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C. Federal Bureau of Investigation

Despite the fact that the FBI is part of the Department of Justice, the question of reimbursement turns upon the statutory provisions relating specifically to FBI authority and appropriations. 54 Comp. Gen. 624 (1375).

As discussed above, 31 U.3.C. 636 (a) provides for the inter- or intra-department purchase of goods and services. As also discussed, however, wher this provision is to be used for the purchase of legal services in connection with litigation it requires an authorization or an appropriation which is specifically and explicitly directed to that point. Our examination of the authorization and appropriations statutes of the FBI reveals no express reference to the retention or compensation of counsel. Accordingly, we find no basis for obtaining reimbursement of defense attorneys' fees from the Bureau. 12/

For the reasons discussed in the portion of this section dealing with the CIA, we believe different treatment can be given to attorneys' fees attributable to services furnished in connection with congressional inquiries. Reimbursement of the Department for such costs incurred on behalf of present or former FBI employees may be obtained from the Eureau.

12/ 31 U.S.C. 628a, which deals with accounting adjustents for services chargeable to more than one appropriation of a department (e.g., the cost of duplicating equipment), oes not alter this conclusion.

Exhibit 5: Memorandum of Rex E. Lee of April 16, 1976 with three attachments 1

As you are aware, we are in fundamental agreement with the proposal to standardize the civil representation of federal employees by moving all civil cases to the Civil Division and by publishing appropriate regulations. I have been informed orally that the Criminal Division has some areas of civil representation which it wishes to retain. assume that Criminal will proceed to identify those areas and justify their retention so that we can bring the matter to a final resolution.

I

My staff

As to the creation of uniform regulations, I think
your staff has made a good start. We have a number of
relatively minor suggestions on language and organization
which are indicated on the attached amended draft.
will make themselves available to discuss the merits of
those suggestions. I would like to limit my own comments to
some major areas where we should appreciate the nature and
scope of the changes which have been suggested.

1. The proposed regulations would permit the Civil
Division to represent an employee who is under investigation
by the Criminal Division as long as he does not have "target"
status. This standard presents a number of questions, some
practical and others more theoretical. The first practical
question relates to the usability of the term "target."
"Target" is nowhere defined in the regulations and previous
discussions with the Criminal Division revealed difficulties
in defining the term. There also appear to have been problems
in identifying "targets" in the civil representation cases now
underway. I suggest that we seek guidance from the Criminal
Division on an appropriate definition of "target" and its
usability in separating investigated defendants for repre-
sentation purposes. Perhaps we can test its utility by

5310-110

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1 Received by the subcommittee as attachment to Babcock letter of December 16, 1977 (exhibit 28).

having the Criminal Division apply it to the representation cases now underway in order to determine how many employees would require private counsel under this proposal.

2.

A second practical issue is the real efficacy of this standard in limiting the need for private counsel. By restricting the use of private counsel to targeted employees, the draft proposal attempts to limit the financial burden of the Department. However, this admirable goal will be frustrated unless we alter another of our past representation decisions. Typically, defendants in civil cases are divided into three groups: (1) employees under investigation, (2) employees cleared of any wrongdoing, and (3) a possible third group of "targets." After discussions between the Civil and Criminal Divisions, we concluded some time ago that providing private representation to the employees under investigation while representing the cleared employees with Justice Department attorneys would publicly identify the "good guys" and the "bad."

There was substantial agreement that this identificatio would not only prejudice the civil litigation but possibly undermine any subsequent criminal indictment. Unless we change this policy, the presence of only one "target" within any group of defendants will trigger the necessity to provide private counsel for all. Thus, the concept of "target," like the concept of "employees under investigation" (which we presently use), may not result in any actual lessening of our private counsel fee burdens.

