When I represent an individual client, a joint defense agreement with my client’s employer can be extremely helpful. The company can share information and documents to help me advise my client about agreeing to a voluntary interview or prepare for grand jury testimony. The benefits go both ways: we can share information about my client’s recollection of key events and interpretation of ambiguous emails.
In September 2022, Deputy Attorney General Lisa Monaco issued a memo with the rather boring title, “Further Revisions to Corporate Criminal Enforcement Policies Following Discussions with Corporate Crime Advisory Group.”
Don’t let the mundane title fool you. It’s an important piece of guidance even if you mostly represent individual and not companies.
The Monaco Memo Encourages Companies to Disclose Misconduct by Employees
Following a long line of other DOJ memos, the Monaco Memo explicitly encourages companies to snitch on disclose wrongdoing by its employees. It makes clear that “[t]o be eligible for any cooperation credit, corporations must disclose to the Department all relevant, non-privileged facts about individual misconduct.”
There’s not much that’s new in that admonition. DOJ has been pushing companies to provide information about employees for years. The 2015 “Yates Memo” (by DAG Sally Yates), said that “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.”
Although the Monaco Memo makes clear that companies should not delay producing documents that may implicate individuals, it emphasizes that the “mere disclosure of records, however, is not enough.” Instead
[p]rosecutors will consider, for example, whether a company promptly notified prosecutors of particularly relevant information once it was discovered, or if the company instead delayed disclosure in a manner that inhibited the government’s investigation. Where prosecutors identify undue or intentional delay in the production of information or documents—particularly with respect to documents that impact the government’s ability to assess individual culpability—cooperation credit will be reduced or eliminated.
Although the Monaco Memo says nothing about interviews of employee during the company’s investigation into what happened, those interviews are a key part of the company’s effort to gather information. And the Monaco Memo adds the word “non-privileged” to the Yates’ memo guidance. Adding that word creates some interesting situations when you add joint defense agreements to the mix of company “cooperation.”
Benefits of an Early Interview by Company Counsel (for the Company)
Many times, the company locates counsel for individual employees after it has conducted an initial interview of the employee. Company counsel will interview the employee, give an Upjohn warning, and find out the basics of what happened. Then, the company tells the employee that she needs her own counsel.
There are some definite upsides to an early interview by company counsel (for the company, at least).
First, that interview helps company counsel decide whether the employee needs individual counsel in the first place. If there’s a clear conflict between the company’s interests and the employee’s interests, then company counsel cannot represent the employee in a later interview with the government.
Second, because the interview is conducted “cold,” meaning that the employee does not know the topics that will be covered during the interview and likely has not prepared for it by reviewing documents and emails in advance or by consulting with a lawyer. That means the answers may be more candid.
Third, given the Monaco Memo’s recent admonition, this interview is not conducted under a JDA and thus anything learned during it can be shared with the government as part of the company’s cooperation efforts. This may put the company (though the employee) on better footing to resolve the investigation early.
And the Downsides of an Early Interview
It’s not all sunshine and unicorns for a company that conducts an early interview.
If the person being interviewed is an officer or director (or another highly situated person in the organizational hierarchy), then finding out harmful facts during an interview that is not conducted under a JDA creates a risk for the company. Not disclosing the information to DOJ may impair the company’s ability to seek cooperation credit from DOJ down the road. Yet disclosing the information to DOJ has its own risk: actions by leadership, as opposed to low-level employees, are more likely imputed to the organization.
Let’s say that a few sales reps offer Medicare kickbacks to doctors. They are, in the company’s view, “rogue employees.” The company can pitch DOJ that it terminated the sales reps immediately, that the compliance plan has been tightened to prevent a problem in the future and so forth. But let’s say the CEO told the sales reps to pay kickbacks. This is a tougher sell to DOJ since DOJ is far more likely to impute the CEO’s behavior to the company and force the company to take a deferred prosecution agreement and a hefty fine as a result.
Conducting Employee Interviews Under a JDA (or Not)
When I represent an individual employee and the company wants to interview her, I sometimes ask to have the interview conducted under our JDA. Sometimes the company will offer to conduct the interview under a JDA. In theory, conducting an interview under a JDA would protect anything company counsel learns during the interview from disclosure to the government. When the company has not yet talked to the employee, then I may offer a JDA-covered interview first and then suggest that we consider a non-JDA interview down the road. That way, company counsel can find out the facts it needs to defend against the investigation but my client’s answers cannot be disclosed to the government without our permission.
For current employees, it’s less likely that the company will accept my proposal. What effect does the Monaco Memo have? On the one hand, a company that desperately seeks cooperation credit wants to find out the facts and disclose them to the government—and company counsel’s obligation is to help the company and not my client. The company can properly condition employment on my client’s cooperation with an interview with company counsel. Although I’ve seen no case law addressing this, that condition would likely include the requirement that the interview happen in a non-JDA setting.
However, company counsel may read the Monaco Memo to mean that if it learns facts as part of a JDA, then they are “privileged” and need not be disclosed to DOJ to obtain cooperation. Maybe this helps a more aggressive defense strategy by the company.
For former employees, though, I have more leverage. The company may desperately need my client’s answers and may very much want to know what she will say if the government interviews her. As a result, company counsel may be more willing to conduct the interview in a JDA setting, with the added Monaco Memo benefit that the facts learned as part of that interview are privileged .
What Are “Privileged” Facts?
The Monaco Memo states that the company must disclose all relevant “non-privileged facts.” This is an odd turn of phrase. Attorney-client privilege law generally provides that while a communication may be privileged, any facts disclosed in that communication are not privileged.
Take, for example, a September 2022 email from the general counsel of a company (Acme) to the CEO disclosing that Spain are investigating the principal of a foreign subsidiary that did work with Acme for paying bribes to Spanish government officials. Acme need not turn over the email from the GC to the CEO, but, theoretically, the fact that the principal is under investigation is not privileged and should be disclosed to DOJ.
There is a lot of gray area here. Let’s say that rather than firing the principal and investigating whether he paid any bribes for his work for Acme, the CEO instead did nothing and renewed the principal’s employment contract in October 2022. The renewed contract is not privileged and would be disclosed but not the GC’s email to the CEO—the CEO could defend against FCPA allegations without facing the evidence of that email that put him on notice of the Spanish investigation.
But the CEO does not have control over the privilege. Could the company decide to disclose the “fact” that the CEO was aware of the Spanish investigation in September 2022 and signed the renewal in October 2022 anyway? Is that a “non-privileged fact” covered by the Monaco Memo?
****
There is a lot of gray area here for company counsel to explore. For individual clients, though, defense counsel needs to understand that the Monaco Memo places even more pressure on company counsel to tell DOJ as much as they possibly can.
Discussions about how the company will use information learned from employee interviews is crucial to evaluate the risk of agreeing to the interview. It’s never fun to advise a client that quitting is a better option than sitting for an interview with her employer, but it may be necessary in light of the continued pressure by DOJ on companies.