The Thompson Memo

The NYT reports that federal judges are uncomfortable with the Thompson Memo.  Larry Thompson, then the deputy attorney general, authored a memorandum of guidelines on when to indict a company (as opposed to its officers) for criminal fraud.  The guidelines considered company "cooperation" a mitigating factor and defined cooperation to include not providing attorney's fees or other support to indicted company officers.  Officers who had negotiated attorney fees coverage in their employment agreements found companies refusing to advance cash to cover attorney fees to cover the expenses of trial.  Companies will find, of course, that they will have to rely more on insurance companies and less on self-payment systems to avoid the full effect of the Thompson Memo.  Payments by an insurance company are not controlled by the company (which has paid the premiums) and cannot be attributed by a federal prosecutor to any failure of "cooperation."