Cooperation Credit, Privileges, and Possible Landmines for Attorneys and Clients: Implications of US v. Coburn

Event Video

Listen & Download

In February 2022, a District of New Jersey court in United States v. Coburn compelled a private company to produce internal investigation materials to two of its former executives, who had been indicted by the U.S. Department of Justice ("DOJ") relating to an alleged foreign bribery scheme. This panel will explore the implications that this decision, and its legal reasoning, might have on attorneys and clients who are attempting to cooperate with DOJ as part of a self-disclosure strategy with the intent to earn "cooperation credit," while at the same time protecting the attorney-client and work product privileges emanating from internal investigations conducted on behalf of one's corporate client.


  • Hon. Don Cochran, Professor of Law, Belmont University College of Law
  • Hon. Mike Hurst, Partner, Phelps Dunbar LLP
  • Hon. John C. Richter, Partner, King & Spalding
  • (Moderator) Hon. David C. Joseph, United States District Court Judge, Western District of Louisiana


As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker.

Event Transcript



Chayila Kleist:  Hello and welcome to this FedSoc Forum webinar call. Today, April 23, 2024, we’re delighted to host a discussion on “Cooperation Credit, Privileges, and Possible Landmines for Attorneys and Clients: The Implications of US v. Coburn.” My name is Chayila Kleist, and I’m an assistant director of practice groups here at The Federalist Society. As always, please note that all expressions of opinion are those of the experts on today’s program, as The Federalist Society takes no position on particular legal or public policy issues.


Now, in the interest of time, we’ll keep our introduction of our guests today brief, but if you’d like to know more and read any of their impressive bios, you can access those at Today, we are fortunate to have with us as our moderator the Honorable David Joseph, who has served since 2020 as the United States District Court Judge in the Western District of Louisiana. Before joining the bench, Judge Joseph served as the United States Attorney in the Western District of Louisiana from 2018 to 2020, and before that he was an AUSA in the same district.


Before joining the DOJ, he served as commissioned officer and prosecutor in the U.S. Army Judge Advocate General’s Corps as an attorney with the professional liability and financial crime section of the Federal Deposit and Insurance Corporation and in private practice as a commercial litigation attorney. And I’ll leave it to him to introduce the rest of our panel.


A last note and then I’ll get off your screens. If you have any questions, please submit them via the question and answer feature found at the bottom of your Zoom screen so they’ll be accessible when we get to that portion of today’s webinar. With that, thank you all for joining us today. Judge Joseph, the floor is yours.


Hon. David C. Joseph:  Thank you, Chayila. I appreciate everybody joining us today. I think this is a very interesting topic. We have with us -- I’m honored to have with us a very distinguished panel today: first, my friend and Professor Don Cochran. He’s a professor at Belmont University College of Law. He teaches evidence, trial advocacy, and criminal law courses.


When I got to know Don, he and I were serving together as United States Attorneys, him for the middle district of Tennessee from September of 2017 to February of 2021. Prior to become U.S. Attorney, Don was a law professor at Belmont and before that at Cumberland School of Law in Birmingham. And from 1998 to 2002, Professor Cochran was an assistant U.S. Attorney in the Northern District of Alabama where he focused on white collar crimes, public corruption and of course violent crimes as well.


Before that, he was an assistant DA in the District Attorney’s Office in Birmingham, where, again, he prosecuted a wide variety of cases and was one of their top prosecutors. Professor Cochran clerked for Judge Julie Carnes of the United States District Court for the Northern District of Georgia after finishing at Vanderbilt Law School and Vanderbilt undergraduate school.


I’m also joined by Mr. John Richter. John is a trial and investigations partner in the special matters and investigations practice groups at King & Spalding. He represents and defends companies, boards of directors, board committees, and individuals facing a wide variety of white collar criminal and regulatory enforcement matters, parallel civil litigation, and internal corporate investigations. Mr. Richter previously served as U.S. Attorney for the Western District of Oklahoma—that was in the George W. Bush Administration—and also as acting Assistant Attorney General in charge of the criminal division at Main Justice.


Finally, we have Mike Hurst. Mike is a litigation partner at Phelps Dunbar Law Firm in Jackson, Mississippi. Mike served with Don and I as United States Attorney in the Southern District of Mississippi from 2017 to 2021 where he led highly successful efforts to combat violent crime, human trafficking, and public corruption, among many other issues throughout Mississippi. Before his tenure as U.S. Attorney, Mike was an Assistant U.S. Attorney for the Southern District of Mississippi for more than eight years where he handled white collar crimes, public corruption, and financial fraud. Mike also has experience in the private sector having practiced law in Washington, D.C., and more recently he served as a litigator and general counsel for a nonprofit. He has experience also in public policy having worked on Capitol Hill for the House Judiciary Committee and the legislative director for a U.S. congressman.


So this is a great panel, I think, to discuss the topic we have. We all have a lot of different types of experience with corporate investigations, and I’m going to kind of lead off asking John who flagged this issue for us to discuss -- this case, U.S. v. Coburn -- to kind of talk about the background of the case a little bit, John.


