of the investigation; (3) criminal and civil attorneys handling corporate investigations should be in routine communication with one another; (4) absent extraordinary circumstances or approved department policy, the Department will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation; (5) Department attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases, and should memorialize any declinations as to individuals in such cases; and (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.

This shift in policy is shaking up the white-collar defense community and inspiring abundant commentary. For instance, writing in her White Collar Crime Prof Blog, Professor Ellen Podgor made the following comments to the memorandum:

Three concerns here: 

1) what is meant by providing “all relevant facts”? Does this mean only information that is relevant to the government’s case against the individuals? Will the government also be asking for Brady material that might be exculpatory for the individuals? Does this mean that the corporation now is officially a member of the government team?

2) what does this mean for the corporate culture? The concept of the individuals in the company working together, asking for legal advice from corporate counsel, and working to resolve problems in an open environment may now be officially over. This policy pits the corporation against the individual. Is this a wise approach to correcting business misconduct?

3) does this make it more important that there be fairness in internal investigations? See here for a discussion of the importance of fairness in internal investigations.

 

James R. Wyrsch is with Wyrsch Hobbs & Mirakian, P.C. in Kansas City, Missouri.


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