[House Report 110-445]
[From the U.S. Government Publishing Office]
110th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 110-445
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ATTORNEY-CLIENT PRIVILEGE PROTECTION ACT OF 2007
_______
November 13, 2007.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Conyers, from the Committee on the Judiciary, submitted the
following
R E P O R T
[To accompany H.R. 3013]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the bill
(H.R. 3013) to provide appropriate protection to attorney-
client privileged communications and attorney work product,
having considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 1
Background and Need for the Legislation.......................... 2
Hearings......................................................... 5
Committee Consideration.......................................... 5
Committee Votes.................................................. 5
Committee Oversight Findings..................................... 5
New Budget Authority and Tax Expenditures........................ 5
Congressional Budget Office Cost Estimate........................ 5
Performance Goals and Objectives................................. 6
Constitutional Authority Statement............................... 6
Advisory on Earmarks............................................. 7
Section-by-Section Analysis...................................... 7
Changes in Existing Law Made by the Bill, as Reported............ 8
Purpose and Summary
The centuries-old common law and constitutional protections
of the attorney-client privilege and attorney work product
doctrine are fundamental to our Nation's system of justice.
Unfortunately, recent governmental policies have given rise to
a ``culture of waiver'' that places the continuing vitality of
these crucial protections in serious jeopardy. H.R. 3013, the
``Attorney-Client Privilege Protection Act of 2007,'' will
restore judicial oversight to these protections, while
preserving prosecutorial discretion necessary to fight
corporate crime.
Background and Need for the Legislation
The United States Supreme Court's landmark decision in
Upjohn Co. v. United States confirmed that companies are
entitled to the protections of the attorney-client privilege
and work product doctrine.\1\ With respect to communications
between a company's attorney and its employees, the Court
reasoned that the privilege operates in the public's best
interest by encouraging corporate executives and managers to
seek legal advice in order to ensure compliance with the law in
their day-to-day work. Protecting client confidences helps to
foster timely reporting of problems so that they can be either
avoided or quickly addressed and remedied, thereby promoting
well-informed and responsible company practices. Without this
protection of confidentiality, employees may be hesitant to
bring their of concerns to counsel
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\1\Upjohn Co. v. U.S. 449 U.S. 383 (1981).
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Recent empirical evidence supports the Supreme Court's
conclusions regarding the importance of attorney-client
privilege in the organizational context. In 2005, a survey of
more than 700 corporate lawyers yielded the following findings:
LReliance on privilege: In-house lawyers
confirmed that their clients are aware of and rely on
the privilege when consulting them (93% affirmed this
statement for senior-level employees; 68% for mid- and
lower-tier employees).
LAbsent privilege, clients will be less
candid: If these communications are not protected, in-
house lawyers believe, there will be a ``chill'' on the
flow or candor of information from clients (95%).
LPrivilege facilitates delivery of legal
services: 96% of in-house counsel respondents reported
that the privilege and work product doctrines serve an
important purpose in facilitating their work as company
counsel.
LPrivilege enhances likelihood that clients
will proactively seek advice: 94% of in-house counsel
respondents believe that the existence of the attorney-
client privilege increases the likelihood that company
employees will come forward to discuss sensitive or
difficult issues regarding the company's compliance
with law.
LPrivilege improves ability to implement
effective compliance initiatives: 97% of corporate
counsel surveyed believe that the privilege improves
the lawyer's ability to monitor, enforce, or improve
company compliance initiatives.\2\
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\2\Association of Corporate Counsel Survey: Is the Attorney-Client
Privilege Under Attack? (Apr. 6, 2005), at http://www.acc.com/Surveys/
attyclient.pdf.
Like the attorney-client privilege, the work product
doctrine facilitates open and frank discussion of issues among
management, employees, and counsel in order to prepare for
litigation, as the doctrine generally protects that discussion
from disclosure. The work product doctrine promotes the
effectiveness of ``adversary system by safeguarding the fruits
of an attorney's trial preparations from the discovery attempts
of the opponent.''\3\ If a corporation routinely waives the
protection of the work product doctrine, employees may be
hesitant to assist counsel in preparation for litigation, or
may even be discouraged from seeking legal advice at all. As
the Supreme Court observed sixty years ago, ``[M]uch of what is
now put down in writing would remain unwritten. . . .
