The then Assistant Attorney General in charge of the Civil Division, Rex Lee, argued strongly that regular staff attorneys should not be free to raise such arguments. See exhibit 5 at page 63 and exhibit 6 at page 83. He argued that it was unclear whether the Department "possesses the legal authority to authorize its attorneys to advance legal arguments and take appeals which are contrary to the U.S. interests." See exhibit 5 at page 64. And he warned that if such independence were permitted the Department could expect that "within the next year Justice Department attorneys will be arguing for the legality of all Cointelpro programs." See exhibit 5 at page 64.

In evaluating Mr. Lee's arguments, two attorneys in the Office of the Deputy Attorney General found this issue to present "the most difficult" problem they had to face in drafting the order. See exhibit 6 at page 83. In fact, they were unable "to reach a solution with which [they were] both comfortable." They argued that "the chief obligation of the Department of Justice is to protect the interests of the United States" and that "any diminution of [the Department's] overall Government interests for the sake of advocating any individual employee's interests is disturbing at best." Exhibit 6 at page 83. Despite these doubts, the draft order forwarded to the Deputy Attorney General still contained a provision allowing Department staff attorneys to raise arguments which conflicted with Department positions. See exhibit 6 at page 88.

When the order was finally issued by the Attorney General on January 19, 1977, this section providing for the independence of Department staff attorneys was deleted. See exhibit 7 at page 94. In fact, the order not only specifically provided-contrary to these earlier drafts— that Department attorneys could not assert positions which "conflict with Government positions," but it further provided that the Government could not even "pay for representation where the positions taken would oppose positions maintained by the United States itself”—a new provision not in earlier drafts. Thus, neither staff attorneys nor private counsel were given independence to raise arguments not in the interests of the United States.

This position, however, was soon reversed in the revised version of the Attorney General's order which is now in effect. This revision makes it clear that the ethical obligation of private counsel retained at the Department expense runs solely to the Federal employee. All retention letters to private counsel make this responsibility explicit. See exhibits 8 and 9 at pages 101 and 103. Thus, private counsel are now free to argue any legal position or defense in the interests of their client even if that position is "not in the interests of the United States to assert" or conflicts with a "Government position." Consequently, the Department will now pay others "to do what the Department has decided it is unable to do directly. ***" See exhibit 10 at page 116. This position is reached in part because the contrary position "would lead in many cases to the complete termination of any form of representation ***" Exhibit 10 at page 116. But "more importantly private counsel are retained in the first instance to protect an interest of the United States, employee morale, which could not otherwise be preserved." Exhibit 10 at page 116.

1 The Department has acknowledged that there is no difference between "Government positions" and "positions or defenses in the interest of the United States." See Sec. 50.15 (a) (7) (ii) and Sec. 50.15(a) (10) of the revised order, exhibit 2 at page 31 and exhibit 26 at pages 358-359.

Moreover, the revised order now requires that the issue of the need for independent counsel be raised whenever Department staff attorneys will not or cannot raise certain arguments which an employee client wishes to assert. See section 50.15 (a) (10) of the order, exhibit 2 at page 35 and exhibit 26 at page 349. (Question 93.) Indeed, the Department attorney must "promptly inform the employee ** * that such positions will not be asserted." See section 50.15 (a) (7) of the order, exhibit 2 at page 34 and exhibit 26 at page 349. (Question 93.) Upon such notification the employee can either consent to the Department position or request private counsel. If private counsel is retained by the Department, such counsel is free to take positions which confflict with or oppose Government positions or to assert legal positions not in the interest of the United States to assert. See exhibit 26 at page 358. (Question 113.)

To summarize these developments, in the initial version of the order there was no provision for hiring private counsel to raise arguments which the Department would not raise, let alone any procedure which would force a Department attorney to raise the issue of the need for private counsel. Department attorneys still cannot raise arguments which conflict with the interests of the United States. But now private counsel are retained to raise these arguments.

