What's on the DOJ's agenda?

Focus on individual accountability. First, the DOJ is renewing its focus on holding individual actors responsible for corporate wrongdoing by reviving its policy that companies will only be eligible for cooperation credit in resolutions if they provide prosecutors with non-privileged information about all individuals involved in or responsible for the misconduct at issue—regardless of the individual's position, status, or seniority. This includes individuals inside and outside the company. This pronouncement reverses the DOJ's prior guidance, which allowed companies to receive cooperation credit for disclosing only those individuals "substantially involved" in the misconduct.

The Justice Manual will be revised at JM 9-28.700 and 9-47.120 to implement this policy shift.

An expansive view of corporate recidivism. Second, DAG Monaco announced a significant change in how historical misconduct will factor into corporate resolutions. Under new DOJ guidance, prosecutors will not just look at prior, similar misconduct, but will also evaluate a company's full criminal, civil, and/or regulatory record in evaluating the appropriate resolution for a subject or target of a criminal investigation, including foreign enforcement actions and enforcement against parents, subsidiaries and other entities within the corporate family.

DAG Monaco's memorandum explained that a corporation's record of past misconduct may be revealing as to the corporate compliance culture and overall commitment to ethical business practice. These factors are likely to be critical to DOJ's considerations as to whether a company's remediation efforts are likely to succeed in the absence of strong, external oversight (i.e., a corporate monitor).

This broader vantage of historical misconduct—including whether a company has been targeted by another regulatory agency or even another country—brings in a host of additional, potentially relevant misconduct, which could have significant implications for corporate resolutions. For instance, DAG Monaco suggested that the DOJ will be considering data on corporate recidivism with an eye toward guidance as to whether pretrial diversionary avenues—including declinations, non-prosecution agreements (NPAs), and deferred prosecution agreements (DPAs)—should be available to recidivist companies.

The Justice Manual will be revised at JM 9-28.600 to address this expanded analysis as to corporate recidivism.

Corporate monitorship comeback. Third, DAG Monaco advised that, where appropriate, the DOJ will deploy corporate monitors to verify compliance and disclosure obligations imposed by the terms of NPAs and DPAs entered into between companies and the DOJ. Monaco's pronouncement explicitly revoked 2018 guidance issued by then-Assistant Attorney General Brian Benczkowski. The "Benczkowski memo" was generally viewed as a more "business-friendly" approach to the DOJ's practice of imposing corporate monitorships as a condition of settlement, setting a presumption against monitorships except in extenuating circumstances. DAG Monaco suggested the DOJ may more frequently utilize monitorships to ensure that companies live up to their end of requirements imposed through corporate resolutions.

In particular, the new guidance explicitly directs that the DOJ should consider monitors "[w]here a corporation's compliance program and controls are untested, ineffective, inadequately resourced, or not fully implemented at the time of a resolution" and, particularly, where a company's controls are "deficient or inadequate in numerous or significant respects."

What's on the horizon?

For starters, this increase in enforcement will be buoyed by a surge of resources provided to DOJ prosecutors, including a new squad of FBI agents embedded in the DOJ's Criminal Fraud Section—placing "agents and prosecutors in the same foxhole," as DAG Monaco described it.

More broadly, the DOJ will evaluate corporate criminal enforcement through the newly formed "Corporate Crime Advisory Group," which will be comprised of representatives from every department involved in corporate criminal enforcement and will consult with stakeholders across industry, academia, and the defense bar. As DAG Monaco explained, the advisory group has a broad mandate to study corporate resolutions, recidivism, monitorships, and benchmarks for cooperation credit in enforcement penalties, and make recommendations to DOJ leadership on potential enhancements to the enforcement of corporate crime. The group will also consider how to leverage new technology and resources to support corporate criminal investigations and enforcement.

What are the practical takeaways?

Unsurprisingly, these sweeping pronouncements have reverberated amongst white-collar defense practitioners and corporations since their announcement in late October. So, what does this all mean for corporate compliance efforts?

First, companies should review their compliance policies and procedures to ensure they are effectively implemented and provide appropriate levels of detection and remediation of wrongdoing, including ensuring adequate compliance resourcing. In the event wrongdoing is uncovered, these new policies serve to further emphasize the significant weight the DOJ will give to the state of the company's compliance controls in determining appropriate corporate enforcement resolutions. In particular, companies should consider whether they have a reasonable mechanism in place to test and enhance their controls on a periodic basis and document efforts to ensure that the program continues to target key risk areas effectively. These efforts will reduce the risk of violations slipping through the cracks, but they will also serve as powerful evidence of the company's commitment to compliance in the event of an enforcement inquiry.

Second, companies should revisit their internal reporting and investigation protocols, ensuring that there are robust and widely known avenues for internal reporting of potential misconduct as well as established protocols for escalating and investigating allegations. Timely voluntary disclosure and full cooperation are often critical to receiving leniency in corporate resolutions. Under the new policy, receiving cooperation credit will require a company to identify all internal and external individuals involved in the misconduct in any way and be in a position to produce all non-privileged information about those individuals' involvement.

Third, in the event that an allegation of misconduct is substantiated, companies will now need to consider the full scope of all prior enforcement resolutions—domestic and foreign, criminal and regulatory—in the calculus as to the potential enforcement outcomes. For companies with a lengthy list of prior misconduct, being able to demonstrate effective implementation of a robust compliance program and timely, full cooperation will be even more important to mitigating the impact the new recidivism policy may have on the ultimate resolution of any enforcement action.

The whipsaw of corporate enforcement policies that comes with each new administration is not a foreign concept to many companies potentially subject to DOJ enforcement. However, to those taking a wait-and-see approach, DAG Monaco delivered a clear message: Now is the time to redouble compliance and ethics reporting efforts, including internal detection and remediation of potential misconduct. As DAG Monaco alluded, these recently announced policy shifts are just "a start" to this administration's corporate compliance mission.

Jamie A. Schafer and Regina L. LaMonica are partners in Perkins Coie's white-collar and investigations practice. They represent companies and individuals in a wide range of white-collar criminal matters, including the Foreign Corrupt Practices Act, federal securities and anti-money laundering laws and regulations.