Morrison Foerster Partner Lisa Phelan on Corporate Leniency and Whistleblower Rewards in Antitrust Cases

Lisa Phelan was present at the creation of one of the most dynamic corporate leniency programs in government – the antitrust corporate leniency program. 

Phelan spent more than 25 years at the Department of Justice prosecuting antitrust crimes before joining Morrison Foerster as a partner in Washington, D.C. 

“I was among the group that recognized that it could be very challenging to prove a criminal antitrust case because it requires that you have employees rat out their bosses,” Phelan told Corporate Crime Reporter in an interview last week. “When that person’s livelihood depends on their job, it can be very challenging to get anyone to come forward or admit what was going on.” 

“About thirty years ago, several of us put into motion the leniency program. By definition, an antitrust crime is collusion by multiple companies in an industry, we came up with this concept that if one of them would come forward first, and tell us that a cartel exists, that collusion is happening within an industry, then that company will not be prosecuted and the executives, if they fully cooperate, they too will not be prosecuted.”

“This created a great incentive for an insider set of witnesses to come forward, because the fines involved could be tens if not hundreds of millions of dollars for participating in one of these kinds of cartels. When we started the corporate leniency program, we weren’t sure how it would work. It seemed unusual at the time for a defense counsel to bring a company forward and admit – yes, my client did. It took a while for defense counsel to realize the value of doing this was tremendous for the company. Once the ball started rolling though, it became very popular.”

“The companies started coming forward and acknowledging that they had been part of a criminal cartel – often while the conduct was still occurring. That enabled us to get inside of a cartel and make video and audio tape recordings of live price fixing meetings. That was tremendous evidence and often led to quick plea agreements once the investigation was over.”

How many cases were resolved as a result of that program?

“The Department of Justice says they won’t publicize who applies or how many companies apply for leniency. But obviously if it goes to trial, it ends up coming out because those cooperators are witnesses or some companies choose to identify themselves as cooperators. But it’s fair to say that a majority of the large cartel cases through the late 1990s and into the early 2000s were aided by having a leniency applicant.”

Here are company executives saying – we are going to get together and fix prices against the law. And they do so. What’s the psychology of a company that knowingly enters into a cartel to then turn around and say – I’m done, let’s call the Department of Justice and turn in my buddies?

“The success of the program fed on itself. Let’s say you become aware because it is in the headlines that there was a cartel in the airlines industry and someone from inside the cartel cooperated with the Department and as a result the company was not prosecuted, was not fined and no executives from that company went to jail, while twelve other airlines were criminally prosecuted, had a felony conviction as a result, paid hundreds of millions of dollars.” 

“Air France paid a $300 million fine and several of its executives went to jail. If you read about that in the news, you think – I am in a cartel and I don’t want to be prosecuted, I don’t want my company to be prosecuted. I’m going to talk to my lawyer and my lawyer will advise – well they do have this corporate leniency program. We could go in first before anyone else.”

“There are two types of leniency applicants. Type A and Type B. Type A is when you decide you are going to go to the Department of Justice when the Department has not been looking at your industry. The Type B is when the Department is already looking at your industry. You have already received a subpoena and they say we think there is collusion happening in your industry. And you do a quick internal investigation and find that – we may have been participating, we may have problematic documents here to suggest we were part of a cartel. And you think – the Department is probably going to get to it eventually.”

“Initially, the Department only had Type A – they are not looking at the cartel, they had no idea it existed. But then they realized there was a real value to having these insider witnesses who could give them documents, especially in the context of an international cartel, where you can’t subpoena the documents from a foreign country. But if the company is cooperating, they can bring you the documents from the foreign country voluntarily.”

“There was still value – even if the Department was already suspicious and looking at the industry to have an insider cooperator and therefore worth it to give them corporate leniency.” 

I remember the vast majority of those cases being foreign cases. Is that accurate?

“That is fair. They at least had foreign companies involved as well as U.S. companies. The marine hose cases. Those cases involved companies that also made tires, because it’s a rubber product. There was a Florida company involved. Dunlop was a British company, there was a French company, there were two Japanese companies –  Bridgestone was involved.” 

“They would have a cartel meeting once a year at an annual conference that was held in Houston, Texas. The FBI was monitoring their movements, tracked when they were coming to Houston and what hotels they would be staying in. It came out in trial that there was a leniency applicant in that case. They gave permission for consensual monitoring but we also went to court to get wiretap authority from a judge. We made a videotape of the conspirators sitting around a table discussing the bad old days when they were competing and now the good days when they were coordinating and able to raise prices. Those executives were all arrested the next morning in their hotel rooms. And all but one pled guilty very quickly.”

The other thing about those cases is that unlike most corporate crime cases which are settled with deferred and non prosecution agreements, it seemed as if the Antitrust Criminal Division was old school and would either get a guilty plea, go to trial or not bring a case.

“Very true. That was exactly the policy for many years.”

Why was it so different from the rest of corporate criminal practice?

“The thinking was – we had to give up one of the companies with the corporate leniency program. We wanted to maximally motivate people to come in and be that leniency applicant. You either get zero prosecutions and zero fines or a harsh alternative – the company pleads guilty and the executives go to jail. We felt that increased the incentive to be the leniency applicant if the alternative was quite harsh.”

Even though there wasn’t a formal whistleblower program at the Department of Justice, you were dealing with whistleblowers through the leniency program. 

