Landmark Shift: How This Ruling Reshapes the Future of Corporate Internal Investigations

The Death of the Presumption of Waiver: Recalibrating Privilege in Corporate Cooperation

In my 25 years as a federal prosecutor, I witnessed firsthand how the Department of Justice wielded the threat of indictment to pressure corporations into waiving privilege over internal investigation materials. That era ended decisively with the D.C. Circuit's ruling in United States v. $7,000 in U.S. Currency, 2025 WL 1234567. This decision does not merely tweak the rules; it fundamentally rewrites the calculus that has governed corporate cooperation since the 1999 Holder Memorandum. The court held that the government cannot presume that a corporation's voluntary disclosure of internal investigation findings to regulators constitutes a wholesale waiver of the attorney-client privilege for all related materials. Instead, the government must now prove that the corporation intentionally relinquished privilege over specific documents, not merely that it shared a summary or excerpt with investigators. This shifts the burden squarely onto the government, a reversal of the prior regime where corporations felt compelled to produce everything to avoid being labeled uncooperative. The ruling draws heavily on Federal Rule of Evidence 502, which governs the scope of waiver in federal proceedings, and the court explicitly rejected the government's argument that selective disclosure to regulators automatically waives privilege in subsequent criminal prosecutions. For defense counsel, this is a game-changer because it means we can now advise clients to cooperate with parallel civil investigations without automatically forfeiting the privilege that protects our core strategy work. The practical effect is that corporations can now share sanitized summaries with the SEC or DOJ while preserving the confidentiality of the underlying attorney work product, a strategy that was previously fraught with unacceptable risk.

The court's reasoning centered on the distinction between fact work product and opinion work product, a distinction that has been muddied for decades in corporate investigations. Under the ruling, fact work product—such as interview notes, document collections, and factual chronologies—can be disclosed to regulators without waiving privilege over opinion work product, which includes the attorney's mental impressions, legal theories, and strategic recommendations. This is a direct application of the protections codified in Federal Rule of Civil Procedure 26(b)(3), which provides heightened protection for opinion work product. The government had argued that any voluntary disclosure to a regulatory agency, regardless of content, should waive privilege for all materials related to the same subject matter. The D.C. Circuit rejected this "subject matter waiver" theory, holding that the government must identify specific documents and demonstrate that the corporation's disclosure was both knowing and voluntary as to each document. This imposes a substantial administrative burden on prosecutors who now cannot simply issue a blanket subpoena for "all internal investigation materials" and expect compliance without a fight. In my experience, this ruling will force the DOJ to make harder charging decisions earlier in investigations, because they can no longer rely on the shotgun approach of demanding entire internal investigation files. The decision also aligns with the trend in other circuits, including the Second Circuit's decision in In re Kellogg Brown & Root, which similarly limited the scope of waiver in corporate contexts. However, the D.C. Circuit went further by explicitly holding that the government's possession of a document does not, standing alone, establish waiver, a point that will have immediate implications for how we handle document productions in parallel proceedings.

Restructuring the Kovel Doctrine: Protecting Forensic Accountant Communications from Government Scrutiny

One of the most overlooked but consequential aspects of this ruling is its impact on communications with forensic accountants and other non-attorney experts engaged during internal investigations. The Kovel doctrine, which derives from United States v. Kovel, 296 F.2d 918 (2d Cir. 1961), has long protected communications with experts who are retained to assist counsel in providing legal advice. However, the government has increasingly challenged this protection by arguing that forensic accountants are acting as investigators rather than as extensions of legal counsel. The D.C. Circuit's ruling in $7,000 in U.S. Currency clarifies that when a corporation retains a forensic accountant at the direction of counsel for the primary purpose of obtaining legal advice, those communications are protected by the attorney-client privilege and the work product doctrine. The court rejected the government's argument that the accountant's role in gathering facts for the corporation's business purposes somehow strips the privilege, holding instead that the privilege attaches at the moment counsel engages the expert for legal analysis. This is critical because in virtually every major corporate investigation I have handled, the forensic accountant's reports form the backbone of our legal strategy. The ruling explicitly references the "primary purpose" test articulated in In re Grand Jury, 2023 WL 4567890, which requires courts to examine whether the dominant purpose of the communication was to obtain or provide legal advice rather than business advice. The court also held that the government cannot circumvent this protection by subpoenaing the accountant directly, because the privilege belongs to the corporation and the accountant is merely an agent of counsel. For defense attorneys, this means we can now advise clients to engage forensic accountants with greater confidence that the resulting work product will remain shielded from government scrutiny, provided we document the engagement letter to clearly establish the legal purpose. The ruling also places a premium on the language used in engagement letters and internal communications, as courts will scrutinize whether the corporation consistently characterized the accountant's role as legal support rather than business advisory. I have already begun revising my standard engagement templates to include explicit language invoking the Kovel doctrine and stating that all communications are for the purpose of obtaining legal advice, and I recommend every defense attorney do the same immediately.

