To Each His Own: The Yates Memorandum and the Importance of Personal Counsel

by Luke Baumstark

On September 9, 2015, Deputy Attorney General Sally Quillian Yates drafted a Memorandum directed to nine high ranking officials with the Department of Justice.[1] Its subject reads “Individual Accountability for Corporate Wrongdoing.” In her Memorandum, Yates outlines six policy changes, which she declares to be applicable all future investigations, aimed at increasing prosecutions of individuals involved in corporate wrongdoing. Some might feel that she is a bit late to the party, as segments of the public have been clamoring for substantive action in this area as least as far back as the financial collapse of 2008. That said, there are those who believed that such action would never come – so this is definitely a case of “better late than never.”

The first of these new policies states that “[t]o be eligible for any cooperation credit, corporations must provide to the Department all relevant facts about the individuals involved in corporate misconduct.” In describing this policy, Yates clarifies that the Department will refuse to credit corporations which “decline to learn of such facts” or which provide incomplete information. She further states that Department attorneys should not blindly rely on such information, but should “be proactively investigating individuals at every step of the process – before, during, and after any corporate cooperation.” Yates also envisions scenarios in which corporations will be made to continue to assist with investigations against individuals even after claims against the corporations themselves have resolved, the failure to do so possibly resulting in penalties or a breach of the plea or settlement agreement.

Yates’ next new policy is that “[b]oth criminal and civil investigations should focus on individuals from the inception of the investigation.” Yates explains that this will increase the chance that targeted persons will proffer information about those “higher up the corporate hierarchy.”

The third new policy charges that “[c]riminal and civil attorneys handling corporate investigations should be in routine communication with one another.” Here, Yates calls for simultaneous civil and criminal investigations of the same individuals “even if it is not certain that a civil or criminal disposition will be the end result for the individuals or the company.”

Following this, Yates announces a policy denying to corporations resolutions that protect individuals from criminal or civil liability “absent extraordinary circumstances.” She adds teeth to this provision by mandating that releases involving these “extraordinary circumstances” must be “personally approved in writing by the relevant Assistant Attorney General or United States Attorney.”

Yates’ fifth new policy states that “[c]orporate cases should not be resolved without a clear plan to resolve related individual cases” and “declinations as to individuals in such cases must be memorialized.” She explains that the Department should not wait on corporate investigations to conclude before pursuing targeted individuals. In rare instances where this cannot be done within the statute of limitations, Yates recommends that department attorneys pursue tolling either through agreement or court order. She also reiterates that decisions not to pursue charges against individuals guilty of misconduct must be approved by the United States Attorney or Assistant Attorney General whose office handled the investigation.

The sixth and final new policy discussed in Yates’ Memorandum states that civil attorneys should base decisions on whether to bring suit against individuals on factors beyond the target’s ability to pay off a judgment. She clarifies that these additional factors should include the seriousness of the alleged misconduct, whether it is “actionable,” whether there is sufficient evidence to sustain a judgment, and whether bringing suit furthers “an important federal interest.”

If pursued aggressively, the new policies outlined in Yates’ Memorandum could cause significant waves in the corporate world, possibly even bringing about the kind of accountability that many have demanded. It is difficult to deny that the United States at least appears to have a problem in prosecuting and punishing corporate crime, and that calling legitimately culpable individuals to task for their actions is in our best interests as a society.

One thing that the DOJ’s new policies will not be able to do, however, is fundamentally change human nature. They can’t, for example, make the guilty less likely to lie, or even to try to pin their crimes on others. Indeed, implementing these policies may have the unintended effect of making them more likely to do so. As the government presses hard to identify individuals to hold accountable for corporate misdeeds, fingers will be pointed. Some of these fingers, however, will undoubtedly be pointed by the guilty, rather than at them. And you can bet that, if the finger-pointer has enough clout within the corporation, the “pig pile” will begin. Although the government may make every effort to learn who is truly responsible, it will often still need to rely on information coming from corporations themselves. The buck will be passed. There will be scapegoats. Innocent people will be charged.

What this means is that, if you work for a corporation or company that is being investigated, and you had any involvement whatsoever (even tangentially) with the conduct at issue, you should retain your own attorney, independent of your employer’s counsel.[2] Even if you believe that the investigation is wrapping up, and you feel like you are “out of the woods,” you may not be. As discussed above, Yates’ Memorandum calls for DOJ attorneys to continue investigations of individuals after the corporate case resolves, and to strong-arm corporations into helping them do so. Your employer’s counsel may have the best of intentions for you initially, but could ultimately wind up being beholden to the very corporation that is trying to make you its scapegoat. Further, because of the DOJ’s newfound commitment to pursuing both civil and criminal actions against the same individuals, you could wind up defending multiple lawsuits simultaneously.

When faced with that kind of adversity, you will need a team that is on your side, and your side alone. The best defense will come from a firm experienced in both white collar criminal defense and government enforcement actions, that is small enough so that the left hand knows what the right is doing, and nimble enough to coordinate your defenses effectively. Choosing the right team might be the best move you ever make. Relying on attorneys provided by someone else could cost you your liberty and your future.


[1] The Memorandum is addressed to the Assistant Attorney Generals heading the Antitrust, Civil, Criminal, Environment and Natural Resources, National Security, and Tax Divisions, as well as the Directors of the Federal Bureau of Investigation and the Executive Office for United States Trustees, and “All United States Attorneys.”

[2] As I have noted in past posts, one should always “lawyer up” when asked to participate in a federal investigation anyway.