Insights

On October 1, 2026, the U.S. Department of Justice’s (DOJ) National Fraud Enforcement Division issued Directive 26-12: Corporate Enforcement in the Fight Against Fraud. Assistant Attorney General Colin M. McDonald’s October directive follows his August 2026 memorandum setting the Division’s enforcement priorities. The directive signals — in the DOJ’s words — “an aggressive, all-tools” enforcement posture across the Division’s health care, government contracting, tax, and trade fraud priorities, while simultaneously supporting the incentives designed to promote transparency, reward cooperation, and encourage voluntary disclosure of misconduct. 

As companies and individuals increasingly embed AI tools in legal practice, courts are grappling with how to treat communications with, and information generated by, these tools. Chief among these questions is whether and in what circumstances attorney-client privilege and work-product protections as they are applied in different jurisdictions extend to AI-generated content or communications with an AI tool.

AI tools have significantly transformed how companies operate, but they come with serious legal risks that are only now taking shape. A recent ruling by a federal judge in the U.S. District Court for the Southern District of New York highlights one such risk: certain inputs and outputs from commercial AI models may not be considered privileged attorney-client communications or protected by the work-product doctrine.

Current political priorities in Congress will continue to push many industries under the microscope of Congressional investigations, including universities, tech companies, entities that receive federal funds, and energy-sector companies. When the chambers of Congress and the executive branch are controlled by the same party, Congressional oversight of the executive branch is less intense and instead public and private sector, state, and local entities are more likely to find themselves in the crosshairs. If a chamber of Congress changes hands in the midterm elections, the focus of the oversight may shift to reflect the policy priorities of the moment and include more executive branch oversight, but even the executive branch is often contending with requests for information that may implicate their dealings with third parties; for example, there is a risk that agency oversight triggers requests for privileged material belonging to a government contractor or grantee. The topics and industries of highest interest may play musical chairs, but entities across sectors would do well to incorporate a few best practices that will mitigate their risk should they end up in the hot seat, either directly or through a government partner.

The Supreme Court last week blessed a broad reading of the federal wire fraud statute, resolving a circuit split over whether economic loss is an element of fraudulent inducement and bolstering the Government’s future enforcement of procurement fraud. In Kousisis et al. v. United States (unanimous in judgment), the Court upheld the conviction of a government contractor for falsely representing compliance with disadvantaged business enterprise (DBE) requirements in contracts awarded by the Pennsylvania Department of Transportation (PennDOT), despite completing the contracts to PennDOT’s satisfaction. The Court held that a material misrepresentation used to deceive someone into parting with money or property is sufficient for a federal wire fraud conviction, regardless of whether the victim suffered any economic loss.

On Monday, September 23, 2024, the Department of Justice (DOJ), released an update to its Evaluation of Corporate Compliance Programs (ECCP) guidance.  The ECCP guidance was last revised in March 2023, which brought a number of significant changes, including a focus on compensation and incentive structures (e.g., clawbacks), and third party messaging applications.  This 2024 update, while not as significant in scope as its predecessor, nonetheless highlights the DOJ’s focus on new and emerging technologies, such as artificial intelligence (AI), as part of its evolving assessment of what makes a corporate compliance program truly effective, and how prosecutors should evaluate risk assessments and other management tools at the time of a corporate resolution.

On May 22, 2024, the U.S. Department of Justice’s National Security Division (NSD) announced its first declination to prosecute a company under its Enforcement Policy for Business Organizations (Enforcement Policy).

On July 26, 2023, the U.S. Department of Justice (“DOJ”), the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”), and the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued a Tri-Seal Compliance Note outlining their respective voluntary self-disclosure (“VSD”) procedures for potential violations of U.S. export controls and sanctions.  This announcement highlights the agencies’ focus on compliance with export controls, sanctions, and other U.S. national security laws, and reminds industry of the incentives for voluntarily disclosing potential violations, including mitigation of civil and criminal penalties. 

A New Jersey federal judge has denied two executives’ efforts to suppress statements made during an interview conducted as part of an internal investigation of alleged bribe payments in India even though their employer was hoping to take advantage of a U.S. Department of Justice FCPA Pilot Program.

On April 26, the Federal Circuit issued a decision in Crawford v. United States (a C&M case), holding that a U.S. Army combat veteran is entitled to recover his attorneys’ fees arising from a dispute related to obtaining medical retirement benefits earned during his service.  In the underlying dispute on remand to the Army Board for Correction of Military Records from the Court of Federal Claims (COFC), Mr. Crawford obtained full relief, including nearly a decade of retirement benefits that he was unlawfully deprived of due to his erroneous administrative discharge, but Mr. Crawford was initially denied recovery of his attorneys’ fees under the Equal Access to Justice Act (EAJA).  Mr. Crawford appealed, and the Court of Appeals for the Federal Circuit unanimously reversed the COFC, holding that (1) even though the COFC’s remand order stated that it was based on judicial economy, the substance of the Government’s admissions in the case amounted to an “implicit” concession of error, and (2) the Government’s legal position was not “substantially justified” under the relevant EAJA standards.  The Federal Circuit then remanded the case to the COFC to determine the quantum of legal fees to be awarded to Mr. Crawford. 

On May 5, 2023, the Securities and Exchange Commission (“SEC” or “Commission”) announced a record-setting whistleblower award of nearly $279 million.  This award more than doubles the SEC’s previous $114 million record-setter, issued in October 2020.