Privilege Cat and Mouse? How the NYAG's Actions Against BofA Threaten Privilege Protection
In a case involving an investigation by the NYAG and the SEC of Bank of America’s merger with Merrill Lynch and compensation and bonuses paid to Merrill Lynch executives (see New York Law Journal story), the NYAG's approach turns privilege law on its head and could profoundly undermine the provision of legal and preventive law counseling in public companies.
The U.S. Department of Justice has officially agreed that coercing privilege waivers is not appropriate, without precedent, and extremely bad public policy. It appears that the NYAG strategy is to "try" Bank of America in the media where they have suggested that Bank of America is not cooperating with the investigation because they haven't released privileged communications and work product. Such arguments do not hold water and would not withstand the scrutiny of introduction in the courtroom, under legal precedent on privilege, current federal charging policy, or SEC enforcement guideline.
It is ludicrous for the government to argue that a company invokes an "advice of counsel defense," because an employee “admits” under questioning that s/he spoke with a lawyer. That "admission" by the employee is the result of a good faith answer to a direct question posed by a prosecutor (and is thus compelled). It is not a disclosure of any aspect of the underlying advice, nor does it somehow create an argument that the company is asserting an advice of counsel defense. We all know that such an assertion needs to be made by the company in a formal adjudication process as a stated defense. Bank of America is quite clearly arguing in this case that its actions were legitimate and compliant with all disclosure laws, not that they were somehow illegitimate or suspect, and only made on “advice of counsel.” (see Lewis Liman’s 9/8/09 letter to the NYAG).
The NYAG's unprincipled shot across the bow [to create out of thin air an assertion that the company has raised an advice of counsel defense and therefore needs to divulge privileged files], if allowed to stand, will reverberate through every corporate boardroom and C-suite. It will have a chilling effect on clients’ willingness to engage in crucial conversations with lawyers on the most sensitive and complex matters they face. Yet those are precisely the circumstances in which the public interest most favors candid consultations with counsel. I would have hoped that prosecutors and enforcement officials in such cases would be interested in encouraging such good practices, rather than undermining them.
see, e.g., the DOJ’s Filip Guidance now incorporated into the US Attorney’s Manual at § 9-28.710 (revised August 20, 2008), Supreme Court precedent in such cases as Upjohn v. United States, 449 U.S. 383, 390 (1981), and the SEC's revised charging guidelines in the SEC's Enforcement Manual, at 99 (Oct. 6, 2008).] ACC has extensive material on these issues online at www.acc.com/advocacy.
