Implications of Justice Dept. Focus on Individuals
It’s still too soon to tell whether the Justice Department’s focus on individual accountability for corporate wrongdoing will have a real and lasting impact, according to a Washington Legal Foundation Legal Backgrounder by two Bryan Cave attorneys. Although the policy announced last fall by deputy attorney general Sally Yates did not include a new legal infrastructure changing the liability of corporate officers, the post says that “corporate executives, officers, and managers must pay attention to their roles and actions when faced with assertions of corporate liability and be cognizant of their own potential legal exposure. This awareness will undoubtedly have a counterproductive impact on a corporation’s ability to ferret out what happened, determine how extensive the wrongdoing was, and make prompt disclosures to the Department of Justice.”
Yates said she wanted to send a message to corporate wrongdoers, the brief says, and “change corporate culture to appropriately recognize the full costs of wrongdoing, rather than treating liability as a cost of doing business.”
The policy outlined six points of guidance in facilitating accountability for individual corporate wrongdoing:
corporations must provide all relevant facts about individuals involved in misconduct to receive any corporate credit for cooperation; individual conduct should be the focus at the outset of all civil or criminal investigations; “routine communication” should take place among civil and criminal attorneys investigating corporate wrongdoing; corporate resolutions will not protect individuals from civil or criminal liability; corporate cases should not be closed before there is a plan for addressing individual liability; and civil attorneys should consider pursuing litigation against individual wrongdoers despite their inability to pay.
The brief discusses three strategic and practical implications for practitioners defending corporate and individual clients in these actions: (1) the “all or nothing” approach to corporate credit; (2) placing individuals at the forefront of investigations along with, and in conflict with, corporations; and (3) consequences of dual-track criminal and civil proceedings.