Hon. John C. Richter:  Thank you, Your Honor. So on February 13 of 2019, the U.S. Department of Justice issued a declination to a company called Cognizant Technology Solutions. And Cognizant had been investigated for some time, and this declination related to alleged violations of the Foreign Corrupt Practices Act due to employees of Cognizant allegedly engaging in a $2 million bribe and other improper payments to Indian government officials. The declination was based in part on Cognizant’s cooperation through a voluntary self-disclosure through internal investigation and provision of “all known relevant facts about the misconduct.”


The next day, two former Cognizant executives, Gordon Coburn and Steven Schwartz, were indicted and thereafter subpoenaed Cognizant seeking the production of all materials regarding the company’s internal investigation of the alleged wrongdoing. The District of New Jersey then ordered the company, nonparty to the criminal case, Cognizant Technology Solutions Corporation, to produce internal investigation materials to these two former executives finding that Cognizant had waived privilege over a number of documents by disclosing portions of certain materials to the department in connection with its investigation and cooperation efforts. The court found specifically that Cognizant’s disclosures, a summary of its internal investigative findings, which included detailed accounts of 42 interviews of 19 Cognizant employees including the two defendants who had been charged, to the department while under the threat of prosecution undermined attorney-client privilege and work product doctrine and therefor effectively destroyed any protection otherwise that might have been afforded to such materials.


The court further ruled that the disclosure affected a waiver as to other communications and documents concerning the same subject matter and that therefore other materials in fairness should be considered along with the actual disclosures. That included, then, a very broad order to produce summaries, notes, memoranda, and other records of witness interviews. To the extent those summaries were conveyed to the government whether orally or in writing, documents and communications whose contents were conveyed within those summaries, documents and communications that were reviewed or formed any part of the basis of any presentation, oral or written, to the department in connection with the investigation. There was some follow up litigation in terms of motions for clarification, but ultimately the breadth of this order of disclosure was carried out.


The Coburn decision obviously took an expansive view of subject matter waiver, particularly in this context in which two former executives were being charged. However, I think overall the view is generally consistent with the federal evidence rules, existing Third Circuit case law, and lower court decisions that indicate that a corporation may waive attorney-client privilege or work product doctrine when it shares internal investigative materials with the government. So based on that, judge, I think that gives a basic foundation for our discussion today.


Hon. David C. Joseph:  Thank you, John. And one of the things that occurred to me in reading the Coburn decision—and that’s out the District of New Jersey—was the use of the defendant in that case -- the use of Rule 17 subpoenas to obtain that information. Of course, in the case it’s United States v. Coburn. The subpoenaed companies are third parties to that litigation. So the mechanism that they used was a Rule 17c subpoena, which the Nixon case from the Supreme Court established a long time ago Rule 17 subpoenas are not discovery devices.


So the mechanism, I think -- and if you look at the Coburn case, the United States did not file a motion to quash those subpoenas. The motion was filed by the companies, by the two companies. The United States from what I could tell did not insert themselves in that process, which is interesting. Don and Mike, what’s your view of kind of maybe stepping back and looking at the discovery device used to obtain this information from the companies?


Hon. Mike Hurst:  Well, I don’t know how else the defendants of this case -- and I’ll point out, John, your summary was great. But I will point out to the audience the defendants in this case were both the president and the chief legal officer. A lot of times we don’t think about the chief legal officers or general counsel getting into any issues, but obviously that came to the attention of the Department of Justice here.


But I don’t know how else the defendants could have tried to get this information from the company but through a Rule 17 subpoena. Judge, as you have said, in our experience we can’t use Rule 17 subpoenas to get discovery in criminal matters, but the rule says and the courts have said that Rule 17 subpoenas can be used to get evidence for trial or I think more in this case to try to go to issues of fact related to pretrial motions and such. So there’s a big hurdle obviously for a good reason, but if I were representing the defendants’ case, I don’t know what other type of vehicle I would or could use in order to try to get this information. I think I would be entitled to for my clients. Don?


Hon. Don Cochran:  Yeah. I think we’ve all seen an attempt to use Rule 17 as a bit of an end run around the limit discovery provided in Rule 16 in criminal cases, and so I think the judge certainly points that out and gives lip service to that. I don’t know to what decree -- and perhaps it’s because the department didn’t file a motion to quash as you said, Your Honor -- whether the court would’ve looked harder at that. The Rule 17, the purpose of it is to expedite the flow of the trial, so it’s really not a device that’s supposed to provide discovery in the early stages. And it’s certainly not supposed to be an end run around Rule 16. So whether the court would’ve taken a harder look at that if the DOJ had filed that motion, Your Honor, I’m not quite sure but perhaps.


