The U.S. Department of Justice announced new Departmental guidelines today that repeal restrictions to attorney-client privilege between corporations and their employees embroiled in federal cases. These new guidelines will prohibit the DOJ from punishing companies for providing their employees legal assistance, such as paying lawyers’ fees or protecting privileged information between employees and corporate lawyers.

The changes stem from a summer 2006 case in which Judge Lewis A. Kaplan of the U.S. District Court in Manhattan dismissed tax-shelter charges against 13 KPMG employees after determining that the government abused its influence and forced KPMG to cut off legal support to its employees. An appeals court upheld the decision today, leading to the rewriting of internal DOJ guidelines.

The reaction so far has been mixed. The New York Times quotes:

A defense lawyer, Mike Madigan, called the ruling a landmark.

“We’re all on cloud nine or a higher one if there is such a thing,” Mr. Madigan said. “It’s really just a great day for the criminal justice system in America.”

On the other hand, the Wall Street Journal quotes:

A coalition that includes the U.S. Chamber of Commerce and the American Civil Liberties Union issued a statement saying that despite improvements made by [Deputy Attorney General Mark] Filip’s revisions: “Federal legislation is still needed to ensure a permanent and lasting solution to the problem of government-enforced waivers of privilege. The Justice Department’s track record of five different policies in ten years cries out for a permanent legislative solution that cannot be revised at the whim of each new Deputy Attorney General.”

Others point out that, while this will save companies legal liability from the DOJ, it doesn’t protect them from the Securities and Exchange Commission and other departments that may come after them for similar charges.