DOJ’s “Filip” Factors and Corporate Prosecutions
Companies that experience a Justice Department criminal investigation undergo a long and painful process. DOJ prosecutors hold the cards when reviewing the facts and deciding whether to indict a company.
The United States Attorneys’ Manual (“USAM”) is a comprehensive collection of DOJ policies regarding civil and criminal enforcement issues. The USAM includes specific policies concerning corporate prosecution guidelines. Specifically, whether to criminally charge a corporation is governed by USAM 9-27.280 (HERE), which sets out what is referred to as the “Filip Factors,” referring to former Deputy Attorney General Mark Filip (who I had the honor of serving with at DOJ during the Bush Administration).
In 2008, DOJ revised its corporate prosecution guidelines in response to concerns that prosecutors were requiring companies to waive attorney-client privilege in order to earn cooperation credit. Over the last 20 years, DOJ has revised its corporation prosecution guidelines several times: in 1999, when Eric Holder was the Deputy Attorney General (“Holder Memorandum”); in 2003, when Larry Thompson served as the Deputy Attorney General (“Thompson Memorandum).
Defense counsel who represent companies usually present facts and circumstances under the Filip Factors to support their argument for a specific resolution. Prosecutors are required to weigh all of the factors normally considered in the exercise of prosecutorial judgment: the sufficiency of the evidence; the likelihood of success at trial; the probable deterrent, rehabilitative and other consequences of conviction; and the adequacy of noncriminal approaches.
When it comes to corporations, the USAM adds the Filip Factors to guide a decision on whether to bring charges, negotiate a plea or other agreement (i.e. deferred or non-prosecution agreement).
As set forth below, the Filip Factors include two specific factors focused on corporate compliance programs – one for the existence of a corporate compliance program at the time the wrongdoing occurred (number 5), and another focused on remedial actions taken by the company to enhance its compliance program in response to the misconduct (number 7).
The specific Filip Factors include:
- The nature and seriousness of the offense, including the risk of harm to the public, and applicable policies and priorities, if any, governing the prosecution of corporations for particular categories of crime (see USAM 9-28.400);
- The pervasiveness of wrongdoing within the corporation, including the complicity in, or condoning of, the wrongdoing by corporate management (see USAM 9-28.500);
- The corporation’s history of similar misconduct, including prior criminal, civil and regulatory enforcement actions against it (see USAM 9-28.600);
- The corporation’s willingness to cooperate in the investigation of its agents (see USAM 9-28.700);
- The existence and effectiveness of the corporation’s pre-existing compliance program (see USAM 9-28.800)
- The corporation’s timely and voluntary disclosure of wrongdoing (see USAM 9-28.900);
- The corporation’s remedial actions, including any efforts to implement an effective corporate compliance program or to improve an existing one, to replace responsible management, to discipline or terminate wrongdoers, to pay restitution, and to cooperate with relevant government agencies (see USAM 9-28.1000);
- The collateral consequences, including whether there is disproportionate harm to shareholders, pension holders, employees, and others not proven personally culpable, as well as impact on the public arising from the prosecution (see USAM 9-28.1100);
- The adequacy of remedies such as civil or regulatory enforcement actions (see USAM 9-28.1200); and
- The adequacy of the prosecution of individuals responsible for the corporation’s malfeasance (see USAM 9-28.1300).
While there is nothing surprising in the Filip Factors list, the emphasis on voluntary disclosure, enhancement of corporate compliance programs, and remediation underscore the importance that a company facing possible prosecution quickly assess the potential misconduct, decide whether to disclose and cooperate, initiate significant remediation efforts, and, most importantly, improve its corporate compliance program.