Inefficiency, unfairness and sharp practices would inevitably
develop in the giving of legal advice and in the preparation of
cases for trial . . . And the interests of the clients and the
cause of justice would be poorly served.''\4\
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\3\United States v. Amer. Tel & Tel. Co., 642 F.3d 1286, 1299 (D.C.
Cir. 1980).
\4\Hickman v. Taylor, 329 U.S. 495, 511 (1947).
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In recent years, however, certain government agencies have
adopted policies that may place companies at greater risk of
prosecution if they claim any of the fundamental protections
embodied in the attorney-client privilege or work product
doctrine. The genesis of these recent policies is a series of
Department of Justice (``DOJ'') memoranda designed to provide
prosecutors with factors to consider when determining whether
to charge a corporation with a criminal offense. Since then,
other Federal agencies have issued similar guidance to their
prosecutors.
The first of such memorandum was issued by Deputy Attorney
General Eric Holder in 1999; it was superseded by a 2003
memorandum from Deputy Attorney General Larry Thompson, and
then by a 2006 memorandum from Deputy Attorney General Paul
McNulty. These memoranda list factors that Federal prosecutors
should consider when charging companies. One of the factors is
the corporation's ``timely and voluntary disclosure of
wrongdoing and its willingness to cooperate in the
investigation of its agents, including, if necessary, the
waiver of corporate attorney-client and work product
protections.''\5\
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\5\See, e.g., Memorandum from Deputy Attorney General Larry
Thompson to Heads of Department Components and U.S. Attorney,
``Principles of Federal Prosecution of Business Organizations'' (Jan.
20, 2003).
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In practice, these new policies have created a ``culture of
waiver,'' despite the fact that their tone may be moderate and
the officials representing these government agencies may stress
their intent to implement them in reasonable ways. By creating
a differential in the treatment of a company based upon whether
that company waives--whether that differential is in the form
of a ``reward'' for waiving or in the form of a ``penalty'' for
not waiving--these policies put undue pressure on companies to
relinquish fundamental rights.
The coercive effect of these new policies is inherent in
the differential itself, whereby companies are forced to waive
regardless of whether the Federal prosecutor or investigator
``demands'' waiver, ``requests'' waiver, or does not explicitly
mention waiver at all. The clear thrust of these new policies
is that waiver is required to get ``cooperation'' credit, a
crucial element in charging decisions.
While aggressive enforcement against corporate wrongdoers
is appropriate, stripping corporate targets of their
fundamental rights is neither a necessary nor appropriate
tactic for a government agency to employ in the course of an
investigation, especially before any finding of culpability.
Companies may cooperate with government investigations in a
variety of ways that will serve the interests of justice and
the swift and sure prosecution of wrongdoers, without the need
for waiver.
Claims that corporate misconduct today is too complex,
large-scale, and difficult to unravel and analyze without
coercing a waiver of these protections are unpersuasive.
Immense and complex acts of fraud have been perpetrated since
the days of the robber barons; today's acts are nothing new.
Moreover, it is well-settled that there is a wide range of
prosecutorial tools available to prosecutors and investigators
that do not require waiver and that have been used effectively
for decades. While it may be more expeditious for a prosecutor
or investigator to coerce waiver, taking such a short cut has
not been necessary in the past and is not necessary now.
H.R. 3013 is carefully crafted to restore judicial
oversight to the important protections of attorney-client
privilege and attorney work product doctrine, while preserving
prosecutorial discretion necessary to fight corporate crime.
Nothing in the legislation is intended to prevent a prosecutor
or enforcement official from vigorously and professionally
investigating the facts or bringing the guilty to justice.
Likewise, the bill does not preclude or inhibit a company or an
individual from cooperating with prosecutors in the conduct of
an investigation. In short, the bill attempts to strike a
balance between the promotion of effective law enforcement and
compliance efforts, on the one hand, and the preservation of
essential legal protections on the other.
Under the bill, an agent or attorney of the United States
may base cooperation credit on the facts that are disclosed,
but is prohibited from basing cooperation credit upon whether
or not the materials are protected by attorney-client privilege
or attorney work product. As a result, an entity that
voluntarily discloses should receive the same amount of
cooperation credit for disclosing facts that happen to be
contained in materials not protected by attorney-client
privilege or attorney work product as it would receive for
disclosing identical facts that are contained in materials
protected by attorney-client privilege or attorney work
product. There should be no differentials in an assessment of
cooperation (i.e., neither a credit nor a penalty) based upon
whether or not the materials disclosed are protected by
attorney-client privilege or attorney work product.
