KPMG Deferred Prosecution Agreement -- Part I

Unless you have been under a virtual rock, you know by now that KPMG has entered a deferred prosecution agreement (DPA) with the Department of Justice.  Two aspects are of interest for the purposes of this blog.  I discuss the first in this post, and I will blog on the second one later today.

The DPA has an entire section devoted to continuing cooperation with the government.  Apropos of the recent discussion of privilege waiver, the cooperation portion of the DPA provides in part:

8.    KPMG agrees that its continuing cooperation with the Office’s [i.e., the United States Attorney’s Office for the SDNY, and NOT the acclaimed BBC comedy of the same name] investigation shall include, but not be limited to, the following:

    (e)    Not asserting, in relation to the Office, any claim of privilege (including but not limited to the attorney-client privilege and the work product protection) as to any documents, records, information, or testimony requested by the Office related to its investigation, provided that:

        (I)    notwithstanding the provisions of this subparagraph (e), KPMG may assert [relevant privileges] with respect to (A) privileged communications between KPMG and its counsel that post-date February 1, 2004 and that concern the Office’s investigation, . . . or (C) any private civil litigation; and

        (II)    by producing privileged materials pursuant to this subparagraph (e), KPMG does not intend to waive the protection of [any relevant privilege] as to third parties.

We see in paragraph 8(e)(II) the real fear that organizations have about turning over privileged documents to the government (and which I have mentioned before): That such disclosure will waive the privilege as to private litigants in civil proceedings.  And as recent news stories have reminded us, KPMG faces an onslaught of such civil suits.  In the end, however, whether this attempt at selective waiver will depend (as discussed in prior posts) on whether the Circuit/District that hears the civil suits recognizes such a partial privilege.