- The Washington Times - Sunday, August 13, 2006

ALBANY, N.Y. (AP) — Two legal groups, including the American Bar Association, are opposing a U.S. Department of Justice policy they say compels companies facing indictment to refuse to pay legal costs of corporate officers or board members.

After scandals at companies such as Enron Corp. and WorldCom Inc. cost shareholders tens of billions of dollars and wiped out thousands of jobs, the Justice Department in January 2003 issued a memo to guide prosecutors as they decide whether to seek criminal charges against a business.

The memo says prosecutors can consider whether the corporation appears to be “protecting its culpable employees and agents” by advancing attorney fees, retaining the employees without sanction or giving the employees information about the government’s investigation.

The legal groups say the memo can inspire companies to do the opposite, including not paying legal costs for employees and agents.

Mark Alcott, president of the 72,000-member New York State Bar Association, said the use of such tactics to “force companies to waive attorney-client privilege” has accelerated in recent months.

His group and the 400,000-member American Bar Association want the Justice Department to back off.

“This is a serious and threatening interference in the relationship between lawyers and clients,” Mr. Alcott said. “We don’t know if somebody is a wrongdoer until charges have been brought, a jury hears a trial and someone is convicted. Every person is entitled to a lawyer, and [company officials] have a legal right to have their employers pay those fees.”

Justice Department spokeswoman Kathleen Blomquist said the department remains committed to the principles and guidance set out in the memo, but it will listen to concerns.

“We look at the seriousness of the offense, its pervasiveness, the corporation’s past history, harm to shareholders and the adequacy of compliance programs, among other things,” she said.

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