U.S. Attorney Manual Revised To Reflect Yates Memorandum’s Focus on Individuals

By on November 19, 2015

On September 9, 2015, Deputy Attorney General Sally Quillian Yates issued a memorandum outlining the Department of Justice’s increased focused on individual responsibility in investigations of corporate wrongdoing, now colloquially referred to as the “Yates Memorandum.”  (We previously reported on the Memorandum here).

Pursuant to the Yates Memorandum’s directive that the U.S. Attorneys’ Manual (USAM) be revised to reflect this increased focus on individuals, on November 16, 2015, such revisions were released.  In a speech on that date to the American Banking Association and the American Bar Association Money Laundering Enforcement Conference, Deputy AG Yates highlighted the important nature of the revisions: “We don’t revise the USAM all that often and, when we do, it’s for something important.  We change the USAM when we want to make clear that a particular policy is at the heart of what all Department of Justice attorneys do and when we want to make sure that certain principles are embedded in the culture of our institution.”

Among other things, the revisions to the USAM update the “Filip factors” concerning criminal prosecution of organizations and associated commentary.  The revisions urge an early focus on individual culpability and possible prosecution in corporate criminal investigations.  The revisions, like the Yates Memorandum itself, also make clear that to receive any credit at all for cooperation, corporations must identify culpable individuals and disclose nonprivileged information concerning their misconduct.  In her speech, Deputy AG Yates remarked that this “seems to be the policy shift that has attracted the most attention,” but also stated that this concept of corporate cooperation is nothing new.  She went on:

“What is new is the consequence of not doing it.  In the past, cooperation credit was a sliding scale of sorts and companies could still receive at least some credit for cooperation, even if they failed to fully disclose all facts about individuals.  That’s changed now.  As the policy makes clear, providing complete information about individuals’ involvement in wrongdoing is a threshold hurdle that must be crossed before we’ll consider any cooperation credit.”

In response to concerns that this policy will require broad and expensive internal investigations, Yates noted that investigations should be tailored to the wrongdoing, and not every investigation needs to be a “years-long, multimillion dollar” effort.  She further suggested that if there are doubts about what is required in terms of an investigation, the requisite extent of the investigation could be vetted with the prosecutor.

Yates observed that nothing about the policy requires waiver of the attorney-client privilege.  But at the same time, she invoked the adage that “legal advice is privileged.  Facts are not.”  As such, while a law firm’s interview memoranda prepared during the course of an internal investigation may not need to be disclosed in order for the corporation to receive credit, “the corporation does need to produce all relevant facts—including the facts learned through those interviews—unless identical information has already been provided.”

Yates further observed that the edits to the USAM make clear that timing “is of the essence,” and a “company should come in as early as it possibly can, even if it doesn’t quite have all the facts yet.”  Moreover, the USAM revisions distinguish the concept of timely/voluntary disclosure from cooperation, noting that while they are related concepts, “prompt voluntary disclosure by a company will be treated as an independent factor weighing in the company’s favor.”

Importantly, Yates also highlighted revisions to the civil chapter in the USAM, which adds a new section directing assistant U.S. attorneys (AUSAs) to focus on individual responsibility from the inception of civil investigations, much like in criminal investigations.  “In this new civil section on individuals, we are directing our civil attorneys to follow the same principles that guide our criminal prosecutors.”  Among these is the principle that corporate resolutions should not provide protection from individual criminal or civil liability, absent extraordinary circumstances.  As Principal Deputy Assistant Attorney General Benjamin Mizer stated in an October 22, 2105, speech to the 16th Pharmaceutical Compliance Congress and Best Practices Forum, “in order to qualify for the reduced multiples provision under the False Claims Act, the organization must voluntarily identify any culpable individuals and provide all material facts about those individuals.” Read the full speech here.

The revisions to the USAM translate the principles announced in the Yates Memorandum into practical application.  While some of those principles have received criticism—including concerns about a corporation’s ability to meet the standard of cooperation, thus leading to less cooperation—Deputy AG Yates responded, “I suppose that may happen, but I am not convinced… But if fewer companies cooperate and our corporate settlements are reduced, we’re okay with that.”  In any event, from the perspective of FCA defendants, it is clear that corporations faced with FCA investigations and litigation will need to give ample consideration early on to the DOJ’s focus on individuals, now codified in the USAM.

Laura McLane
Laura McLane serves as head of McDermott's Boston Litigation Practice Group. Laura represents national and international clients in health care, securities and other government enforcement matters, both civil and criminal. She also represents clients in professional and products liability cases and in complex commercial disputes. A significant part of Laura's practice is devoted to representing health care and other companies, as well as individuals, in government investigations and qui tam litigation based on the False Claims Act (FCA) and related statutes, including the Anti-Kickback Statute and the Stark Law. Read Laura McLane's full bio.