For a corporation, however, indictment can be fatal. Soon thereafter, the Department of Justice announced a revised policy concerning the circumstances under which a corporation's failure to waive its attorney-client privilege might influence the decision to prosecute it. The 110 th Congress concluded without further action, although a related amendment to the Federal Rules of Evidence did pass. Proposals similar to that passed by the House in the 110 th Congress have been introduced in the 111 th Congress, H.R. 4326 (Representative Scott); S. 445 (Senator Specter). v. United States , 212 U.S. 481, 495-96 (1909). Constitutional Concerns

In ther summer of 2006, a court in the Southern District of New York held that implementation of the Thompson Memorandum's policy with regard to a corporation's reimbursement of the attorneys' fees of its employees and pressure on them to make incriminating statements violated the Fifth Amendment substantive due process rights of the employees, their Fifth Amendment privilege against self-incrimination, as well as their Sixth Amendment right to the assistance of counsel. The case began with the criminal tax investigation of an accounting firm and its employees. The Fifth Amendment due process clause and its twin in the Fourteenth Amendment contain both procedural and substantive components. On appeal, the Second Circuit found it unnecessary to address either Fifth Amendment issue because of its treatment of the Assistance of Counsel issue. They heard contentions from some witnesses that:
The policy represented a departure from past practices, since historically, Justice Department requests for waivers of corporate attorney-client and work product protection were unheard of. In the final days of the 109 th Congress, Senator Specter introduced S. 30 which, among other things, would have prohibited federal authorities from requesting a waiver of organizational attorney-client or work product protection or predicating the adverse exercise of prosecutorial discretion on the absence of such a waiver or the payment of attorneys' fees for their employees or officers. A corporation's refusal to waive could not be considered in the exercise of prosecutorial discretion, id. :
the McNulty Memorandum changes the tone of the policy, abandoning the aggressive implications of the Thompson Memorandum in favor of statements that confirm the Department's recognition and respect for the importance of the attorney-client privilege; the Memorandum establishes a strict procedure for waiver requests and generally bars prosecutors from holding against a company its payment the legal expenses of an employee; the Memorandum strikes the proper balance between the public's interest in vigorous investigation and prosecute white collar crime and fairness to corporations and their officers and employees; experience since the issuance of the McNulty Memorandum refute the suggestion of widespread prosecutorial abuse; "legislative action is simply not needed;" although the bills have no explicit enforcement mechanism and the courts are generally reluctant to impose sanctions in the absence of statutory authority, the bills' proposals are likely to bring forth a "cottage industry of prosecutorial abuse claims" that may deter the prosecution of worthy cases; even if the Memorandum fosters an environment in which employees must waive their Fifth Amendment privilege or be fired, it results in no more than a situation in which the guilty suffer; the legislative proposals will make prosecution of white collar crime more difficult because they reduce the incentive for corporate cooperation and thereby encourage "stonewalling." Attorneys Manual.
The Justice Department enjoys prosecutorial discretion to bring criminal charges against a corporation, its culpable officers or employees, or both. For a corporation, indictment alone can be catastrophic, if not fatal, in some instances. The Thompson Memorandum, since replaced with guidelines in the U. S. Attorneys Manual, described the policy factors to be considered in the exercise of prosecutorial discretion. Two of the factors explicitly mentioned were whether a corporation had waived its privileges and whether it had cut off the payment of attorneys' fees for its officers and employees.
Justice Department policies and practices under the Thompson Memorandum led to constitutional challenges based on the Fifth Amendment's self-incrimination clause, the Amendment's due process clause, and the Sixth Amendment's right to counsel clause. Due process and right to counsel concerns were enough for a federal district court in New York to throw out the indictments of thirteen former partners and employees of an accounting firm, charged with creating and marketing fraudulent tax shelters, United States v. Stein. The Second Circuit affirmed on right to counsel grounds and consequently found it necessary to address the merits of the due process argument.
The House addressed the conflict in attorney-client protective legislation which it passed in the 110th Congress. Soon thereafter, the Department of Justice announced a revised policy concerning the circumstances under which a corporation's failure to waive its attorney-client privilege might influence the decision to prosecute it. The 110th Congress, which had previously amended the Federal Rules of Evidence relating to the inadvertent waiver of the attorney-client privilege, adjourned without taking further action on the House-passed legislation. Similar proposals, however, have been introduced in 111th Congress, H.R. 4326 (Representative Scott); S. 445 (Senator Specter). This report provides a brief discussion of the legislation, the legal background, and a chronology of related issues and events. Also available is an abridged report, stripped of its footnotes and most of its citations to authority (CRS Report RS22588, The McNulty Memorandum In Short: Attorneys' Fees and Waiver of Corporate Attorney-Client and Work Product Protection, by [author name scrubbed]).