Photo courtesy of Davis Wright Tremaine LLP
When Administrations change, it is inevitable that there will be new leadership and priorities which inform their actions. This applies across governmental functions, and the Department of Justice has never been exempted. I served in the Department — both in the USAO (DC) and in Main Justice (Fraud) — under Presidents Reagan, Bush 1, Clinton, Bush 2, and Obama. My wife served for almost 20 years in the Public Integrity Section under similarly diverse leadership. Joseph DiGenova was my US Attorney, and AG Edwin Meese signed my Criminal Division Appointment. I worked under Attorneys General as diverse as Edwin Meese, Bill Barr, Janet Reno, and Eric Holder. Sometimes the changes in the Department were substantial, and at others they were more nuanced. But the impact on traditional white-collar investigations and enforcement was generally reflected in shifts toward new initiatives and away from others, while not altering the fundamental landscape of white-collar enforcement. In those years, white-collar practice moved through procurement fraud, the Savings and Loan Crisis, invigoration of foreign bribery enforcement, health care, and more sophisticated forms of financial and market fraud.
The current Administration’s impact on the DOJ and more particularly on the world of white-collar enforcement is transformative and not a simple cyclical adjustment. The ecosystem of white-collar criminal enforcement and defense, particularly within the White-Collar Bar, has not accepted or internalized the scope of the changes and the impact they will have for years and potentially Administrations to come. Main Justice has been and continues to be drained of talent and skill. The two most impactful Criminal Division Sections, Public Integrity and Fraud, have been eviscerated, and are being reduced primarily to support and ministerial functions. Foreign bribery investigations have been mothballed, and the prospects for their reincarnation (at least in the current Administration) are very bleak. DOJ Leadership and Key United States Attorney’s Offices are being directed by The President’s personal lawyers who view Main Justice as the enemy. Line attorney loyalty is enforced, and transgressions are punished.
There are other developments, albeit more atmospheric, which add to the current white-collar malaise. The Administration has made clear its intention to withdraw from global compacts and more generally international engagement — and this will impact the developed relationships that have grown global white-collar enforcement. The Administration has also enabled a new cottage industry of pardon attorneys who have been successfully undoing significant and often overwhelmingly successful fraud prosecutions. Major law firms are under Executive Order assault because they represented or acted for individuals and entities which the current President and his DOJ Leadership view as enemies. A disappointing number of firms have caved to extortionate demands, and almost all of these have large and mature white-collar practices. Each of these developments adds fuel to the bonfire that is currently altering the white-collar landscape.
During my time in the Fraud Section — looking back some 15-20 years and with apologies to my UK white collar friends — I remarked to DOJ colleagues that it seemed then that the UK viewed white collar misconduct as simply “bad form” and not criminal. It is reasonable to argue that there is a similarly indifferent attitude toward more conventional white-collar enforcement. The President’s EO on the FCPA and foreign bribery all but endorses the market value and import of bribery in international business.
I am sure there will be no shortage of local federal prosecutions of fraud, but the large national and institutional enforcement efforts are trending toward hibernation. A new administration can revive white-collar enforcement, but it will take more than a shift in viewpoint. The current DOJ is being transformed — and whether one views that as a good or bad development — these are changes that will not be easy to reverse. It will require a massive and expensive rebuild.
Large and institutionally driven White Collar practices must be preparing for leaner rations and thinking hard about the areas where there may be new opportunities — Employment, Sanctions, Trade, Health Care. Practices with global reach and presence should be investing internationally — because even if there is no prospect that foreign enforcement authorities can take up the slack that the DOJ will be leaving in global enforcement — nature does abhor a vacuum. European authorities seem interested in expanding their footprint.
Robertson Park is a Partner at Davis Wright Tremaine LLP.
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