Hon. David C. Joseph:  Yeah. That’s a good point, Professor Cochran. At least in the Fifth Circuit, it’s called the Arditti case. It says that Rule 17 is not a proper way to obtain what you might use for impeachment. And I think in this case that was a lot of what they -- they were trying to get witness interviews done by the company to then maybe impeach those witnesses when they’re testifying. Is that right, John? Is that your understanding?


Hon. John C. Richter:  Well, I think that’s -- yeah, I think you’re right about that. I’m certain that was a portion of it. They certainly hung their hat a great deal on what they believed was Brady-Giglio in arguing the --


Hon. David C. Joseph:  Right, right. But again, Brady-Giglio applies to the government, and the government, unless you -- there’s an argument that the company is a part of the prosecution team, which maybe could be made but I don’t think was made here. Brady-Giglio doesn’t apply.


Hon. John C. Richter:  Well, I think what they argued was, again, that by virtue of the company effectively providing what they would’ve argued was a selective view of the facts to the government and doing it in the manner that they did it they essentially waived privilege and work product doctrine and therefore should receive any other information that may have been countervailing to the view that was conveyed by Cognizant in seeking to curry favor with the government and get a declination. And so that, I think, was the basis for it.


The defendants did seek separately, I’ll note, thereafter to try to argue that essentially Cognizant was acting as an agent of the government. The court in a later ruling declined to adopt that view, but I think, again, my guess is that regardless of the rule that says that there’s not general discovery in a criminal case, I think the court felt like the manner in which this was shared, which was a pretty extensive summary of interviews of witnesses, did in fact effectuate a waiver, was an intentional waiver under federal rule of evidence 502(a), and that in fairness the defendants needed to have the full nature of what was provided so as to not have essentially this affirmative disclosure, if you will, used as both a sword and a shield.


They were using this essentially to get Cognizant to avoid having alleged criminal conduct imputed to them criminally while at the same time, then, obviously seeking to curry favor for the defense standpoint by throwing the individuals under the proverbial bus. And the question was is the information that was provided -- if it was selective, did the rest of that information in fairness need to be provided?


Hon. David C. Joseph:  Right. And that’s a great point, and I think it does implicate the case law that the defendant has the right to present a defense; right? And if you think about the Supreme Court case Chambers v. Mississippi, dealing with how different procedural rules were used to effectively deny the defendant the opportunity to present the case that the defendant had, the fundamental fairness comes in, and I agree that this case might implicate some of those concerns.


Hon. Mike Hurst:  Well, and to John’s earlier point -- I don’t want to jump the gun here, but really isn’t the issue or the thing that we’re probably all concerned about at least in the private sector is DOJ is pushing strong to go after corporate criminals, as they allege. But they also want corporations to cooperate and disclose, and this case I think illustrates the danger there because if you start disclosing to the government to try to get your client the company out of something, do you run afoul of Rule 502 and effectuate a subject matter waiver and have to disclose not just what you told the government but everything related to that? And I think that’s a real concern here.


Hon. David C. Joseph:  Getting past the mechanism of using Rule 17 to obtain these documents, let’s talk about how the Federal Rules of Evidence might apply. And I think the primary rule dealing with waiver that was applied by the district court here was Federal Rule of Evidence 502(a). Professor Cochran, you taught evidence for a number of years. Do you have any thoughts on the application of this rule?


Hon. Don Cochran:  Yeah. Interestingly, 502 is one of the more recent rules of evidence. It came into existence when Congress passed it in 2008, and it was largely intended to deal with issues related to e-discovery and just the voluminous discovery that exists in the modern world and problems inherent with disclosure of massive amounts of materials where inadvertently there might be attorney-client protected or work product protected material within that. And so inadvertent disclosure was part of what the rule covered. It also covers intentional disclosure in 502(a).


But I think interestingly, although it seems on its face to codify the common law here, it actually if you look at the advisory committee comments was intended to narrow the wide scope under common law of subject matter waiver because the advisory committee notes talk about the in fairness to be considered prong of that intentional waiver part to only be limited to situations of which a party intentionally puts protected information into litigation in a selective, misleading, and unfair manner. And I’m not trying to second guess the judge in New Jersey. He knew his case far better than I do, and perhaps as John said he felt that’s what was going on here.


I didn’t see a lot of analysis of that in the opinion, but that may well be. He may have felt like they selectively put out the parts of it that looked favorable to them and withheld the rest or the rest was needed for context. But at least on its face, 502(a) is supposed to limit the broader common law rule of subject matter waiver.


Hon. David C. Joseph:  Right. And that’s a very interesting point. I hadn’t looked at the comments, but there is the qualifications of when waiver extends past the information disclosed to the government. So that would be, I think -- getting past the Rule 17 issue to the companies that are actually moving to quash these subpoenas, Mike and John, might that be avenues you would counsel your corporate clients they might pursue? In other words, in deciding what information to give to the government, think about what other information is out there and how that information might relate to Rule 502(a) and how 502(a) might open information up, so your thoughts on that issue.