Receipt by an agent or attorney of the United States of
inadvertently disclosed materials that are protected by
attorney-client privilege or attorney work product would not
constitute a violation of the bill. Similarly, an agent or
attorney of the United States does not violate it by
propounding a general discovery request that does not
specifically request materials protected by attorney-client
privilege or attorney work product, even if certain protected
materials may be responsive.
Finally, the measure is not intended to limit any statutory
authority of any agent or attorney of the United States to
access material protected by attorney client privilege or
attorney work product. Nor is it designed to prohibit an agent
or attorney from charging an entity or individual under a
Federal statute that makes the conduct in itself an independent
offense.
Hearings
The Committee's Subcommittee on Crime, Terrorism, and
Homeland Security held 1 day of hearings on the issue of the
right to counsel, particularly in the context of corporate
investigations, on March 8, 2007. Testimony was received and
heard from Barry M. Sabin, Deputy Attorney General, U.S.
Department of Justice; Andrew Weissman, Partner, Jenner and
Block; Richard White, Senior Vice President, Secretary, and
General Counsel, The Auto Club Group; William Sullivan, Jr.,
Partner, Winston & Strawn; and Karen J. Mathis, President,
American Bar Association.
Committee Consideration
On July 24, 2007, the Subcommittee on Crime, Terrorism, and
Homeland Security met in open session and ordered the bill
H.R.3013 favorably reported, by voice vote, a quorum being
present. On August 1, 2007, the Committee met in open session
and ordered the bill favorably reported without amendment, by
voice vote, a quorum being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that there
were no recorded votes during the Committee's consideration of
H.R. 3013.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 3013, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, August 17, 2007.
Hon. John Conyers, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3013, the
Attorney-Client Privilege Protection Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Leigh Angres,
who can be reached at 226-2680.
Sincerely,
Peter R. Orszag,
Director.
Enclosure
cc:
Honorable Lamar S. Smith.
Ranking Member
H.R. 3013--Attorney-Client Privilege Protection Act of 2007
H.R. 3013 would prohibit federal prosecutors or agents, in
a federal investigation, from demanding or requesting that a
corporation waive its attorney-client privilege or from using a
waiver as a factor in determining whether to indict the
organization. The bill also would bar prosecutors from
compelling a corporation to submit its attorneys' litigation
materials. Under the bill, a corporation could agree to waive
its attorney-client privilege as under current law.
CBO estimates that H.R. 3013 would have no significant
impact on the federal budget. According to the Department of
Justice, the bill could alter and possibly increase federal
attorneys' litigation duties. CBO estimates, however, that any
resulting increase in federal spending would total less than
$500,000 a year, assuming the availability of appropriated
funds. Enacting H.R. 3013 would not affect direct spending or
revenues.
H.R. 3013 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of State, local, or tribal
governments.
The staff contact for this estimate is Leigh Angres who can
be reached at 226-2860. The estimate was approved by Peter H.
Fontaine, Assistant Director for Budget Analysis.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
3013, has as its primary objective the preservation of
fundamental legal protections in the context of Federal
investigation and enforcement matters.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in Article I, Section 8 of the Constitution.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 3013 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(d), 9(e), or 9(f) of Rule XXI.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Sec. 1. Short Title. Section 1 sets forth the bill's short
title as the ``Attorney-Client Privilege Protection Act of
2007.''
Sec. 2. Findings and Purpose. Section 2 sets forth nine
Congressional findings and explains that the purpose of the Act
is to ``place on each agency clear and practical limits
designed to preserve the attorney-client privilege and work
product protections available to an organization and preserve
the constitutional rights and other legal protections available
to employees of such an organization.''
Sec. 3. Disclosure of Attorney-Client Privilege or
Advancement of Counsel Fees as Elements of Cooperation.
Subsection (a) of section 3 adds a new section 3014 to title 18
of the United States Code. New section 3014(a) defines the
terms ``attorney-client privilege'' and ``attorney work
product.''
