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Corporate Cooperation and the Joint Defense Privilege

White Collar Criminal Defense By Harvey Binnall PLLC - 2018/07/25 at 08:11pm

In the context of white collar criminal defense, there has — generally speaking — been a fundamental tension between employees and their employers.  After all, when government agencies begin to investigate the potential wrongdoing of a business entity (and the employees therein), conflicts of interest naturally arise.

An employee, for example, may be suspected of committing fraud while working for their business employer.  If the employee acted alone and without the knowledge of their employer, then no tension exists — it is perfectly reasonable for the employer to engage with prosecutors separately, and to leave the employee on their own to handle their defense.

If the employee potentially committed fraud, and that (potential) fraud was hidden by their employer, then both parties may be liable for related charges.  Under such circumstances, there is a natural alliance of interests — the employer and employee may be incentivized to work together in engaging with prosecutors.

What is the Joint Defense Privilege?

When parties enter into a joint defense agreement, the joint defense privilege will attach to certain communications between them.  Simply put, the joint defense privilege applies to communications between employees and their employers when the communications are part of an ongoing and joint effort to setup a common defense strategy.  Essentially, the joint defense privilege gives parties the ability to share information (e.g. information shielded pursuant to the attorney-client privilege) without waiving the foundational attorney-client privilege.

How does this work in real world terms?

Suppose that you are an employee who has been charged with a white collar crime (fraud), and your employer has also been charged with related crimes.  The government is investigating the case.  Perhaps you and your employer have a shared interest, and could cooperate to the benefit of each party.  You therefore sign a joint defense agreement and share information so that you can coordinate your defense without compromising any of the information.  Prosecutors cannot use the fact that you shared the information to waive the attorney-client privilege.

New Considerations in a Post-Yates Environment

In 2015, the issuance of the Yates Memo led to a significant shift in how white collar criminal cases are prosecuted.  Individual accountability became the primary focus of prosecutors, with cooperation credits provided to those employers who disclose relevant facts pertaining to individual misconduct within the organization.  Failure to identify individuals who may have been responsible for corporate misconduct, and to disclose all facts relating to that misconduct, will result in the loss of all “cooperation credit” for the business entity.

Given the heightened tension between businesses and their employees in a post-Yates environment, the applicability of joint defense agreements (and the privilege) has been called into question.

There are primarily two issues to consider in this regard: 1) the effect of the Yates Memo in creating an environment that pits the employer against their employees in a white collar criminal investigation, and 2) the “common interest” problem.

Now that employers are incentivized by the government to disclose the misconduct of individuals within their organization, there is less reason for employers to enter into joint defense agreements.  After all, if the employer learns something relevant about the misconduct of their employee and fails to disclose it to the government, then they might lose all cooperation credit.

It’s also worth noting that the joint defense privilege only applies to communications between parties that have a common interest.  In the post-Yates world, however, employees and employers under investigation may not actually share a common interest.  If the prosecution can show that there is no common interest, then they may be able to overcome the privilege and obtain sensitive information.

Consult a Skilled Alexandria White Collar Defense Attorney for Help

Here at Harvey & Binnall, PLLC, our team of attorneys has decades of experience representing a variety of white collar criminal defendants — individual employees and business entities — in litigation.  We are committed to comprehensive legal advocacy.  We approach disputes as though we will necessarily proceed to trial, thus giving us a substantial advantage during negotiations with prosecutors.  If negotiations do not lead to a positive resolution, and the case does proceed to trial, we are well-equipped to obtain a favorable verdict on your behalf.

Call (703) 888-1943 or submit an online case form today to get in touch with an experienced Alexandria white collar defense attorney at Harvey & Binnall, PLLC.  We look forward to speaking further about the charges that have been brought against you, and assisting with next steps.