Hon. John C. Richter:  Well, I’ll speak first. Obviously, Mike, I’m sure you have good thoughts on it. Absolutely, Your Honor. I think first and foremost Professional Rules of Responsibility 1.6 govern and make sure and tell the lawyers that they must keep client information confidential and must take reasonable steps to preserve such confidentiality. So any time you as a practicing attorney are going to be releasing information that’s been gathered through your work, you necessarily need to be making sure that you are taking reasonable steps to protect it and/or advising your client about the risk/reward that exists in this context of providing information in engaging with the government in an investigation.


The reality of course is, unlike many individual defendants who face criminal prosecution, companies often have a much greater opportunity to engage and negotiate outside a court of law for resolution. What we think about that could be a subject of another conversation, but that’s just the simple reality. And so on the one hand, corporations face a risk here in producing and providing information to the government. On the other hand, they get a benefit that may not be afforded to many other defendants in other criminal cases insofar as they can provide presentations on key findings and obviously argue for a particular resolution.


Obviously, in the Cognizant case it paid off with a declination. In other matters, it may pay off with a lesser sanction or lesser fine or other terms that may be seen as better than the worst case of being indicted. So I think certainly 502 governs, and the question then is if you’re going to cooperate and you’re going to provide information to the government as part of engaging with the government, what are some ways in which you can do so and not open yourself up to this subject matter waiver that occurred in the Coburn case.


Hon. David C. Joseph:  Yeah. And Mike, I want you to comment on this. So when turning over information, you need to think about what other information that’s related is out there. What’s the scope of that information? And what’s the likelihood you would have to produce that if a similar situation occurred?


Hon. Mike Hurst:  Absolutely. I couldn’t agree with you more, judge and John. Both of y’all’s last points I think gets to the heart of this. We know these rules. We’re well aware of the rules of evidence and the rules of criminal procedure, but this case I think really hits home for us to emphasize that we have to take a more comprehensive, holistic view of our representation of companies or corporations because of this.


Like John said, a lot of times we represented individuals it’s somewhat easier because there’s not as much. With corporations, we’re doing internal investigations. We have all this evidence, and if we don’t consider subject matter waiver and the potential for subject matter waiver of our attorney-client privilege and our work product privilege, you can get real sideways and have a decision like this one where not only what you intended to disclose to the government has to be turned over to individual criminal defendants but as John said at the very beginning any part, anything that was relevant, anything that was referenced in whatever summaries, oral or written, you gave to the government now must be disclosed to individual defendants.


So yeah, I think it’s a good reminder for us to really assess, again, comprehensively how we talk to our corporate clients and how we advise them on cooperating or disclosing things to the Department of Justice.


Hon. David C. Joseph:  I mean, might it also affect how you conduct the investigation?


Hon. Mike Hurst:  Absolutely.


Hon. David C. Joseph:  What kind of work product you’re actually producing, maybe speak to that a little bit.


Hon. Mike Hurst:  Again, I think it’s a reminder that things that we all know, such as the facts that we uncover during internal investigations are obviously not confidential. They’re not privileged, and so I think we have to reassess how we do these investigations to ensure that the most privilege can apply to things that we find and things that we analyze for our clients.


Hon. John C. Richter:  Judge, I would note that there seems to be some recognition not only in the Coburn case but in a couple of other cases that predate that that involve SEC litigation or matters that a distinction between sort of quoting directly from particular interviews or describing really the substance of individual interviews as opposed to offering a high level summary of what you believe the facts would show generally speaking. And I think the challenge with that is I think that’s true, that if as counsel for a company you’re proffering a high level summary of what you think the facts would be and you’re organizing them thematically rather than witness by witness as seems to have been done in the Coburn case at least according to the opinion. The reality, though, is of course that the government’s policy in terms of earning cooperation suggests that you have to not only provide high level information of relevant nonprivileged facts but also the evidence as it may pertain to all individuals involved and must sort of come clean about everybody.


And so to the degree that that is what is necessary to gain the cooperation credit that you may be seeking for your client, you necessarily -- it puts counsel in a difficult spot in terms of how you can meet that standard. I can tell you that few prosecutors are really focusing on this issue, at least in my experience to date -- that you’ve got to point it out to them and point out that clear tension between the government’s expectation of full cooperation versus the risk of disclosures and the fact that it may run afoul of the department’s own statements to the effect that it’s not actually seeking privileged or work product materials. But it is not an easy call in terms of a perfectly clear path, particularly when you’re thinking about it prospectively and you don’t know that you’re going to get the declination. If you’ve gotten the declination, then you know maybe it was all worth it. But when you’re doing this, you don’t know what the benefit may be that will ultimately come to your client.


Hon. David C. Joseph:  Yeah. So the takeaway there is that there may not be that much wiggle room to craft your investigation in consideration of this rule. You may have to take certain steps to maybe get credit from the government; right?


