qualify Department of Justice counsel from representing a witness in the case because the Department had pending a criminal investigation of "some of the named defendants" in the case. See exhibit 28 at page 409. Within the Department it was recognized that the McCord decision could "be read to hold broadly that civil representation is improper where the Department is otherwise engaged, through other employees, in a criminal investigation the subject of which is akin to the gravamen of the civil action.'" Exhibit 5 at page 61. Two divergent positions surfaced in response to the decision: One cautioned that "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," exhibit 5 at page 61; the other did not find that the McCord decision raised "insurmountable obstacles." Exhibit 6 at page 82. The latter position was based on three factors. First, "the decision was not appealed and thus has no binding effect on other District of Columbia district judges." Secondly, "since it is not well reasoned, the opinion is unlikely to have even persuasive force." And finally, "the validity of these regulations will surely be litigated in any event." Exhibit 6 at page 82.

In addition to the direct or indirect impact of the order on criminal investigations, public confidence in the Department criminal investigation may be undermined when the Department does not prosecute a Federal employee or accepts a plea to a lesser charge in a case related to one in which counsel has been retained by the Department to represent that same employee in a civil suit.

The staff concludes that the Department should not subsidize private counsel whose actions may complicate or frustrate the efforts of Department criminal investigations. To the extent that there is a conflict between defense in civil suits and prosecution in criminal suits, the latter should take precedence.

The Department has recognized that at some point there is an inseparable conflict. When a decision to seek a prosecution is made, the Department ceases to pay for private counsel to represent the employee. However, criminal investigations may well be adversely affected by representation in any related civil case well before the point of indictment.

A way to accomplish the ends sought by this policy and avoid the conflict would be to authorize the reimbursement of private counsel fees in civil suits when the Department determines, on the merits, that a Federal employee should not be prosecuted or when the employee is found innocent of criminal charges.

D. EXPENSE OF PRIVATE COUNSEL

The cost of retaining private legal counsel to represent Federal employees under the order is unacceptably high, far exceeding the Department's expectations when it began the program. Still, it is difficult, if not impossible, to control the costs of the current program in a manner that does not infringe on the independence of private counsel.

The cost of the Department program has mushroomed from $12,000 in 1974, to the most recent appropriation of $1,860,000 for fiscal 1977.

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The Department had originally requested $4,878,000 for fiscal 1977, an amount equal to 23 percent of the Civil Division's entire estimated appropriation of $16,792,000 for that year. Given the number of cases involved in the private counsel program in comparison to the 43,844 cases the Division handled in fiscal 1976, the cost is staggering.

When asked by the Appropriations Committees to estimate the total cost of the private counsel program, the Department was unable even to offer a dollar estimate given the unanticipated growth in the program up to that point. The Department did not know how to predict costs. Exhibit 12 at page 180. That costs "will be very expensive" and that those costs "will last for several years, although perhaps not at this high level," was conceded by the Department. Exhibit 12 at page 178. It is anticipated, however, that "disclosures that have been made in the aftermath of the Watergate matter will not be * * * a recurring matter." Exhibit 12 at page 178.

One suggested means by which the Department can control costs is by a "postexamination" of claims. Exhibit 12 at page 180. The Department's position is that it cannot "be too exacting" about what it asks a private counsel in this regard. "For example, [asking] whether the time he spent was necessary, why he spent that time, why he made that motion, *** would be interfering with the attorney-client relationship." Exhibit 12 at page 180. Consequently the Department knows of no way "to predict with any degree of accuracy how much the bill of a private counsel it retains will be. See exhibit 12 at page 181.

Moreover, the cost of the program is increased because the Department has adopted a policy of hiring private counsel in certain situations although no conflict exists to prevent regular staff attorneys from providing the representation.

Both the January 19 order and the revised order provided that where there is a conflict among defendants "some situations may make it advisable that private representation be provided to all conflicting groups and that Justice Department attorneys be withheld so as not to prejudice particular defendants." See exhibit 1 at page 29 and exhibit 2 at page 31. Similarly, where only one Federal employee in a group of defendants in a civil case is a "target," of a criminal investigation private counsel will be provided not only to the target, but to all of the other defendants to avoid identifying the target.