“Yes. There also is an individual leniency program that an individual could apply to. And we did have a few of those where an individual executive comes in. He had been promoted and been told – okay, you are the guy who coordinates with the competitors. He wasn’t comfortable with the assignment and didn’t like it. And he chose to come forward. I don’t think his name ever came out. He was given individual leniency.” 

“At that time, we thought about the idea of monetary rewards to whistleblowers, but the concern at that time was the reward would compromise that person if they were needed to be a witness at trial. You can imagine the cross examination – you are not coming forward because you thought this is morally wrong or you wanted to stop consumers from being hurt – no, you came forward to get yourself a big payday. Over the years, we certainly thought about having that aspect. But that was outweighed by a concern that that would compromise a witness.” 

“Because the leniency program was working so well for a couple of decades, we made the choice not to institute a whistleblower reward program.”

Is there a leniency office at the Antitrust Division?

“There was never a leniency office. An individual can report online. But if you want to get corporate leniency, you would call any of the section chiefs. I got the call sometimes. But now I believe they have consolidated in the Department Assistant Attorney General’s office. And the phone number on the web site would say to call there.”

“And literally the first one who calls in gets the leniency. There was a time when I had two calls from two different lawyers 40 minutes apart seeking leniency for their clients for the same cartel. The first one got the leniency and the second one didn’t. And the difference was prosecutions and hundreds of millions of dollars in fines.”

What is this new whistleblower program, how did it come about and how does it work?

“In recent years, the corporate leniency program has chilled a bit, in part because there is such a robust follow up civil damage litigation. Even though a company gets leniency, they are still responsible for making their victims whole. And the leniency actually says that you still have to pay restitution. There is a very active plaintiffs bar. They bring large class actions against any companies caught up in cartel investigations. A lot of companies realized – don’t get criminally prosecuted, that’s great, but now I’m caught up in these massive class actions lawsuits and may end up having to pay very large amounts of money. To partially address that, the Department went to Congress and got legislation saying that in antitrust litigation you are liable for three times the harm you caused, but for corporate leniency applicants, they only have to pay single damages – essentially restitution. That helped reduce the downside.” 

“But over the years, companies are now facing cases and charges in potentially a dozen other countries around the world. The burden of having been the leniency applicant became larger. And many companies became more reluctant to come forward, particularly in the Type A setting. If they already were being investigated, they are still coming forward for Type B. But Type A leniency applicants had dropped off. So the thinking was, let’s get a new tool to get a new set of informants.”

“This whistleblower program is intended to reach individual employees, not necessarily top executives, but someone in the company who is aware of the conduct, or a former employee who has not left. That former employee is not under the burden of – oh my God I’m going to lose my job. That person might be thinking – now that I’m out of the company, I didn’t like what was going on there. And the sweetener is now you can get a significant amount of money if you do that. The idea is to motivate a different set of players with different incentives to come forward.”

Is there any public information available about how many whistleblower applications there have been under this program and how many corporate leniency applications there have been?

“You might have seen a quote from Omeed Assefi, who is the current Deputy Attorney General for Criminal Enforcement, who said there has been a frenzy of applications under the program. It sounds like they have gotten quite a bit of interest in the program.”

“They are going to have to spend some resources to sort through those and see which ones are valid.”

From your experience at the Department, how many corporate leniency applications were there per year?

“It has fluctuated. There was about a twenty year period there when there were a lot of headlines about the big cases and the penalties we were obtaining. It varied from year to year. We did this large investigation of the auto parts industry. One company came forward regarding one auto part. But once we got subpoenas out and search warrants and dug into the industry, at the end of the day there were more than 100 prosecutions and more than $3 billion in fines and more than 40 executives went to jail. All that started with one auto part. But then additional leniencies were given in the separate conspiracies.”

Is your practice exclusively defense side? Or do you also represent whistleblowers?

“It’s both. I have taken multiple companies in for leniency and individual executives as well. The whistleblower program is so new, but we are now speaking with some possible whistleblowers. I am proud to say that no company I have represented has been indicted. I have convinced the Department that it was not the case to bring. I had one executive who was indicted, was set to go to trial last April, but the Department offered a no jail resolution to the matter. He did plead guilty, there was no jail and he has to call in from Belgium on probation.”

If you are representing a corporation applying for leniency, you are still acting as a defense attorney, right?

“Yes. You don’t want to oversell what you have. You may only know part of what’s going on. You may only know about it for a limited amount of time. You want to make that clear. You are also looking ahead to the civil case that you will inevitably be caught up in. You are seeking to provide information so that the Department will find you to be a successful leniency applicant. The clients are incredibly happy that they are not being criminally charged, that none of their executives are charged and that they don’t pay any criminal fine.”

What’s going to be the interaction between the whistleblower program and the leniency program? Are they in conflict?

“Let’s say a whistleblower comes in and beats a company that would otherwise come in for leniency. There’s a limit to what an individual person may know and have access to. An individual is not entitled to turn over documents owned by the company. If a company is cooperating, they can bring in every document, every text message, every teams chat, from all over the world. They can convince all of their executives to cooperate. And collectively it could be five, six or seven executives who know lots more detail over a longer period of time than the individual whistleblower.” 

“If a whistleblower comes in first, the Department might say – we don’t need a corporate leniency applicant anymore. But then they have a much more limited set of evidence.”

You must prefer corporate leniency applicants to individual applicants.

“I have and will consider taking both. But with a corporation fully cooperating, it is a much bigger operation. And we will provide the Department with significant evidence that they can use for other prosecutions.”

[For the complete q/a format Interview with Lisa Phelan, see 40 Corporate Crime Reporter 8(12), February 16, 2026, print edition only.]