Hon. John C. Richter:  Well, I think that’s right. I think in terms of the way you conduct the investigation, that’s one thing. Really, I think what’s most important is how you share the information, in what form you share the information, and what the record is that you make contemporaneously of what you shared and how you shared it. So if you separate obviously facts from legal analysis and conclusions, you separate obviously in a clear -- what your talking points are to the degree that you’re conveying orally so that you can obviously go back and recreate what you said and what you didn’t say and limit obviously the inclusion of portions of your actual investigative documents.


Those are certainly ways to mitigate. And of course to some degree, this is also a judgment based on how much cooperation credit you really think you would get and is actually going to be provided, which is also another subject of do you really get -- what do you really get if you really go full cooperation. And depending on which agency you’re dealing with, depending on the prosecutors or attorneys with whom you’re dealing, you may judge that differently on behalf of your client.


Hon. David C. Joseph:  Right. John, you mentioned the Rules of Professional Conduct, and of course we all have different rules based on where we’re admitted to the bar. But generally the rule of confidentiality of client information is the same. Professor Cochran, how do you think your obligations to keep client material and communications confidential plays into how a lawyer representing a company might advise their client about possibly having to produce that stuff?


Hon. Don Cochran:  Well, I think as John said earlier, and I think Mike echoed it as well, you’ve got to have a full and frank discussion with your client about the advantages and disadvantages of the degree of disclosure that you are proposing. You can’t disclose anything that you haven’t adequately apprised them of the risks and rewards, too, of disclosing. And of course, in 502 there’s provisions that require diligence in terms of protecting against inadvertent disclosure.


But mostly what we’re talking about here seems to be intentional disclosure and then the degree that then constitutes a wider subject matter waiver. And I think that the lawyer just really has to make sure that that’s adequately explained to the client and that you get full buy-in from the client before you do that. And I’d certainly defer to what John and Mike would have to say on this issue, but that’d sort of be my take on it.


Hon. David C. Joseph:  Okay. Yeah. Any thoughts on that, Mike?


Hon. Mike Hurst:  I couldn’t agree more. I think a lot of times we as attorneys are so engrossed or invested into the substantive details of the criminal charges that sometimes we might not do that comprehensive discussion with the clients relating to rules of professional responsibility like Don said. And I think this, again, is a good reminder and hammers on that we have to take a more holistic view to the way we represent clients and make sure they understand that we have the duty not only to not inadvertently disclose materials but make sure that if we do disclose that we have the client’s permission to do that.


Hon. David C. Joseph:  Now, we’ve all -- we’re in different jobs now, but we’ve all been on the government side of this equation before in corporate investigations that we’ve conducted as AUSAs or U.S. Attorneys. And John, you’d spoken about this a little bit when we visited, but how do you advise your client about -- a lot of the Clean Water Act type cases that we did down here in the Gulf involved corporate investigations that really the government didn’t have the resources to do. They didn’t have the manpower to do it. The agencies didn’t have the interest necessarily, so really, we relied on the companies’ internal investigations to figure out what laws were broken and who may have done it. What are your thoughts about how you might advise your client about the benefits of cooperation as opposed to what risk you actually may have if you don’t cooperate?


Hon. John C. Richter:  Well, I think first and foremost of course the notion of cooperation does assume that of course you believe that there is some reasonable possibility that the evidence would give rise to criminal charges for a civil action against you. And so to some degree, the issue of cooperation is a little bit -- is a sliding scale. There’s cooperation insofar as you are working -- you’re providing information to the government that serves your interest to ultimately get a matter declined on the merits or convince the government to go away on the merits.


Then there’s cooperation obviously that is really designed notwithstanding that there may be criminal or civil liability that would be incurred by the company at least through principles of respondeat superior. Then there’s the cooperation that essentially is I’m going to help the government sufficiently that the government is going to ultimately conclude that it should give us a sizable break as a result of what we did. And obviously when a company makes a decision, as you note in your example, to proactively investigate the matter, they do it for multiple reasons.


They do it for their own reasons which is many times there is outside scrutiny, particularly to a publicly traded company, as to if issues have been raised publicly, that they are good corporate stewards, that they take their role as citizens seriously, and that therefore they’re conducting an investigation to determine what the facts are and will deal with it responsibly and appropriately. At the same time, of course, you’re right that in many instances the prosecutors and their investigative agencies lack the full capacity to get at all the facts and circumstances or sometimes the will to do so or a combination of the two. And there is some risk there that go with that in terms of how far you go.


There are cases out there. There’s a case out of the Southern District of New York from 2019, United States v. Connolly, that involved an investigation of a bank for alleged market manipulation related to LIBOR rates. Essentially, the argument that was put up by the defendant Connolly was that basically the bank really had worked at the direction of the government and had effectively become an agent of the government as opposed to working on its own to serve its own interests. And in that case the court found that basically more than 200 interviews of more than 50 bank employees, the sharing of those results with the government and the direction that was given by government lawyers with regards to investigative steps -- the combination of the two ultimately led the court to conclude that basically the bank had worked at the direction of the government and that that then waived all kinds of privilege and work product protections as they may relate to the materials and essentially meant that that whole record by counsel on behalf of that client was effectively the government’s work product that needed to be addressed.


