Courtesy of The Wall Street Journal Law Blog, comes the announcement that the Department of Justice will no longer take punitive measures, as a general rule, when a corporate defendant facing criminal investigation advances fees to its officers pursuant to pre-existing advancement rights. The former DOJ position was outlined in what was notoriously known as the Thompson Memo. The new position is outlined in what is referred to as the McNulty Memo. My blog has addressed the DOJ’s prior position  which in my view was plainly wrong and clearly at odds with the basic right of advancement under Delaware law. See, e.g., here and here. I quote from the WSJ Blog for a quick summary of the new  DOJ position (what took the DOJ so long to see the light?):

"The new memorandum also instructs prosecutors that they cannot consider a corporation’s advancement of attorneys’ fees to employees when making a charging decision. An exception is created for those extraordinary instances where the advancement of fees, combined with other significant facts, shows that it was intended to impede the government’s investigation. " Here is the link to the WSJ Blog post on the matter: Law Blog Thompson Memo Out, McNulty Memo In .

UPDATE: Prof. Larry Ribstein quotes further from the memo but cautions that the new memo may not be as clear as it should be if it still "more subtly" pressures corporations to either waive privilege and/or restrict the advancement rights previously given to officers. Here is the fuller quote from the memo:

"Prosecutors generally should not take into account whether a corporation is advancing attorneys’ fees to employees or agents under investigation and indictment. Many state indemnification statutes grant corporations the power to advance the legal fees of officers under investigation prior to a formal determination of guilt. As a consequence, many corporations enter into contractual obligations to advance attorneys’ fees through provisions contained in their corporate charters, bylaws or employment agreements. Therefore, a corporation’s compliance with governing state law and its contractual obligations cannot be considered a failure to cooperate…."  See this link to Prof. Ribstein’s post on the matter. Here is the DOJ’s Press Release.