Earlier this year, Deputy Attorney General Sally Quillian Yates issued new guidance outlining the DOJ’s increased focus on individual accountability during civil and criminal investigations of corporate wrongdoing. The principles announced in the “Yates Memo” serve as the basis for revisions to the U.S. Attorney’s Manual – particularly the section outlining the Principles of Federal Prosecution of Business Organizations – released November 16, 2015. While many of the principles outlined in the Yates Memo and recent revisions to the U.S. Attorney’s Manual are consistent with DOJ’s prior practice and rhetoric regarding white collar investigations, the emphasis on individual accountability requires companies to consider carefully those aspects of an internal investigation with consequences on individual executives and employees.

The Yates Memo outlines six “key step” to guide the Department’s investigations of corporate misconduct as it strengthens its focus on individual accountability for corporate wrongdoing:

  1. The Yates Memo makes clear that, as a “threshold requirement” to receiving any cooperation credit in civil or criminal matters, corporations must provide all relevant facts relating to the individuals responsible for or involved in the corporate misconduct, regardless of their position in the company.
  2. Prosecutors are instructed to “focus on individuals from the inception of the investigation.”
  3. Continuing with DOJ’s focus in recent years on facilitating coordination between DOJ attorneys handling criminal and civil matters, the Yates Memo directs those attorneys involved in corporate investigations to be in routine communication with each other.
  4. “Absent extraordinary circumstances,” resolutions with companies may not provide protection to individuals from criminal or civil liability, such as through agreements to dismiss charges against or provide immunity for individual officers or employees.
  5. Resolutions with corporate targets should not be obtained without a clear plan to resolve related individual cases within the statute of limitations period and any declinations regarding individuals should be clearly memorialized.
  6. In determining whether to bring suit against an individual, civil attorneys must evaluate factors beyond the individual’s ability to pay.

The Yates Memo formalizes a message DOJ officials have been clearly forecasting during the last several years: individuals responsible for corporate wrongdoings will be held accountable. Furthermore, most of the principles outlined in the Yates Memo and accompanying changes to the U.S. Attorney’s Manual remain consistent with the DOJ’s prior procedures and expectations relating to the investigation and prosecution of white collar cases. Nevertheless, the Yates Memo will impact the considerations companies must make in conducting their investigations and responding to evidence of wrongdoing.

Most significantly, the Yates Memo changes the manner in which the thoroughness of a factual disclosure is evaluated for cooperation credit by mandating that a company identify all individuals “involved in and responsible for” the wrongdoing. DOJ’s expectation that companies disclose all factual information is not novel; as Yates herself recently put it, “[w]hat is new is the consequence of not” disclosing all relevant facts about individuals. She further explained, “In the past, cooperation credit was a sliding scale of sorts and companies could still receive at least some credit for cooperation, even if they failed to fully disclose all facts about individuals. That has changed now.”

This distinction is particularly important for companies that submit claims to the federal government, and thus face scrutiny under the FCA. Notably, the FCA was the only statute explicitly referenced in the Yates Memo, as it noted DOJ’s position that full disclosure of all facts regarding individuals is required to establish “full cooperation” that may qualify a defendant for reduced damages under the FCA.

In light of the Yates Memo, companies must carefully consider those elements of an internal investigation that interact with the rights of and consequences for individual executives and employees. For example, companies should continue to administer comprehensive Upjohn warnings when interviewing company personnel, and ensure that the warnings are well-documented. Similarly, early in the investigation, and on a continuing basis, companies must evaluate the need for separate counsel for individual executives or employees. Most importantly, however, the company should ensure that any remediation plan incorporates actions to address every individual “involved in or responsible for” the wrongdoing through enhanced training or, if appropriate, personnel action.

Finally, in determining the extent to which a company intends on cooperating with a government investigation, the company must be mindful that DOJ likely will view any efforts of cooperation as coming up short, if the company is not willing to identify the individuals relevant to the misconduct. Consequently, the thoroughness of the disclosure has not only become a threshold issue for DOJ in evaluating a company’s cooperation, but should also be the primary consideration for companies in developing their position with regard to cooperation in an investigation.