Almost every major regulatory regime relies on a basic principle of law enforcement policy that, by creating incentives for self-policing, companies are more likely to adopt effective compliance. This notion inexorably depends upon the certainty that the protections afforded by the attorney-client privilege and related privileges are available. In Barko, U.S. District Court Judge James Gwin recently issued an alarming order granting a motion to compel that threatened to destabilize the bedrock principles of privilege.[1] Fortunately, however, the D.C. Circuit has now vacated Judge Gwin’s opinion, restoring — at least temporarily — stability to corporate compliance programs.[2] The tenet that protecting privilege encourages corporate compliance has been widely recognized, from the U.S. Department of Justice,[3] to the United States Supreme Court in Upjohn Co. v. United States, 449 U.S. 383 (1981). It was the principles underlying the Supreme Court’s decision in Upjohn that were threatened by the D.C. district court’s recent decision in Barko. Although the D.C. Circuit has now vacated Judge Gwin’s opinion, counsel for the relator in Barko has made it clear that he will appeal the circuit court’s decision. This article addresses the unintended consequences that will likely result if the relator is successful and the D.C. Circuit’s decision in Barko is reversed by the circuit en banc. Barko is a False Claims Act case alleging, among other things, that the KBR Inc. defendants overcharged the U.S. Army for services performed in Iraq under the Logistics Civil Augmentation Program (“LOGCAP III”) contract. Specifically, Barko, the relator, alleged that KBR incurred excessive and fraudulent costs on work performed by its subcontractor, Dauod and Partners (“D&P”), which it then passed on to the Army. The government declined to intervene in the case, and the relator proceeded to pursue the case under the FCA’s qui tam provisions.
