Ihad the privilege of spending three weeks in an old North Carolina courtroom this summer, assisting a stellar team of attorneys as they mounted their defense against allegations of a massive fraud. The Old North State is outside my jurisdiction; I was there in a non-lawyer, technical support and consulting role. Freedom from the pressure of spotting objections or conducting
cross-examination left me space to appreciate the trial craft on display.
One aspect that stood out as noteworthy was the scale of the defense
case. The government called expert witnesses to explicate the target business’s financial data or tax returns, and the defense called experts to counter those analyses. The government called dozens of witnesses and offered
hundreds of exhibits, and the defense had witnesses and exhibits in similar
number. The respective cases in chief took approximately the same number
of days to present.
In criminal defense, you more commonly see reasonable doubt defenses, where little testimony and few exhibits are offered — usually for good
reason. Too often, favorable witnesses are vulnerable to potentially fatal
cross-examination. And, correspondingly, too often exculpatory evidence
has no safe proponent through which to introduce it. Sometimes the facts
just aren’t on your side, so the less that gets in, the better. Besides, doesn’t
the prosecution bear the burden of proof? But watching a trial play out as
a clash between equal forces rather than asymmetrical warfare, I was impressed with another reason for the prevalence of leaner defense cases: How
does someone pay for all this?
It’s no secret that lawyers cost a lot, and the problem is compounded for
federal white-collar prosecutions; you’re up against the vast resources of the
federal government. Indictment usually comes after lengthy investigation,
which means voluminous, sometimes Augean, discovery to wade through.
Defending against charges based on complex business transactions often
means getting the jury to understand how things really happened, instead
of the simplistic where-there’s-smoke-there’s-fire explanation on offer from
the prosecution — and that means financial analysts and expert witnesses.
But when your liberty is on the line, even a large price tag may seem reasonable.
Soon, more white-collar defendants may have to figure out how to pay
those defense bills. While federal white-collar prosecutions have been
trending down for some time, with 2015 (the most recent year for which
Department of Justice (DOJ) statistics are available) seeing fewer than any
year in the Obama administration,
1 the wind may be changing. The DOJ
released a policy statement in September 2015 (the Yates Memo,
in more detail in the April/May 2016 issue of NWLawyer3), in which it sets
a goal of holding more individuals criminally responsible for corporate malfeasance instead of simply charging the corporations. If the DOJ keeps to
this course, how will these future defendants cover their legal expenses?
The three most common routes for funding a defense are: pay for it through
insurance, pay for it through the company, or pay for it by yourself. Increasingly,
though, there are complications along each path.
The Federal Public Defenders (FPD), of course, continue to provide extraordinary representation to their clients without charging a dime. They
bring to the table experience, dedicated support staff, and the extensive re-
FOOTING THE BILL FOR
by Isham M. Reavis
Liability Insurance and Indemnification in Corporate Criminal Defense