During the drafting of the initial order this policy of representing nontargets with private counsel generated some criticism within the Department. The Civil Division approved of this policy. Exhibit 5 at page 61. Attorneys in the Deputy Attorney General's Office concluded, however, that "the practice must change" if the Department's "attempt to represent as many employees as possible within the Department" was to succeed. Exhibit 6 at page 82. The prejudice to the torret was thought to be "minimal" and "not legally cognizable ***" Exhibit 6 at page 82. Despite this criticism, the provision was adonted and the Department operates under a "strong preference" to retaining private counsel for nontargets "to avoid any prejudice" to a target. Exhibit 10 at page 123. No wav has been found to give private representation "only to those defendants whose activities, in relation to the suit, are most intimately related, to normal operations." Exhibit 10 at page 123. The result is that the Department retains private coun

sel to represent many defendants who are not targets, who have no conflict with other defendants, and who do not wish to raise arguments which conflict with Government positions.

The Department now recognizes that the expense of private counsel "has become the single largest problem facing the Department with respect to its program of retaining private counsel." Exhibit 10 at page 125. The Department's experience is that "it is not at all unusual for one counsel, retained to represent a single defendant (where grouping was not possible), to submit a monthly bill ranging from $12,000 to $30,000 for work not involving extensive discovery or brief preparation." Exhibit 10 at page 125.

The high costs stem from the "open-ended nature of the retention contracts themselves which evidently have been read to place no limits on the number of attorneys which could be used by the retained counsel to perform the necessary representational services." Exhibit 10 at page 125. In one case now pending "upward of eight attorneys and four legal assistants bill[ed] the Department for over 480 hours of work in 1 month for one defendant." Exhibit 10 at page 126. The Department is considering various ways to limit these expenses including permitting the defendant employee to "purchase additional legal services from his private attorney at his own expense, albeit at a costly rate. * * *" Exhibit 10 at page 127. The Department is also considering paying for private counsel "on the basis of the individual defendant's need rather than across the board." Exhibit 10 at page 129.

The staff concludes that there is no effective way to limit the cost of private counsel without limiting the authority of a private counsel vigorously to represent his client. The prohibitive cost of retaining private counsel makes it essential that an alternative to the Department policy be adopted.

III. RECOMMENDATIONS

The absence of statutory authority for the Department's current program of hiring private legal counsel make it imperative for the Justice Department and the Judiciary Committee to take expeditious action to reform the program in order to protect both the interests of Federal employees who are presently being represented by private legal counsel and the public interest. To accomplish these two aims, the staff makes six recommendations which are here briefly summarized. A. Congress should appropriate no more funds to pay for private counsel in the absence of specific statutory authority for the Department to retain such counsel. Until appropriate amendments to the Federal Tort Claims Act are adopted and the Department's statutory authority to hire private counsel is clarified, no new contracts for private counsel should be awarded. The House and Senate Appropriations Committees should be informed that the Judiciary Committee believes no further appropriation of funds for private counsel should be made.

B. Until the Department's authority to retain private counsel is formally adjudicated, the Department should continue to make payments from available funds to private counsel it has already retained. The Department should take every step possible to avoid exhausting its remaining funds.

C. In the event that existing Department contracts with private counsel already retained are held invalid or appropriated funds are exhausted, private bills should be considered to reimburse private counsel on an interim basis.

D. As soon as the interest of justice permits the Department should determine whether to seek indictments of Federal employees for conduct which is currently the subject of civil suits against such employees. Once these prosecution decisions are made, it will no longer be necessary for the Department to retain private counsel to represent Federal employees who were targets in these investigations.

E. The committee should adopt legislation amending the Federal Tort Claims Act to alleviate the need for the Department to retain private legal counsel. The general purpose of such amendments would be to substitute the United States as the defendant in civil cases involving conduct within the scope of an employees' employment. Because the effect of such an amendment would be to relieve an employee from personal tort liability, an adequate alternative administrative disciplinary procedure must be included for Federal employees who violate constitutional rights. Such amendments must also provide an election of remedies for plaintiffs when the Federal employee cannot be made subject to administrative disciplinary proceedings.

F. Amendments to the Federal Tort Claims Act which provide for an election of remedies in certain cases will not completely eliminate the need for the Department to retain private counsel in the future. In addition, it is doubtful any amendments to the Tort Claims Act will (23)