So in advising a client, obviously, you want to keep a distance between the government’s desires and demands and make that record along the way of what you’re doing and why you’re doing it and make sure that that record can be recreated down the road so that when you find yourself on the receiving end of a third party Rule 17 subpoena or otherwise or a civil request in discovery in a civil matter you can recreate why you did it, what you did at the time so as to be able to not only defend what the company did but frankly as counsel defend what you did since going back and looking through your own files to figure this all out is obviously not a task that anyone would prefer to have to do.


Hon. David C. Joseph:  Right. It may also help you narrow, of course, the scope of what you ultimately have to produce; correct?


Hon. John C. Richter:  That’s exactly right.


Hon. David C. Joseph:  And Mike, you were going to say something?


Hon. Mike Hurst:  Yeah. I was going to add I’ve seen this both as an AUSA prosecuting leadership of companies and also as a private practitioner now. To those points you made, John, about cooperation -- determining cooperation, how you determine that, in some of the cases I’ve seen both the prosecutor and the defense attorney a number of times, kind of like this case, the company doesn’t necessarily know that some of the bad actors are doing what they’re doing. And in those cases, again, I’ve seen on both sides of the aisle the company coming in, doing an internal investigation, disclosing everything and as much as they can to the government to show that the company was not aware of these bad actors within an agency capacity that allowed the company to get a declination or a free pass and not be prosecuted.


That being said, I’ve also seen it where the leaders of a company or the leaders of a corporation are so intertwined and are pretty much the company or the corporation that there’s no way to extract their actions and what they did from the company. And I’ve seen in those cases even as an AUSA prosecuted companies in addition to presidents, vice presidents, and on down the line. So I’ve seen it a bunch of different ways, but the most effective way I’ve seen it is when the company does not know or claims to not know and then that information or that conclusion is backed up by an internal investigation and shows the government, hey, there’s really no criminal culpability here on behalf of the company.


Hon. David C. Joseph:  You raised a really interesting point, Mike, that I’d like you to talk about a little bit. In this case, in Coburn, there were some high level executives at the companies that were ultimately indicted. As an outside counsel doing investigations work, how do you deal with the fact that it becomes clear that maybe some higher level executives that you’re working with and maybe pertain to you on behalf of the company, may be involved? How do you deal with that issue?


Hon. Mike Hurst:  Yeah. I think you have to be incredibly careful, and I think the way that the attorneys here for Cognizant did it, which is just doing the broadest type of investigation you can -- it had to be dicey. It had to be touchy. You’ve got the president and the chief legal officer for the company who are the ones criminally indicted. I don’t know how the attorneys here with the company did it, but I would imagine going to the board, going to the --


Hon. David C. Joseph:  Yeah, to work with the board. Correct.


Hon. Mike Hurst:  Yeah. I would think if and when the company finds that there is evidence that the leadership, in this case a president and a chief legal officer, has potentially violated criminal law, I think you have to go to higher leadership than those and try to get direction and follow those directions from the company’s board.


Hon. David C. Joseph:  Make sure you’re acting in the interest of the company and also to protect --


Hon. Mike Hurst:  That’s right.


Hon. David C. Joseph:  -- yourself, too, a little bit.


Hon. Mike Hurst:  Absolutely.


Hon. David C. Joseph:  Your client is the company.


Hon. John C. Richter:  This raises the issue, of course, also of the potential conflict that can exist between management and the board when it comes to conducting an internal investigation. Obviously, if management is accused informally or is alleged to have engaged in unlawful conduct, the board may wish to and may need essentially, prudentially, to have an investigation done. Who conducts that investigation then becomes critical.


Regular company counsel is probably not the appropriate choice, not because regular company counsel is just so down for the cause but rather it’s also the appearance of independence to some degree to advise the board of directors about what the facts are. And certainly there are cases out there that again deal with this question of privilege and work product doctrine protection and waiver that arise in this kind of context and that necessarily also counsel that is really important for lawyers in working with their client. In that case, if the board or a committee of the board, that conducting an internal investigation -- to the degree that that counsel then turns and provides oral summaries or written work product to an enforcement agency like the SEC or otherwise or DOJ, obviously then these same issues of waiver potentially are in play.


And particularly in the context of providing oral waivers, that’s going to be critical. But again, what a board is doing often times in that situation is trying to determine whether and to what degree management was involved in the alleged wrongdoing. Obviously, management typically is who directs company counsel, and therefore company counsel then usually is not the ones that end up doing that investigation. But the same thing comes up obviously in that kind of situation involving allegations against management.


Hon. Mike Hurst:  Well, John, in this case it’s probably important to point out to our audience that this was not a quick process either. I think when the company management was interviewed by the outside counsel and the internal investigation it was October of 2016, the president and the chief legal officer they weren’t indicted until February of 2019, almost two and a half years later. So you’re dealing with a period of two and a half years where you’ve got that tension between the board and management and the outside counsel who’s presumably trying to do the best they can and conducting an internal investigation for the company and not the management, not the individual.


