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Be Careful What You Wish For
In the wake of the demise of Arthur Andersen following the partnerships' indictment by the federal government, prosecutors are increasingly pressuring corporations to enter into deferred-prosecution agreements (DPAs) to avoid ' at least temporarily ' full-blown criminal prosecutions. While these agreements may seem to offer an attractive option to embattled companies faced with the prospect of a lengthy and potentially devastating criminal prosecution, the freedom with which the individual prosecutors operate when crafting the agreements should cause concern. The standard DPA requirement that the company accept, and agree to never challenge, a government-crafted statement of facts enumerating the illegal acts forming the basis of the government's case puts the company in a precarious position that can ultimately result in a pre-packaged conviction if the company breaches any provision of the DPA. This potential pitfall must be recognized from the outset, and the effects of stipulating to the government's facts have to be considered before a company enters into any DPA.
Unjustifiable Clauses
While most DPAs contain an assortment of standard clauses ' requiring that the corporation pay fines and restitution, cooperate with investigators, and implement compliance programs, to name a few ' some DPAs now include extraordinary clauses that simply cannot be justified. In its June 2005 DPA, Bristol-Myers Squibb, in addition to agreeing to the normal comprehensive DPA provisions, was forced to endow a chair of corporate ethics at Seton Hall University Law School, the alma mater of the U.S. Attorney for the District of New Jersey, who signed the DPA for the government. In similar heavy-handed fashion, the Oklahoma Attorney General forced MCI to agree in a DPA to create 1600 new jobs within the state over a ten-year period as a requirement for allowing the company to avoid prosecution. Tactics like these have led one legal commentator to question whether this seemingly unchecked power has left companies 'vulnerable to the extortionate demands of even well-meaning prosecutors,' who 'may be tempted to experiment with corporate governance in ways that exceed their competence or entitlement.' See John C. Coffee, Jr., Deferred Prosecution: Has It Gone Too Far?, Nat'l L. J., Vol. 27, No. 25, July 25, 2005, at 13. Although requiring corporations to agree to a statement of facts may not seem as drastic as the examples above, this facet of a DPA has the potential to cause a company much greater harm. Therefore, a company must carefully weigh the risks and benefits of entering into such an agreement.
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