In my continuing series on corporate criminal prosecutions, an important assumption for many DOJ policies and corporate counsel representation is that a company cannot survive a criminal conviction. That assumption and policy is being whittled away and I expect will continue to be modified.

We are witnessing the development of a new willingness to require corporate guilty pleas and an increased number of challenges to criminal indictments. Federal Express and Pacific Gas and Electric are both challenging criminal indictments against them.

There are two significant reasons for this trend.

First, since DOJ has embraced a wider range of criminal conduct to include regulatory type offenses, it is inevitable that companies will be forced to resist DOJ pressure to plead guilty to a regulatory offense cloaked in criminal charges.

Second, financial regulators are now more willing to continue licenses and other permits for companies that have been convicted of criminal offenses. As a result, companies are willing to challenge prosecutors, and may decide to go to trial in certain borderline cases. Companies always have an incentive to resolve cases short of trial and reduce reputational harm.

For years, DOJ sought to avoid the catastrophe of its criminal prosecution of Arthur Anderson, which imploded when charged with criminal offenses arising out of the Enron scandal. Jobs were lost, and the community suffered a stinging economic loss as a result of Arthur Anderson’s dissolution.

In response, DOJ embraced NPAs, DPAs and monitorships to resolve cases short of a criminal conviction and turned the new model into a way to collect significant fines and impose enhanced compliance and governance requirements.

In the last few years, DOJ has been pressured to move from this approach and require companies to enter guilty pleas to criminal charges. In response to political pressure, DOJ has been forced to reexamine this balance and impose criminal guilty pleas in FCPA, AML and tax evasion cases.

To pave the way for these pleas, however, DOJ has supported regulatory assurances that criminal convictions would not have any serious collateral consequences to the offending company. As a result, corporations can be immune from any serious collateral consequences and only suffer reputational consequences.

Corporations are going to face a new balance of factors, where the balance in favor of trial will increase. I do not expect there to be a significant increase in the number of companies deciding to challenge a criminal case. It is very difficult for companies to defend itself against criminal charges and to persuade juries to acquit the company.

Given the doctrine of respondeat superior, companies have an uphill climb from a legal standpoint and juries are not very sympathetic to the “plight” of a criminally-charged company. Companies will have to pick and choose when to go to trial in those cases where the actors’ intent is equivocal.

The stakes for companies in certain industries are much higher. Defense companies face possible debarment and suspension; Healthcare companies face exclusion from all federal healthcare programs. Companies in these industries will continue to avoid trials and a possible criminal conviction.