Vote Urged on Confidentiality Act

A Congressional bill that seeks to toughen the so-called McNulty Memorandum and strengthen the client-attorney privilege of confidentiality was approved by the House last week and is now before a Senate committee.

The closely watched bill would make it illegal for prosecutors and other federal enforcement officials, including those at the Securities and Exchange Commission, to demand that a company under investigation disclose confidential legal communications or risk being indicted — a corporate death knell.

The Justice Department, which opposes the bill, argues that changes to the DOJ policy could prevent prosecutors from doing their jobs.

At least 32 former prosecutors disagree. On Friday, they sent a seven-page letter to Senator Patrick Leahy (D-VT) urging the powerful chairman of the Senate Judiciary Committee, to put the Attorney-Client Privilege Protection Act of 2007 up for a full Senate vote before Congress’ summer break in July. In their letter, the prosecutors wrote that the bill "takes off the talbe the irresistible incentive for businesses to waive the privilege in order to gain favor with the prosecution."

The bill, sponsored by Senator Arlen Specter (R-PA) has broad support from both parties, and is expected to be approved by the Bush administration.  

According to The New York Times, U.S. Attorney General Michael B. Mukasey said earlier this month that he saw no need to change the McNulty Memorandum. He believes legislation to protect the confidentiality of legal communications was unnecessary.

The McNulty Memorandum--named for Deputy Attorney General Paul J. McNulty who wrote the guidelines--established guidelines aimed at preventing prosecutors from pushing companies to disclose legal secrets in exchange for lenient treatment by setting up new federal sentencing guidelines. The guidelines are not legally binding, however.

Michael R. Bromwich, a litigation partner resident in Fried Frank’s Washington, D.C., and New York offices, addressed the waiving of attorney-client privileges to minimize court sanctions in Directorship’s December 2007 issue.