A curious contradiction exists within the order on the point of the independence of private counsel. The Department does assert that it will refuse to retain private counsel if "representation is not in the interest of the United States." See section 50.16(b) (1) (iv) of the order, exhibit 2 at page 37 and exhibit 26 at page 358. (Question 113.) It is not clear how the Department reconciles that position with its policy of hiring private legal counsel in order to raise a "legal position or defense not in the interest of the United States to assert." The Department cannot both give private counsel complete independence and assure that the interests of the United States are not adversely affected by the legal arguments advanced by such private counsel. Although Deputy Attorney General Tyler recognized that conflicts may arise between these two interests (see exhibit 39 at pages 512513), in its answer to the committee the Department does not acknowledge that the interest of the United States in representing Federal employees can be in direct conflict with the interest of the United States in legal positions and arguments made in court. See exhibit 28 at page 403. (Question 6.) Instead the Department argues that "if, after hiring private counsel, the broader interests of the United States require representation, that objective can be accommodated through the vehicle of an amicus appearance." Exhibit 28 at page 403. (Question 6.)

In determining whether it is in the public interest for the Government to represent an employee in a civil suit, particular problems arise when that employee is under investigation for possible criminal conduct. The Department policy is that "until it is determined a crime has been committed. [it] must assume the person acted properly and deserves representation." See exhibit 13 at page 208 and exhibit 39 at page 511. The Department thus operates under "a presumption" that Federal employees are "entitled to some form of representation by the

Department of Justice, by the Government, for acts they performed that arose out of their official duties." See exhibit 13 at page 225.

This presumption is almost a necessity if there exists the possibility of prosecution. In this situation the Department "cannot get all the facts" about the case. The employee "cannot tell" the Department what it needs to know "because it might be used [by the Department] in the criminal investigation." See exhibit 13 at page 226. Once the Department terminates a criminal investigation without recommending a prosecution, the Department views it as a "necessary conclusion' that the conduct "can be defended as a permissible, not unlawful form of conduct." See exhibit 13 at page 210.

Apparently, the Department's position is that it is in the public interest to defend any conduct which has not been held to be criminal. This hardly comports with its stated policy of refusing to retain private counsel if "representation is not in the interest of the United States". The practical result is that, "however gross that conduct may seem to the layman," the Department has not once found the public interest to be independent grounds for refusing to represent an employee sued in his or her individual capacity when the Department has determined such employee was acting within the scope of his or her employment. See exhibit 13 at page 210 and exhibit 26 at page 336. (Question 57.)

Once it has been determined that it is in the public interest to represent an employee and that private counsel must be retained, the Department will normally defer to the counsel selected by the defendant employee. See exhibit 12 at pages 177 and 179-180. The rate of pay for such counsel is negotiated in each case and varies between $50 and $75 an hour, which is often less than such attorney's customary fee. See exhibit 12 at page 180 and exhibit 13 at page 203. The bills submitted by such counsel are reviewed by the Department, but no limits on the number of hours the private counsel can work on a case are imposed by the Department in advance. See exhibit 12 at pages 180-181 and exhibit 13 at page 203. If a Federal employee is eventually held by a court to have performed acts outside the scope of his employment, the Department has no basis for recovering the attorneys fees paid to the employee's counsel. See exhibit 4 at page 54 and exhibit 26 at page 364. (Question 133.)

Pursuant to the order the Department has to date hired 79 lawyers. or law firms to represent 107 defendants in 27 cases. Some of these defendants are named in more than one suit, for example Richard Helms is now represented in six different cases by the same law firm. Approximately 175 other cases are being handled by regular Department attorneys. In cases where criminal investigations have been closed, Department staff attorneys have replaced private counsel. The cost of the private counsel who have been retained was $12,000 in 1974, $47,800 in 1975, and $554,306 in 1976. See exhibit 13, at page 228. Of the $1,860,000 appropriated by the Congress for fiscal year 1977, $448,520 was expended prior to October 1, 1977, and the rest has been obligated for fiscal year 1978. In the fiscal year 1978 budget, the Department has requested no additional funds, but warned of the possible need for a supplemental appropriation in fiscal 1978. See exhibits 20 and 21 at pages 253 and 265.

II. EVALUATION OF JUSTICE DEPARTMENT POLICY OF RETAINING PRIVATE LEGAL COUNSEL TO REPRESENT FEDERAL EMPLOYEES

The Attorney General's order arose from a sincere desire on the Department's part to resolve the conflicts which would otherwise prevent the Department from representing some Federal employees in civil suits brought against them in their individual capacity. The policy of retaining private legal counsel, however, is subject to four basic criticisms: (1) The Department has no statutory authority to retain private legal counsel who-unlike regular Department staff attorneys are not under the supervision and control of the Attorney General; (2) private legal counsel retained by the Department are free to raise legal arguments which the Department believes are not in the public interest to raise; (3) the policy of retaining private legal counsel to represent Federal employees in civil suits concerning the same. acts which are subject of a criminal investigation has the effect of discouraging vigorous investigation of these Federal employees by the Department; (4) retaining private legal counsel is prohibitively expensive. Each of these criticisms will be evaluated in turn.

