By Fisher, JD, CHC, CCEP
The Yates Memorandum revised federal prosecutorial policy by placing greater emphasis on individual wrongdoing in matters involving corporate misconduct. Federal prosecutors were directed by the Department of Justice to consider individual liability before resolving an investigation or reaching a settlement with respect to corporate wrongdoing. The Yates Memorandum extends beyond federal agents considering criminal charges against companies or individuals. It specifically states that the concept of individual accountability should apply to government divisions responsible for assessing potential civil liability, monetary penalties, program exclusion, and other remedies short of criminal prosecution. Government attorneys are therefore expected to consider individual monetary responsibility even where the individual may lack the ability to satisfy a potential judgment.
Clearly, the stakes have increased for individuals involved in companies that commit wrongdoing. In order to receive the benefits of cooperation with government investigators, a company must provide all information relevant to individual liability. This expectation requires the company to conduct a robust internal investigation of all potential subjects and to bring that investigation to resolution with respect to each such individual. As a practical matter, when allegations of misconduct arise, the company can no longer focus solely on institutional exposure; it must also identify who knew what, when they knew it, what they did in response, and whether their conduct contributed to the violation.
This shift has important consequences in civil enforcement proceedings. Civil enforcement historically has been viewed by some corporate actors as a matter of financial negotiation between the government and the entity. Under the Yates approach, however, civil attorneys are encouraged to evaluate whether individual officers, directors, employees, or agents should also face claims. The analysis is not limited to collectability. Deterrence, accountability, the seriousness of the misconduct, the individual’s role, and the public interest may all support pursuing a civil action even where recovery from the individual is uncertain.
For companies, the memorandum creates tension between cooperation with the government and the company’s relationships with its personnel. A corporation seeking cooperation credit must gather and disclose relevant facts concerning individual conduct. That process may require interviews, document collection, privilege assessments, and difficult decisions about whether employees should receive separate counsel. Companies must also take care to preserve the attorney-client privilege and work-product protections while still providing sufficient factual information to satisfy government expectations.
For individuals, the practical risks are equally significant. Employees who previously may have assumed that the company would resolve the matter on their behalf may now find themselves the focus of a parallel civil inquiry. Statements made during internal investigations, emails, memoranda, approvals, and meeting notes may all become relevant to the government’s assessment of individual responsibility. Individuals whose conduct is questioned should understand the potential conflict between their interests and the company’s interests, particularly where the company is seeking cooperation credit by disclosing facts about individual conduct.
The memorandum also changes the settlement dynamic. A corporate resolution that fails to address related individual cases may be disfavored unless the government has a clear plan for resolving those matters. This means that companies may face longer investigations, more extensive factual development, and greater uncertainty before settlement. At the same time, individuals may face pressure to respond quickly to government inquiries while civil and criminal attorneys coordinate their efforts.
The best response is preparation. Companies should maintain effective compliance programs, preserve relevant records, and establish protocols for internal investigations before a crisis occurs. When allegations arise, counsel should define the scope of the investigation, identify potentially involved individuals, document investigative steps, and evaluate whether separate representation is appropriate. Boards and senior management should also understand that cooperation decisions may have direct consequences for individual employees and executives.
In sum, the Yates Memorandum expanded the practical importance of individual accountability in both criminal and civil corporate enforcement. Its central message is that corporate liability and individual liability should not be treated as separate afterthoughts. For companies, cooperation now requires a disciplined investigation into individual conduct. For individuals, corporate misconduct may create personal civil exposure even when criminal charges are not pursued. The result is a higher-risk enforcement environment in which both entities and individuals must respond strategically, promptly, and with a clear understanding of their potentially divergent interests.