New section 3014(b)(1) prohibits an attorney or agent of
the United States in any Federal investigation or criminal or
civil enforcement matter from demanding, requesting, or
conditioning treatment on the disclosure of any communication
protected by attorney-client privilege or attorney work
product. New section 3014(b)(2) prohibits an attorney or agent
of the United States in any Federal investigation or criminal
or civil enforcement matter relating to an organization or
affiliated person from conditioning a charging decision upon,
or using as a factor in determining cooperation, any one of
five specified actions. These actions include:
(1) Lmaking a valid assertion of attorney-client
privilege or attorney work product;
(2) Lproviding counsel or contributing legal defense
fees or expenses to an organization's employee;
(3) Lentering into joint defense, information sharing,
or common interest agreements with an organization's
employee;
(4) Lsharing relevant information with an
organization's employee; and
(5) Lfailing to terminate or otherwise sanction an
organization's employee because of that employee's
decision to exercise constitutional rights or other
legal protections.
New section 3014(b)(3) prohibits an attorney or agent of
the United States in any Federal investigation or criminal or
civil enforcement matter from demanding or requesting that an
organization or affiliated person not take any of these five
specified actions.
New section 3014(c) provides that the Act does not prohibit
an attorney or agent of the United States from requesting or
seeking material that such an attorney or agent reasonably
believes is not entitled to protection under the attorney-
client privilege or attorney work product doctrine.
New section 3014(d) establishes that the Act is not
intended to prohibit an organization from making, or an
attorney or agent of the United States from accepting, a
voluntary and unsolicited offer to share the organization's
internal investigation materials.
Subsection (b) of section 3 of the Act amends the table of
sections for chapter 201 of title 18 of the United States Code
to add new section 3014.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italics and existing law in which no change is
proposed is shown in roman):
TITLE 18, UNITED STATES CODE
* * * * * * *
PART II--CRIMINAL PROCEDURE
* * * * * * *
CHAPTER 201--GENERAL PROVISIONS
Sec.
3001. Procedure governed by rules; scope, purpose and effect;
definition of terms; local rules; forms-Rule.
* * * * * * *
3014. Preservation of fundamental legal protections and rights in the
context of investigations and enforcement matters regarding
organizations.
* * * * * * *
Sec. 3014. Preservation of fundamental legal protections and rights in
the context of investigations and enforcement
matters regarding organizations
(a) Definitions.--In this section:
(1) Attorney-client privilege.--The term
``attorney-client privilege'' means the attorney-client
privilege as governed by the principles of the common
law, as they may be interpreted by the courts of the
United States in the light of reason and experience,
and the principles of article V of the Federal Rules of
Evidence.
(2) Attorney work product.--The term ``attorney
work product'' means materials prepared by or at the
direction of an attorney in anticipation of litigation,
particularly any such materials that contain a mental
impression, conclusion, opinion, or legal theory of
that attorney.
(b) In General.--In any Federal investigation or criminal
or civil enforcement matter, an agent or attorney of the United
States shall not--
(1) demand, request, or condition treatment on the
disclosure by an organization, or person affiliated
with that organization, of any communication protected
by the attorney-client privilege or any attorney work
product;
(2) condition a civil or criminal charging decision
relating to a organization, or person affiliated with
that organization, on, or use as a factor in
determining whether an organization, or person
affiliated with that organization, is cooperating with
the Government--
(A) any valid assertion of the attorney-
client privilege or privilege for attorney work
product;
(B) the provision of counsel to, or
contribution to the legal defense fees or
expenses of, an employee of that organization;
(C) the entry into a joint defense,
information sharing, or common interest
agreement with an employee of that organization
if the organization determines it has a common
interest in defending against the investigation
or enforcement matter;
(D) the sharing of information relevant to
the investigation or enforcement matter with an
employee of that organization; or
(E) a failure to terminate the employment
of or otherwise sanction any employee of that
organization because of the decision by that
employee to exercise the constitutional rights
or other legal protections of that employee in
response to a Government request; or
(3) demand or request that an organization, or
person affiliated with that organization, not take any
action described in paragraph (2).
(c) Inapplicability.--Nothing in this Act shall prohibit an
agent or attorney of the United States from requesting or
seeking any communication or material that such agent or
attorney reasonably believes is not entitled to protection
under the attorney-client privilege or attorney work product
doctrine.
(d) Voluntary Disclosures.--Nothing in this Act is intended
to prohibit an organization from making, or an agent or
attorney of the United States from accepting, a voluntary and
unsolicited offer to share the internal investigation materials
of such organization.
* * * * * * *