A. ABSENCE OF STATUTORY AUTHORITY

The staff study concludes that the Justice Department has no statutory authority to retain private legal counsel who are under the terms of the revised order-independent of Department supervision and control. If this conclusion is sustained, the validity of each of the approximately 79 contracts which the Department has awarded to law firms to represent Federal employees would be unclear, no further contracts for private counsel could be awarded under the order, and no further funds could be appropriated to pay for private counsel fees without new statutory authority. Moreover the right of such law firms to demand further payments under existing contracts would be equally unclear.

Nowhere in the internal memoranda provided to the committee does the Department express any doubt about its statutory authority to retain private legal counsel. Prior to the committee inquiry, both Antonin Scalia and John Harmon, the former and present Assistant Attorneys General-Office of Legal Counsel, expressed their judgment that the Department did have legal authority to retain private counsel. See exhibit 13 at page 195 and exhibit 3 at page 38. In the most recent of these legal memorandum, dated February 18, 1977, Assistant Attorney General Harmon reached this conclusion, relying on implied authority in 28 U.S.C. 509, 516-517 and "the traditional practice of the Department in defending civil suits***" Exhibit 13 at page 196. A third opinion reaching the same conclusion was issued on March 10, 1978. Exhibit 36 at page 1056. During hearings on the supplemental appropriations bill, Department witnesses emphasized their reliance on 28

(7)

U.S.C. 509, which provides that "all functions of the officers of the Department of Justice and all functions of agencies and employees of the Department of Justice are vested in the Attorney General * * *” Exhibit 12 at page 185.

During the course of the Judiciary Committee review, the Department was twice requested to explain in greater detail its authority for retaining private legal counsel. See exhibit 25 at page 280 and exhibit 27 at page 393. On both occasions the Department reiterated its reliance on 28 U.S.C. 516 and 517 which reserve the conduct of litigation in which the United States is interested to "officers of the Department of Justice" and authorize the Attorney General to send the "Solicitor General or any officer of the Department of Justice" to attend to any "interest of the United States." See exhibit 26 at page 313 and exhibit 28 at page 400. In neither answer did the Department mention section 509.

In the committee's first inquiry the Department was asked whether the legislative history of 28 U.S.C. 515 and 543 didn't indicate that "the Department may only retain private legal counsel pursuant to one of these two sections." Exhibit 25 at page 280. These two sections define how private attorneys, under the supervision and control of the Department, may be retained. The Department also was asked to consider two cases, Croswaite and 1960 Acres of Land. The Department answered these inquiries by saying it believed it did not have to retain private counsel under sections 515 and 543. Indeed, it could not retain private counsel under sections 515 and 543 to resolve its conflict of interest because such counsel are under its supervision and control. See exhibit 26 at page 315. (Question 6.)

In the committee's second inquiry the Department was specifically asked to explain its reliance on sections 516 and 517 given the fact that neither section 516 or 517 makes any mention of Department authority to retain private legal counsel. The Department was again asked to "refer to the legislative history" of sections 515 (a) and 543. Exhibit 27 at page 393. The Department responded that it was "unaware of either the legislative history or court precedent which the committee is relying upon to indicate that the cited sections fail to support the retention of private counsel." See exhibit 28 at page 400. As a part of the committee's review of the Department's statutory authority, a detailed, 37-page legal memorandum (hereinafter "Committee Staff Memorandum") was prepared which concluded unequivocally that the Department has no statutory authority to retain private counsel under the order. See exhibit 31 at page 413. This memorandum relies on an exhaustive legislative history of 28 U.S.C. 515(a) and 543 and of the related provisions of 5 U.S.C. 3106.

On November 11, 1977, the committee staff memorandum was forwarded to the Congressional Research Service of the Library of Congress and to the Comptroller General for review. See exhibits 32 and 33 at pages 450 and 452. On December 21, 1977, the Library of Congress responded to this request with a 39-nage legal memorandum (C.R.S. Memo). See exhibit 34 at page 454. The C.R.S. memorandum adopted each of the arguments in the committee staff memorandum and concluded that "substantial doubt" existed as to whether the Department has the statutory authority to retain private attorneys who are not subject to the supervision, control and direction of the Attor