Justice: Prosecutors can't ask firms to waive legal privileges

— -- In a sharp turnaround from the aggressive corporate-charging guidelines of the Enron era, the Justice Department on Thursday announced new policies for federal prosecutors who are investigating companies.

Among other practices, the new guidelines bar prosecutors — in deciding whether to file charges against corporations — from asking companies to waive their attorney-client privileges or to turn over legally protected materials.

Deputy Attorney General Mark Filip said in a statement that the new rules strike a balance between "safeguarding the attorney-client privilege" and "preserving the department's ability to investigate corporate wrongdoing effectively."

"I don't think it is going to change the number or types of cases we do. We are committed very much to aggressively investigating and prosecuting crimes whether it's by individuals or companies, " Filip said at a news conference at the New York Stock Exchange, according to Reuters.

During the Enron era in the early 2000s, the Justice Department won praise from President Bush, shareholders' groups and others for cracking down on corporate crime. Hundreds of executives and dozens of companies were charged with securities fraud and other crimes.

But defense attorneys and other critics — including the U.S. Chamber of Commerce, the American Bar Association and lawmakers — claimed that overzealous prosecutors improperly forced companies to cooperate with government investigations or risk facing charges.

To avoid prosecution, companies often were compelled to turn over private attorney-client communications and other confidential documents, according to defense attorneys.

On Thursday, Filip praised corporations as important government allies.

Defense attorneys and corporate lawyers cautiously praised the new guidelines.

"The proof will be in the pudding as to how they're applied," says Nick Hanna, a partner at Gibson Dunn & Crutcher and a former federal prosecutor. "But it's a clear admission on the Justice Department's part that the previous guidelines were inappropriate and went too far."