The Implications of Yates Memo on D&O Indemnification, Fee Advancement and Insurance
On September 9, 2015, then Deputy Attorney General Sally Yates issued a memorandum citing the Department of Justice's (DOJ) focus on the prosecution of individuals responsible for corporate misconduct. The memo has raised concerns among company directors and officers about the adequacy of their indemnification, fee advancement and insurance policy to protect them in a DOJ investigation.
A well-drafted indemnification agreement helps companies do the right thing when providing individual D&Os with important protections like advancement of legal fees. It clearly outlines who is entitled of indemnification, the scope of indemnity and the limitations on the right to indemnity. The advancement provisions also allows for payment of fees throughout the case.
Companies must take a critical review of their D&O insurance program and expect potential statutory and case law limitations, enforcement hurdles, and the interplay of indemnification provisions to avoid potential risks and legal pitfalls.
In a two-hour LIVE Webcast, a panel of thought leaders and practitioners assembled by The Knowledge Group will discuss the implications of the Yates Memo on D&O indemnification, fee advancement and insurance. Speakers will offer best practices on drafting or reviewing indemnification agreements and D&O insurance policies to ensure protection during a DOJ investigation.
Some of the major topics that will be covered in this course are:
- Impacts of Yates Memo to D&O Indemnification, Advancement and Insurance
- Obtaining Cooperation Credit from the Government
- Key Considerations when Reviewing D&O Insurance Program
- Drafting/Reviewing Indemnification and Advancement Provisions
- Protecting D&O Indemnification and Advancement Rights
Joshua D. Roth, Partner
Fried, Frank, Harris, Shriver & Jacobson LLP
- An Introduction to the Yates Memo
- Challenges Associated with Bringing Enforcement Actions Against Individuals
- Components of the Yates Memo
- Qualifying for Cooperation Credit
- Focus on Individuals During Corporate Investigations
- Improved Coordination Between Criminal and Civil Attorneys at DOJ
- Default Presumption Against Releasing Individuals When Settling With Entities
- Coordinated Approach to Resolving Matters Against Entities and Individuals
- Increasing Civil Enforcement Actions Against Individuals
- Other Enforcement Agencies Jump on the Bandwagon
- The Yates Memo at (almost) Two
- Other Initiatives Focused on Holding Individuals Accountable
- The FCPA Pilot Program
Pamela S. Palmer, Partner
Pepper Hamilton LLP
- What are the impacts of the Yates Memo to D&O Indemnification, Advancement, and Insurance
- Increased defense costs
- More individuals facing longer and more costly legal battles
- Individuals more likely to want independent counsel rather than trust fate to the hands of lawyers representing the corporation; Upjohn warnings
- Document production and individual representation – increased costs and possible tension between corporate counsel and individual counsel on certain documents (traditionally individual counsel may have requested sharing of document productions, but few requests and that may change – individual counsel may wish to do their own review to ensure favorable documents are produced).
- Concerns among D&O’s about adequacy of indemnification, fee advancement and insurance policy to protect them in an investigation.
- Potential for conflicts of interest – companies (eager to seek cooperation credit) v. individuals (interest in avoiding individual prosecution)
- KPMG case: DOJ deemed guilty of invasion of tax partners’ constitutional rights when it influenced KPMG to cut off defense cost funding on even of criminal trial
- Increased defense costs
- Perspective of the Individual
- Secure counsel
- Secure Indemnification (permissive v. mandatory)
- Secure Advancement (right to advancement not dependent on right to indemnification)
- D&O insurance protection increased importance (last line of defense) – limits selection and limits adequacy, maximize Side A coverage
- Perspective of the Corporation
- Obtaining Cooperation Credit from the Government
- Expect increased requests for separate counsel
- More protracted investigations
- Requirements for advancement; Secure flexibility to refuse advancement
- Best Practices of Reviewing/Drafting Indemnification Agreement: What does a well-drafted indemnification agreement look like?
- Who is entitled to indemnification?
- What is the scope of permissible indemnity?
- What are the limitations on the right to indemnity?
Sarah Katz Downey, Senior Vice President of D&O Products and Claims Advocate
- What is D&O liability insurance?