3. The theoretical problem with the "target" standard comes out of the decision in the Democratic National Committee, et al. v. James McCord, et al., Civil Action No. 1233-72 August 9, 1972).1 That decision may be read to hold broadly that civil representation is improper where "the Department of Justice is otherwise engaged, through other employees, in a criminal investigation the subject matter of which is akin to the gravamen of the civil action." Without supporting the merits of this opinion, it seems to me that because of its existence, the Civil Division would proceed at some peril to represent government employees who (while not targets) are under investigation by the Criminal Division on the same subject matter as the civil suit. In this posture, I would support submission of the representation guidelines to the American Bar Association for their prior approval. (Alternative we could proceed as we do now to retain private counsel for all those under investigation irrespective of whether or not they are targets.)

1 See attachment to exhibit 28 at p. 409.

3.

If we are to avoid censure when we represent

employees under criminal investigation, we must take all practical steps to limit the possibility of actual conflicts of interest. A first step might be to define target in terms of "probability of indictment" so as to cull out all cases where the employee is likely to face criminal charges. Secondly, we should do all that we can to separate the Justice Department's civil and criminal functions with respect to these defendants. A necessary step reflected in the draft is the imposition of a clear attorney-client privilege protecting any incriminating information received by the Justice Department attorney.

However, avoidance of the fact and appearance of conflict may require further efforts to insulate the representing attorney from the Justice Department's criminal functions. Many of our representation cases are handled by Assistant United States Attorneys who are engaged in both criminal prosecution and civil litigation. I would think it improper for such an Assistant United States Attorney to handle a civil case where the defendant is under criminal investigation, and I would recommend that all such cases be handled directly out of the Civil Division.

In the great bulk of civil representation cases where there is no pending investigation, civil representation can continue to be provided through Assistant United States Attorney: We should realize that should a later criminal investigation arise on the same subject matter, any prosecution might have to proceed through a special prosecutor to avoid the appearance of impropriety. We would expect such instances to be extremely

few in number.

At the other end of the scale, conflict charges could be based upon the ultimate supervision of Civil Division attorneys by the Attorney General and the Deputy Attorney General. Arguably, avoidance of any hint of conflict would require that supervision of these cases and attorneys be contained completely within the Civil Division without any formal or informal supervision by higher Justice Department officials who may be otherwise involved in the criminal prosecution process. However, in my view, the imposition of the

attorney-client privilege and the use of a properly defined "target" standard will so reduce the potential for actual conflict of interest as to make this step unnecessary.*/

5. Section 15.4(f) of the draft provides that where there are conflicts between defendants, the employees can be separated into groups and each group provided with separate representation by a Civil Division attorney. Subsection (f) thus seems to anticipate that different attorneys in the same division will represent conflicting interests. This seems quite analogous to separate members of a law firm representing conflicting parties in the same lawsuit situation which we would all agree to be contrary to the canons of ethics. Thus, I would conclude that if the government employees have factual or legal conflicts, the employees would by necessity require representation by outside counsel.

-- a

6. The proposed guidelines also anticipate that the Civil Division attorney will undertake the full range of litigation responsibilities that would be expected from a private lawyer. As articulated, this would include raising arguments regardless of their symmetry with the interests of the United States. Consistent with this theory, we might expect these attorneys to take appeals and seek Supreme Court review independently of United States' interests.

We represent individual government employees in hundreds of civil cases at any one time. Our representation in these cases has, since the institution of this Division, been limited by the interests of the United States, both as to legal arguments and appeals. In most cases, we make a determination to consider whether particular defenses, arguments or positions will conflict with the general position of the United States. In the great majority of instances there is

*/ The extent to which the disqualification of one member of a lawyering institution may disqualify the entire body has generated enormous controversy. Thus far the conflict controversy has focused on private law firms, but the principles involved arguably may be applicable to government institutions as well. See, "The Ethics Squeeze on Ex-Government Lawyers, Business Week, February 23, 1976 (Attachment A) and an excerpt from Kesselhaut v. United States, Ct.Cl. Tr. Div., March 26, 1976 (Attachment B).