Ted Wells: White-Collar Game Has Radically Changed
September 23, 2005
Corporate Crime Reporter
The earth has moved.
The white-collar game has radically changed over the last ten years.
That’s the take of Ted Wells, a partner at Paul Weiss in New York City.
“Ten years ago, it was – save the individuals and plead the corporation,” Wells said last week at a conference on white-collar crime sponsored by the National Association of Criminal Defense Attorneys. “Now, things have radically changed and it’s totally reversed.”
“Now, the government has set up a system where it’s – save the corporation by sacrificing the individuals,” Wells said. “The independent directors hire a law firm, which becomes in effect a deputized prosecutor. And the individual executives are sacrificed to save the corporation.”
“In the old days, there used to be a close relationship between executives and the corporation,” he said. “Today, they are separated.”
Wells said that one thing that led to the shift – the Thompson memo on prosecuting corporations.
And the key difference, according to Wells, between the Thompson memo and its predecessor – the Holder memo?
The adjective “authentic.”
“The Justice Department came to believe that cooperation from corporations wasn’t real cooperation,” Wells said. “And so the Department, in the Thompson memo, demanded ‘authentic’ cooperation from corporations. And now it’s getting it.”
As they look out over the horizon, corporate lawyers see more than just federal prosecutors.
They see regulatory agencies and state attorneys general.
“Eliot Spitzer gets his picture on the cover of Forbes and Fortune, and all of the other attorney generals want their pictures on the cover of magazines,” Wells told the gathering of about 100 defense lawyers gathered at Georgetown Law Center.
To which Joseph Savage, a partner at Goodwin Procter in Boston, chimed in – “It’s become the National Association of Aspiring Governors.”
Savage said that the lawyer for the corporation has unlimited resources at his disposal and this gives him an advantage over the lawyer for the chief executive.
Savage also observed that parallel proceedings have morphed in recent years into joint proceedings – with much deeper and more coordinated cooperation between law enforcement agencies.
The NACDL White Collar Crime Project sponsored the two day event. The project is funded by an anonymous corporate donor.
In an interview with Corporate Crime Reporter, the project’s director, Stephanie Martz, said that tensions exist within the defense bar between those who represent primarily corporations and those who represent primarily individuals.
“Lawyers who represent individuals say that the problem is lawyers who represent corporations,” Martz said. “They sell out too quickly to the government. They sell out employees. The board of directors isn’t getting all of the information they need to make these decisions – that kind of thing. And I think many of the good lawyers who represent corporations agree that is a problem.”
(For a complete transcript of the interview with Stephanie Martz, see 19 Corporate Crime Reporter 37 (12-16), September 26, 2006, print edition only.)