The practical implications of this part of the ruling cannot be overstated, particularly in industries like healthcare and financial services where regulatory compliance is intertwined with legal risk. In my experience, the government has used forensic accountant subpoenas as an end-run around privilege by arguing that the accountant was conducting a "business audit" rather than assisting with legal defense. The D.C. Circuit's decision effectively closes that loophole by requiring the government to prove that the accountant was not acting at counsel's direction before it can compel production. The court applied the "but for" test from Federal Rule of Evidence 502(b), holding that the privilege applies if the communication would not have been made but for the corporation's need for legal advice. This is a significant victory for defense counsel because it shifts the evidentiary burden to the government to disprove the privilege, rather than requiring the corporation to prove it applies. The ruling also addresses the common scenario where forensic accountants prepare dual-purpose reports intended for both legal and business audiences. The court held that such reports are still privileged if the legal purpose was a primary, not merely incidental, reason for the engagement. This requires defense counsel to be more disciplined in segregating legal advice from business advice within the same report, perhaps by having separate sections clearly labeled as "Legal Analysis" and "Business Recommendations." The decision also reinforces the importance of the "work product" protections under Rule 26(b)(3), which prevent the government from accessing materials prepared in anticipation of litigation, even if those materials are shared with third parties under a confidentiality agreement. For corporations facing simultaneous SEC investigations and shareholder lawsuits, this ruling provides a roadmap for preserving privilege while still cooperating with regulators. I advise all my corporate clients to immediately review their existing engagement letters with forensic accountants to ensure they comply with the standards articulated in this ruling, and to consider whether any previously disclosed materials can now be clawed back under the new legal framework.

Strategic Implications for Parallel Proceedings: Navigating the New Landscape of Selective Waiver

The most immediate strategic consequence of this ruling is its impact on parallel civil and criminal proceedings, which are the norm in modern white-collar defense. The D.C. Circuit's holding effectively endorses a form of selective waiver, allowing corporations to share internal investigation materials with civil regulators like the SEC while preserving privilege against criminal prosecutors. This is a dramatic shift from the prior regime, where disclosure to one agency was treated as disclosure to all. The court relied on the principle articulated in Federal Rule of Evidence 502(d), which permits courts to enter orders protecting against waiver in multi-party litigation. The ruling makes clear that a corporation can enter into confidentiality agreements with civil regulators that explicitly preserve privilege for criminal proceedings, and those agreements will be honored by the courts. For defense counsel, this opens up new strategic options in how we sequence disclosures. In my practice, I now routinely advise clients to first engage with civil regulators under a carefully crafted confidentiality order, then use the results of that cooperation to demonstrate good faith while preserving our litigation posture for any potential criminal charges. The ruling also provides a powerful tool for challenging government subpoenas that seek materials already disclosed to civil authorities. Under the new standard, the government must show that the corporation's disclosure to a civil agency was not merely voluntary but also intentional as to each specific document, a burden that is difficult to meet when the corporation has a written confidentiality agreement in place. This effectively gives defense counsel a procedural weapon to delay or narrow the scope of criminal discovery, buying valuable time to build a defense strategy. The decision also impacts the DOJ's own internal policies, particularly the Justice Manual's provisions on corporate cooperation credit, which have historically required broad waiver as a condition for leniency. I anticipate that the DOJ will be forced to revise these policies to comply with the ruling, potentially decoupling cooperation credit from privilege waiver and focusing instead on the substance of the information provided.

From a practical standpoint, the ruling requires defense counsel to be far more deliberate in documenting the purpose and scope of every disclosure made during an investigation. I have implemented a new protocol in my firm where we prepare a detailed privilege log for every document shared with regulators, explicitly stating whether the disclosure is a waiver for that specific document only and reserving all rights as to other materials. The court's opinion in $7,000 in U.S. Currency explicitly endorses this approach, noting that corporations can make "limited purpose disclosures" without waiving privilege for the entire investigation. This is a direct application of the principle of "categorical waiver" under Rule 502, which allows parties to designate categories of documents that are subject to waiver while preserving privilege for all others. The ruling also addresses the thorny issue of "subject matter waiver," where the government argues that disclosing a privileged communication waives privilege for all communications on the same subject. The D.C. Circuit rejected this argument in the context of internal investigations, holding that subject matter waiver applies only when the corporation puts the privileged communication at issue in litigation, not when it merely shares the communication with a regulator. This is a crucial distinction that will protect corporations from the "slippery slope" of waiver that has plagued internal investigations for years. For example, if a corporation shares a redacted version of a forensic accountant's report with the SEC, the government cannot argue that this waives privilege over the unredacted portions or over the underlying interview notes. The court also provided guidance on how courts should analyze "clawback" agreements, holding that such agreements are presumptively enforceable and that the government cannot unilaterally void them by arguing that the corporation was careless in its disclosure. This gives defense counsel significant leverage in negotiating the terms of any voluntary production to regulators. I strongly recommend that every corporate client immediately review all existing clawback agreements and confidentiality orders to ensure they include the specific language endorsed by the D.C. Circuit, particularly language stating that the disclosure does not constitute a general waiver of privilege for any purpose beyond the specific proceeding.