Hon. David C. Joseph:  When I was in private practice years ago, I think as soon as it becomes evident that there might be an issue you get -- you retain outside counsel for those individuals who might have problems, and that way you can make sure you’re conflict free and continue to represent the company. And I think a lot of times the company ends up funding that representation; right?


Hon. Mike Hurst:  Right.


Hon. John C. Richter:  That’s right. Well, many times they’re required to under the --


Hon. David C. Joseph:  Under the -- yeah.


Hon. John C. Richter:  -- articles of incorporation.


Hon. David C. Joseph:  Right.


Hon. John C. Richter:  And you’re required to advance fees and indemnify at least until there’s a finding, as long as they’re representing that they believe they did no wrong, unless and until there’s actually a final judgment to the contrary. And that in and of itself of course can be a very expensive thing.


The other challenge that we’re discussing here is we’re assuming that those managers and the company are necessarily averse to one another. At the outset of an investigation, you may not know that, and many times you may be getting -- counsel may be for the individuals involved. But you may in fact determine that you’ve got common interests. You may enter into a joint defense agreement, orally or in writing, depending on the circumstances. And you may proceed in parallel under the belief that you basically have a unity between the company and those individual executives through their counsel for some period of time.


Obviously, if the matter gets declined without throwing anybody under the bus, you may have maintained it all the way through. On the other hand, there may come a time in which you’ve got to, as corporate counsel, decide that there is not a path by which you can avoid essentially providing information that is derogatory as to these particular officers or former officers and executives. And usually by the time you’re doing that, they are former and not still in the position.


But that’s not always the case, and so all of this, again, makes it dicey in terms of your ability to meet this standard that the government seems to believe is sort of summarily can be met of providing sort of all information and that essentially requires companies to provide all nonprivileged information relative to all individuals involved in the misconduct in order to earn cooperation credit.


Hon. David C. Joseph:  Don, any comments on that issue?


Hon. Don Cochran:  No, I think that what we’re really talking about is the tightrope, or I think of the title of our presentation, the landmines that sort of exist in effort cases like Coburn and what seems like a pretty broad view of what constitutes subject matter waiver. And there’s no question that there’s some landmines out there. I think Mike’s earlier point that sort of the hornbook point is that facts aren’t protected and conclusions and summaries probably are as work product. And then you get into attorney-client issues, so the closer you can stick to facts the better. But that’s not always possible obviously.


I do want to throw one thing out just as -- and to get people’s thoughts on it because as somebody who teaches Rule 502 and has looked at it there is a mechanism in 502 that’s designed to protect this. And I don’t know what -- I have heard the DOJ is not so supportive of this idea, but I don’t know. It’s interesting.


There are nonwaiver agreements in 502(a) that are just between the parties, but in 502(d) there are actually a court order, a protective order that the court signs where the parties agree to not waive even in the face of intentional disclosure. And I don’t know the degree to which lawyers or then DOJ are open to that idea. It would seem like in a post Coburn type world where courts are taking a broader view of waiver, then maybe that’s the time to sort of rethink that idea at any rate. So I just throw that out there.


Hon. David C. Joseph:  Yeah, and if not, at least have the government give you their position on the fact that you anticipate maybe some of these types of requests if you cooperate. What’s your position going to be? In Coburn, the government didn’t intervene. They didn’t put a position forward. It was a bit surprising to me, so I think just getting clarity about what the expectations are if not a formal waiver from the government about what their position would be if you end up with a Rule 17 subpoena.


Hon. John C. Richter:  Yeah. I’d be interested, Your Honor, in your thoughts on this because 502(d) as Don notes is that provides a federal court can order that the privilege of protection is not waived by disclosure, but it’s really disclosure connected with litigation pending before the court in which event obviously then the disclosure essentially is not a waiver in any other federal or state proceeding. The challenge is that oftentimes the procedural posture in which this is coming up is not with a matter pending before the court.


Now, there are exceptions to that. There may be, for example, a civil action, particularly a qui tam action under seal, False Claims Act, that’s parallel to a criminal or civil proceeding. But oftentimes, there is not litigation pending. I have seen and I have attempted personally to seek 502(d) orders through sort of a miscellaneous proceeding essentially before a court. As you might imagine, that’s a strange animal.


Hon. David C. Joseph:  Yes, it is.


Hon. John C. Richter:  The court never knows what to do with it. In my experience, the Department of Justice is very reluctant to go down this road, and it expresses a lack of desire to join in it. And of course, if you don’t have the government on board, the chances that the court is going to be particularly amenable to it I think can be reduced because it’s just a strange animal that is not often seen. But what I would say is that this is obviously theoretically a possibility that you could seek a Rule 502(d) order to prevent waiver in this kind of issues and prevent essentially selective -- and create selective waiver, which the Eighth Circuit does recognize but no other circuit does.