- Increased pursuit of individuals: D&O Insurance Implications
- Program Limits and Structure
- Definition of Claim / Definition of Inquiry
- Definition of Claim
- Definition of Pre-Claim Inquiry
- Upjohn warnings –
- Internal Investigations pre-enforcement agency contact
- Advancement language
- Conduct Exclusion
- Severability Provisions
- SEC’s Policy of Wrongful Admissions: D&O Insurance Implications
- Could impair D&O corporate indemnity
- Could impair insurance coverage
Who Should Attend:
- Corporate Counsel
- In-house Counsel
- Board of Directors & Officers
- Directors and Officers
- Legal & Senior Executives
- Business Lawyers
- Public and Private Companies
- Other Interested/Related Individuals
Pamela S. Palmer is a partner in the Commercial Litigation Practice of Pepper Hamilton LLP, resident in the Los Angeles and Orange County offices. She handles a wide range of complex business disputes with particular emphasis in matters involving investor disputes, securities litigation, class actions, derivative suits and corporate investigations. Ms. Palmer defends public and private companies, officers, directors against claims involving fiduciary duty, business judgment, and professional liability. She handles SEC and other regulatory matters, as well as litigation arising out of mergers and acquisitions. She advises boards and special committees in internal investigations involving whistleblowers, shareholder demands, restatements and other corporate crises, and also advises clients on business liability, corporate governance, disclosure, indemnification and director and officer liability insurance coverage. Her clients have included Fortune-ranked public companies, private companies, accounting firms and individuals involved in a wide range of industries.
Ms. Palmer has achieved judgments of dismissal in numerous actions and proceedings in federal and state trial courts and in courts of appeal. She has been named one of the Top 100 Women Litigators in California by the Daily Journal (2009),named to the Southern California Super Lawyers list in litigation every year since 2005, recognized as a leading securities litigation attorney in The Legal 500 U.S., and is rated AV Preeminent Martindale-Hubbell.
Pamela S. Palmer is a partner in the Commercial Litigation Practice of Pepper Hamilton LLP, resident in the Los Angeles …
Joshua D. Roth is a litigation partner resident in Fried Frank’s New York office.
He concentrates his practice in white-collar criminal defense, securities enforcement and regulatory interactions. He represents entities and individuals in a diverse range of complex white collar, regulatory, and commercial litigation matters. Mr. Roth also represents entities and individuals in investigations and enforcement actions by various federal and state government authorities, including the Department of Justice and the SEC, among others.
Mr. Roth has extensive experience representing individuals. For example, Mr. Roth is currently representing a senior executive at a large financial institution who was charged by the SEC with aiding and abetting and/or causing securities laws violations by the financial institution.
In addition, Mr. Roth counsels clients on anti-corruption laws, representing entities and individuals in connection with investigations, due diligence for transactions, and designing and implementing anti-corruption compliance programs for businesses in various industries.
Mr. Roth received his JD, magna cum laude, from Boston University School of Law and his BA, magna cum laude, from Cornell University.
Joshua D. Roth is a litigation partner resident in Fried Frank’s New York office. He concentrates his practice in white-collar …
SARAH DOWNEY is the D&O Product Leader and a FINPRO Claims Advocate at Marsh USA, Inc. Ms. Downey graduated from Fordham University School of Law. As the Marsh D&O Product Leader Ms. Downey is responsible for developing and implementing Marsh’s strategy with respect to the D&O product overall and with regard to interaction with colleagues, clients and prospects. Ms. Downey is also leading Marsh’s efforts in the creation and delivery of D&O Thought Leadership. In her role as a Claims Advocate, Ms. Downey specializes in complex coverage and claims issues concerning mainly directors and officers insurance. Prior to joining Marsh, Ms. Downey was in private practice where she advised insurers and corporate clients with respect to the interpretation of policy wording and counseled clients with respect to coverage recommendations and resolution strategies. She also successfully represented insurer clients in coverage and bad faith litigation in a variety of state and federal court actions.
SARAH DOWNEY is the D&O Product Leader and a FINPRO Claims Advocate at Marsh USA, Inc. Ms. Downey graduated from …
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Method of Presentation:
Experience in corporate or white collar criminal law
NASBA Field of Study:
Business Law - Technical
NY Category of CLE Credit:
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About Pepper Hamilton LLP
Pepper Hamilton LLP is a multi-practice law firm with more than 450 lawyers nationally. The firm provides corporate, litigation and regulatory legal services to leading businesses, governmental entities, nonprofit organizations and individuals throughout the nation and the world.
About Fried, Frank, Harris, Shriver & Jacobson LLP
Fried, Frank, Harris, Shriver & Jacobson LLP advises the world's leading corporations, investment funds and financial institutions on their most critical legal needs and business opportunities. The Firm's approximately 500 lawyers are based in North America and Europe. More information can be found at www.friedfrank.com.
About Marsh USA
Marsh is a global leader in insurance broking and risk management. Marsh helps clients succeed by defining, designing, and delivering innovative industry-specific solutions that help them effectively manage risk. Marsh’s approximately 30,000 colleagues work together to serve clients in more than 130 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy, and people. With annual revenue of US$13 billion and approximately 60,000 colleagues worldwide, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a leader in providing risk and reinsurance intermediary services; Mercer, a leader in talent, health, retirement, and investment consulting; and Oliver Wyman, a leader in management consulting. Follow Marsh on Twitter, @MarshGlobal; LinkedIn; Facebook; and YouTube