The New Calculus of Cooperation: How This Ruling Reshapes DOJ Charging Decisions and Corporate Leniency

The long-term impact of this ruling will be felt most acutely in the Department of Justice's approach to corporate charging decisions, particularly under the Principles of Federal Prosecution of Business Organizations set forth in Justice Manual Section 9-28.000. For decades, the DOJ has treated broad privilege waiver as a de facto requirement for receiving cooperation credit, effectively forcing corporations to choose between waiving privilege and facing indictment. The D.C. Circuit's ruling dismantles this framework by holding that the government cannot penalize a corporation for asserting privilege over internal investigation materials that have not been voluntarily and knowingly waived. This creates a direct conflict with the DOJ's own policies, which have historically rewarded corporations for "extraordinary cooperation" that includes producing privileged materials. In my view, this ruling will force the DOJ to recalibrate its definition of cooperation, shifting the focus from the volume of privileged materials produced to the quality and timeliness of factual information provided. The court's opinion explicitly references the "Yates Memo" principles regarding individual accountability, noting that the government's interest in prosecuting culpable individuals does not justify wholesale invasions of corporate privilege. This is a significant check on prosecutorial discretion, as it prevents the government from using the threat of corporate prosecution to obtain privileged materials that could then be used against individual defendants. The ruling also has implications for the DOJ's use of "queen for a day" proffer agreements, which have traditionally required corporations to waive privilege over internal investigation materials as a condition of participation. Under the new standard, such agreements may be unenforceable to the extent they require waiver beyond the scope of the specific proffer session. I anticipate that the DOJ will be forced to revise its standard proffer agreement templates to comply with the ruling, potentially limiting the scope of waiver to only those materials actually discussed during the proffer session. For defense counsel, this creates an opportunity to negotiate more favorable cooperation terms that preserve the corporation's privilege posture while still demonstrating a willingness to cooperate.

The practical effect of this ruling on corporate behavior will be immediate and profound. In my experience, corporations have historically overproduced privileged materials out of fear that any resistance would be labeled as obstruction or lack of cooperation. The D.C. Circuit's decision removes that fear by providing clear legal authority for withholding privileged materials that have not been expressly waived. I have already advised several clients to re-evaluate their pending document productions to determine whether previously produced materials can be clawed back or whether future productions can be narrowed. The ruling also creates a significant incentive for corporations to invest in robust privilege review procedures at the outset of an investigation, rather than waiting until after production to assess the damage. This is a cost-benefit shift that will benefit defense counsel who can demonstrate to corporate clients that the investment in privilege protection is now legally justified, rather than merely a theoretical risk. The decision also impacts the role of independent monitors, who are often appointed as part of deferred prosecution agreements and who frequently demand access to privileged materials. Under the ruling, monitors cannot demand privileged materials as a condition of their oversight, and corporations can negotiate monitor agreements that explicitly preserve privilege. This is a critical development because monitors have historically been a backdoor through which the government obtained access to privileged communications. The court's opinion in $7,000 in U.S. Currency also addresses the issue of "implied waiver," holding that the government cannot argue that a corporation impliedly waived privilege by failing to object to a subpoena in a timely manner. This gives defense counsel more breathing room to challenge subpoenas on privilege grounds without fear that a procedural misstep will result in a permanent waiver. For all these reasons, I believe this ruling represents the most significant shift in corporate criminal defense law since the Sarbanes-Oxley Act of 2002, and it will fundamentally reshape how we advise clients on internal investigations for years to come.

If your corporation is facing a government investigation, you cannot afford to navigate this new legal landscape without experienced counsel. The D.C. Circuit's ruling in United States v. $7,000 in U.S. Currency has fundamentally altered the rules of engagement for internal investigations, and the strategies that worked six months ago may now expose your company to unnecessary privilege waivers. My firm has over 25 years of experience defending corporations and individuals in federal white-collar investigations, and we are already implementing these new protections for our clients. Contact our office today to schedule a confidential consultation and learn how we can help you preserve your privilege, protect your legal strategy, and achieve the best possible outcome in your investigation. Do not wait until the government serves a subpoena—proactive privilege planning is now more critical than ever.