Hon. Mike Hurst:  John, are you at liberty to say whether you were successful in the 502(d) court order?


Hon. John C. Richter:  I have been successful one time. I have been unsuccessful many more times. Usually and ultimately, I have not moved forward just because I’ve got too much resistance from the government, and I’ve decided I need to pick the battles of the client.


Hon. David C. Joseph:  I think from the judge’s perspective, John, I think I would be reluctant to sign such an order without really having a case in front of me and not knowing the full scope of what I was doing. I’m not saying I wouldn’t do it. Certainly if the government was on board and we had -- there was either an in camera submission for me to look at what’s the scope of the documents we’re talking about or if it’s summarized with the government’s concurrence, then maybe I’d be more likely to do it. But it is a strange animal. I think that’s well said, and I think not wanting to get out too far in front of it by signing an order like that I think would be the probably default position of most judges.


Hon. Mike Hurst:  Well, imagine the judge having signed an order here in this case, in the Coburn case. And then the judge later sees all that context you referenced, Your Honor, and then says wait, wait, wait.


Hon. David C. Joseph:  Yeah, yeah.


Hon. Mike Hurst:  If you gave one side -- they used as John said the sword and the shield, and now I’ve already signed a court order? To your point, it seems to tie the hands of the judge before the judge even knows what’s going on in the case.


Hon. David C. Joseph:  Yeah. I’d be very reluctant to do that unless there was a really good reason to. I think the better tactic would be to try to get some understanding with the government about what their position’s going to be if you received one of these subpoenas. And hopefully an AUSA’s still there when it comes up.


Hon. John C. Richter:  Or sometimes you might hope it’s a different AUSA, Your Honor. It really depends on the circumstances.


Hon. David C. Joseph:  Mm-hmm. Well, that’s interesting. Any other kind of practice points, takeaways from this case and how we might -- how either in-house counsel or outside investigations counsel, how they may start thinking differently about cooperating with the government?


Hon. John C. Richter:  Well, I’ll make quickly a couple of points. First, while I have obviously immense affection for my former employer the U.S. Department of Justice, the department definitely speaks out of both sides of its mouth when it says that it really doesn’t want privileged and work product information to be divulged but by the same token then basically has these extraordinarily high expectations for what constitutes cooperation. Those two things cannot live together perfectly aligned. And so this notion that in order to get any cooperation credit you must divulge everything puts -- is essentially a concession that says notwithstanding that we say in the justice manual that a privilege may not be sought by AUSAs -- a privilege waiver may not be sought or asked for, in point of fact the policy in and of itself if you wish to qualify for it or to take it at face value effectively compels that result.


And that is something that I think is not fully -- has not been opened up for full debate. I can’t tell you that from the time -- when the Thompson memo back in 2003 was issued and then the years thereafter -- and that memo was expressing basically giving credit if you waived. That of course received all kinds of criticism. But the same dynamics still exist notwithstanding the change in the language.


As far as the practical realities of the day-to-day go, your client, the point is that you’ve got to discuss this with your client early on with imperfect information and make some judgment calls about what the risks are down the road for yourself if in fact this information is going to see the light of day not only in dealing with the government, the immediate problem that you’re looking at, but the follow-on litigation and collateral cases that may flow from it. Obviously, your cooperation with the government and the revealing of this information that leads to a criminal declination is a “win.” The fact that that information then can be used by securities shareholder plaintiffs to sue you and seek a big judgment is obviously a risk that’s out there once this information is provided. But again, these are all cost-benefit calculus that have to be made by the in-house lawyers, along with outside counsel and key management, with imperfect information, and that’s why obviously it’s an interesting subject and a complex area for practice.


Hon. David C. Joseph:  Right. And I think -- I guess lastly it occurred to me reading the Coburn decision and thinking about it that really someone who’s not familiar with how the department operates either at the U.S. Attorney’s level or at Main Justice really wouldn’t know where these landmines are in cooperating. I think it would be very, very hard not to know kind of the lifecycle of an investigation and be able to properly advise your client. Do we have time for any questions, Chayila, or is there a mechanism to do that?


Chayila Kleist:  I think we’re almost to the top of the hour, so we may want to wrap it here.


Hon. David C. Joseph:  Okay. Any final comments, gentlemen? Okay. Well, thank you all for joining us today, and this was a very interesting conversation. I appreciate John, Don, and Mike joining me today and look forward to seeing y’all again soon.


Hon. Mike Hurst:  Thank you, judge.


Hon. Don Cochran:  Thank you, Your Honor.


Hon. John C. Richter:  Thank you, Your Honor.


Chayila Kleist:  I’ll add to those thanks. Really appreciate you all joining us today and carving out this section of your afternoons. Thank you also to our audience for joining and participating. We welcome listener feedback by email at [email protected], and as always, keep an eye on our website and your emails for announcements about other upcoming virtual events. With that, thank you all for joining us today. We are adjourned.