President Donald Trump’s Attorney General nominee is likely to arrive with his own strong opinions about how to run the Justice Department generally and corporate crime enforcement in particular.
William Barr, whose Senate confirmation hearing is scheduled to begin January 15, has already served one stint as attorney general and then as Verizon Communications Inc.’s general counsel.
If confirmed, he’d oversee the implementation of new policies aimed at streamlining enforcement and closing corporate cases more quickly. Here’s what to watch for in DOJ’s corporate crime enforcement in 2019 under Barr:
Corporate attorneys will closely monitor Barr’s working relationship with Deputy Attorney General Rod Rosenstein, who oversees corporate crime cases, attorneys said.
Rosenstein’s fate at the DOJ has been up in the air, stemming from his support of the ongoing Russia investigation that has drawn President Trump’s ire. But Rosenstein provides much needed continuity amid the policy changes, Barak Cohen, partner at Perkins Coie LLP’s white collar and investigations practice, told Bloomberg Law.
“Rosenstein doesn’t appear to be going anywhere, and in fact, he’s more important to the Department now than before because he’s the stable link between departing Attorney General Sessions and the incoming Attorney General Barr,” he said.
Rosenstein unveiled the new corporate crime policies. And, as long as he stays as the second in command, the DOJ is unlikely to roll back the changes, Michael Himmel, chair of Lowenstein Sandler LLP’s white collar criminal defense group, told Bloomberg Law.
Updates to Yates Memo
The DOJ’s November policy update on how companies should cooperate with criminal and civil investigations will drive new corporate legal strategies and penalties, attorneys say.
In criminal matters, the DOJ now only wants companies, if they want government leniency, to submit names of the senior executives who played a “substantial” role in the crimes. Its previous policy, outlined in the 2015 memo by former Deputy Attorney General Sally Yates, called for companies to disclose all who were involved, not just the ones who were substantially involved.
Corporations and prosecutors will likely dispute over what entails substantial involvement, Zane Memeger, partner at Morgan, Lewis & Bockius LLP, said.
But the DOJ and companies could pursue more cases under the revised policy since corporations can gain leniency without revealing as much detail upfront, Himmel said. Corporations “no longer have to engage or be involved in pain staking details as it was under the Yates memo,” he said.
The new policy also changed how government leniency is granted In civil cases. DOJ prosecutors can reward leniency in fines or other penalties to companies on a sliding scale based on how cooperative they are. In the past, the DOJ issued leniency on an all-or-nothing basis, meaning a company has to cooperate fully to the extent of DOJ prosecutors’ demand to gain relief. The all-or-nothing basis remains unchanged for criminal probes.
The policy change allows companies to be more strategic in their cooperation approach with the government, Jay Holtmeier, partner at Wilmer Cutler Pickering Hale and Dorr LLP, told Bloomberg Law.
Such flexibility “will allow matters to come to a conclusion sooner than what happened under the Yates memo,” Memeger said.
Corporate lawyers will assess how quickly cases will be resolved under Rosenstein’s May policy announcement urging federal prosecutors to work more closely with counterparts in other enforcement agencies.
So far, so good, Himmel said. “I’m involved in cases now where it was just an SEC matter, and when the DOJ has gotten involved, the cases are moving much faster,” he said.
DOJ prosecutors must now collaborate with the SEC and other agencies to investigate and determine a single financial penalty in corporate crime matters. Previously, agencies investigated and resolved matters separately, typically leading to separate fines and resolution dates for companies. The DOJ expects cases to be resolved more quickly under the new collaboration approach, Rosenstein has said.
Under the new policy, U.S. agencies are also encouraged to work with enforcement agencies abroad. Federal prosecutors have worked with French, Brazilian, Swiss, Malaysian authorities and others, resulting in multi-million dollar fines in 2018.
The trend will continue in 2019, Cohen said.