Sunday, March 11, 2007

KPMG Guest Posting - Part IV

Professor J. Kelly Strader (Southwestern) - Guest Blogging - KPMG PART IV -

What lessons can we draw so far from the KPMG case? First, by any measure this is an enormously complex case. In pre-trial discovery, the government has produced over 11 million pages of documents, the transcripts of 335 depositions, and 195 income tax returns. The government has named 68 trial witnesses and identified over five thousand trial exhibits. The trial is estimated to last from four to eight months.

Second, this case has produced an extraordinary amount of pre-trial litigation, even for a complex financial fraud case. As of last summer, well over 1,000 pages of pretrial briefs had been filed, and it’s probably over 2,000 pages by now. (Most recently, the defendants filed a motion to vacate an order granting the government’s request to dismiss the criminal case against KPMG. The court recently denied the motion (see here).

What does all the pre-trial litigation and maneuvering mean? At one point last month, as I watched the mounds of KPMG-related briefs pile up on my desk, I had a nightmare flashback to the time when I was a junior litigation associate at a large New York law firm. One day, I was told that I would be working on the mergers and acquisitions litigation team (otherwise known to junior associates as the hell realm). Such litigation produces furious motion practice that is often more tactical than substantive and that seems to have no end. (The silver lining is that I ended up in a career of white collar criminal defense.)

I wonder whether the issues surrounding the Thompson and McNulty Memorandums is transforming white collar litigation into similarly overly-complicated litigation. So long as the government continues to seek to obtain attorney-client privilege waivers, to exert pressure on entities to decline to pay individuals’ attorneys’ fees, and to deem assertion of the Fifth to be non-cooperation, we are likely to see more KPMGs. This does not bode well either for the efficient use of our resources in fighting white collar crime, or for the functionality and fairness of the criminal justice system.


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Professor Strader is correct in pointing out that some litigation is needlessly complex, and that some law firms file motions for tactical rather than legitimate reasons. However, his perspective as a white collar crime defense lawyer brings to mind the proverbial trees which hide the forest. First with respect to KPMG, the government was pursuing the largest ever criminal conspiracy fraud case in history. Shouldn't it be complex with thousands of motion pages and hundreds depositions? The good professor, the business community, and the media should be asking a more relevant questions: "Why didn't the DOJ prosecute under the most appropriate law, RICO, for the largest ever conspiracy to commit fraud?" Why does the government reserve RICO primarily for Italian Americans and certain labor unions? Second, our nation will continue to suffer ever greater instances of white collar crime, a continuing tax on our economy, until the lawyers and law firms which assist and enable corporate criminals are brought to justice.

Posted by: Dave O'Donnell | Jun 25, 2007 9:19:50 PM

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