As noted in this prior D & O Diary post, at least one U.S. District Court has found the Thompson Memo unconstitutional. At its recent annual convention, the American Bar Association adopted a Report issued by its Task Force on Attorney-Client Privilege. The Report urges the Department of Justice to withdraw or revise a number of provisions in the Thompson Memo, including in particular the provisions encouraging corporations seeking to avoid criminal prosecution to withhold the payment its employees’ criminal defense fees. Among other things, the report states that this provision of the Thompson Memo is “inconsistent with ABA principles, good corporate governance, the role of lawyers in our adversarial system of justice and individual Constitutional rights.” The Task Force presented four specific recommendations for the revision of the Thompson Memo, which may be found here.

Professor Ellen Podgor, in a post on the White Collar Crime Prof blog, presents a more practical argument for the Department of Justice to revise or abandon the Thompson Memo – that is, as long as prosecutors act upon the Thompson Memo’s requirements, they run the risk that future prosecutions will be in jeopardy, as companies could escape prosecution or individuals walk free if additional courts find the prosecutors’ reliance on the Thompson Memo to be unlawful. She notes “as a taxpayer, I am not sure this benefits our pocketbooks.”

And in an article in the August 14, 2006 issue of the National Law Journal, two defense attorneys present their view that Judge Kaplan’s opinion in the KPMG tax shelters case was correct in declaring the Thompson Memo unconstitutional, but flawed by its failure to throw out the criminal cases against the individual defendants altogether. Their argument is that Judge Kaplan’s solomonic effort to compel KPMG to pay the individual defendants’ attorneys’ fees failed to recognize that the “government’s conduct prejudiced the defendants’ ability to make critical pretrial decisions, including what lawyer to hire; whether and on what terms the defendants’ might cooperate with the government or plea bargain; or other lawyering that might prevent an indictment.” Their argument is that denial of legal fees at the early stages “cannot be atoned for after the fact” because the “full panoply of pretrial lawyering [is] forever lost when the government interferes with the attorney-client relationship.”

Options Backdating Litigation Update: The D & O Diary’s options backdating litigation list, which may be found here, has been updated to add the new securities fraud class action lawsuit that has been been filed Broadcom Corp. The number of securities fraud lawsuits based on options timing allegations now stands at 12. Note: The list was updated again on August 15, 2006, to add the new securites fraud lawsuit that has been filed against Witness Systems.

Calvin’s Dad Explains the Universe: Calvin’s Dad (of Calvin and Hobbes fame) was a patent attorney, and that is close enough to a good reason to include a link to this site containing a distillation of Calvin’s father’s pronouncements on the mysterious workings of the universe.