A front-page article in the New York Times today discusses what it calls a “shift” in Justice Department policy: “corporate deals” are replacing “trials,” as the headline puts it. The tenor of the article is that corporations are getting away with murder, thanks to the lax prosecutorial policies of the Justice Department. The article, however, rests on a simple confusion about what is going on.
The article confuses two overlapping but conceptually distinct phenomena: a plea agreement , where the defendant avoids a trial and the risk of a conviction by paying a fine (sometimes, pleading guilty to a lesser charge, sometimes not); and a deferred prosecution agreement , where a similar deal is made (including payment of a fine) but, in addition , the corporate defendant agrees to undertake internal reform that will be monitored by an outsider appointed by the government. If the monitor declares that the firm has failed to make the necessary reforms, then the agreement is off, prosecution and trial will proceed. A DPA is just a tough version of the plain-vanilla plea agreement.
The article (read the headline) implies that the Justice Department prefers to coddle corporate defendants with DPAs, rather than subject them to trial, conviction, stigmatization, and destruction. So trials are being abandoned in favor of DPAs. But, in fact, the article provides no evidence that this is what is happening, nor does it quote anyone who says this is what is happening. (The article quotes a law professor, Vikramaditya Khanna, who quite reasonably says that corporations prefer DPAs to trials (after all, if they didn’t, they wouldn’t agree to DPAs). But Khanna’s work does not establish that DPAs are replacing trials; he’s interested in how DPAs should be structured. Others quoted in the article worry about whether DPAs may be too lax but none says that they have replaced trials.)
In fact, what appears to be happening is that the Justice Department has decided that DPAs are often more appropriate than ordinary plea agreements. That’s the policy “shift”; not a decision to stop trying corporations. And it’s a policy shift that should make corporations cry rather than cheer. As far as I can tell from looking at DOJ and Sentencing Commission statistics, the likelihood that a corporate defendant will go to trial rather than enter a plea has remained about the same (10-15 percent of cases) since the early 1990s. It’s possible that trials of corporate defendants have become less common, but, if so, it’s not because DPAs have become more common. DPAs seem to be replacing ordinary plea agreements, not trials. And, as far as I can tell from the scholarship, the main concern now is not corporate coddling, but prosecutorial overreaching. See this article by Brandon Garrett, for example.
In other words, when the article says that the Justice Department, “once known for taking down giant corporations, including the accounting firm Arthur Andersen, has put off prosecuting more than 50 companies suspected of wrongdoing over the last three years,” we need to know the counterfactual. In an earlier time, would these prosecutions have ended in plea bargains or in trials? And would any convictions secured after a trial be worth the time and expense that could have been used to pursue other cases?
The headline should be: “In Justice Shift, Corporate Monitoring Supplements Plea Deals.” It may be that this shift is a bad idea, or that Justice Department policy toward corporations is in other ways objectionable (maybe the deals are not strict enough), but the article sheds no light on these issues.