The Crime-Fraud Exception to the Attorney-Client Privilege

Posted by Sample HubSpot User on Mon, Mar 21, 2016 @ 03:53 PM

Not all attorney-client communications are privileged.

The attorney-client privilege protects most communications between clients and their lawyers. But, according to the crime-fraud exception to the privilege, a client’s communication to her attorney isn’t privileged if she made it with the intention of committing or covering up a crime or fraud.

Because the attorney-client privilege belongs to the client, the client’s intent determines whether the exception applies. Most courts will apply the exception even if the attorney had no knowledge of, and didn’t participate in, the actual crime or fraud.

The crime-fraud exception applies if:

  • the client was in the process of committing or intended to commit a crime or fraudulent act, and
  • the client communicated with the lawyer with intent to further the crime or fraud, or to cover it up.

(For further information about the exception, see How do courts determine whether the crime-fraud exception applies? and Does the crime-fraud exception apply to documents?)

Not Just Crime

In some states, the crime-fraud exception isn’t limited to crimes and fraud; it also applies where the client’s object is a civil tort. For example, the exception could apply if a landlord sought advice about unlawfully evicting a tenant.

Note that many torts are also crimes—assault and trespassing are but two examples. So, even in a state where the client’s objective must be criminal in order for the crime-fraud exception to apply, something that also happens to be a tort may trigger it.

Crimes and Frauds

Whether the crime-fraud exception applies depends on the content and context of the communication. The exception covers communications about a variety of crimes and frauds, including (to name just a few):

  • “suborning perjury” (asking an attorney to present testimony she knows is false)
  • destroying or concealing evidence
  • witness tampering, and
  • concealing income or assets.

Example: Walt meets with criminal defense attorney Saul for legal advice and asks about the penalties for cooking and selling meth. Saul explains the penalties, and also explains that profits from illegal drug sales can lead to money laundering charges. The conversation is privileged because Walt merely sought advice about penalties. But the result would be different if Walt asked Saul for advice on hiding or destroying evidence, or how to launder his profits by funneling them through a legitimate business.

Example: A securities broker who asks her attorney which documents she should shred to avoid being charged with securities violations is asking the attorney to help her commit a criminal fraud. The prosecution, assuming it suspects or has any indication this conversation took place, could call the lawyer to testify about it. If the judge agreed, the lawyer wouldn’t be able to use the attorney-client privilege as a basis to refuse to answer questions about the broker’s document-shredding consultation.

Past, Present, or Future

Perhaps the most important consideration about the crime-fraud exception is whether the communication at hand relates to a past wrong, or a present or future one. Communications about past crimes and frauds are almost always privileged, but communications about ongoing or future ones usually aren’t.

Note, however, that many courts distinguish present from future intent, and are more likely to apply the exception where the intent is current. The exception ordinarily doesn’t apply if the client is merely seeking advice about the consequences of some possible future action. Not surprisingly, the line between present intent and possible future intent can be hazy. Ultimately, it may be up to a court to decide whether the client was about to commit a crime, or was merely asking about the consequences of some future action he might or might not take.

Mandatory Disclosure

If the crime-fraud exception applies, the prosecution can subpoena the attorney and force him to disclose the contents of the communication in question. But, apart from the crime-fraud exception, some situations ethically require lawyers to disclose communications. If lawyers don’t, they risk disciplinary sanctions, and possibly criminal charges. Examples include the following.

  • Perjury. If the attorney knows a witness is about to give, or has given, perjured testimony, she must inform the court. (Importantly, though, this obligation may not apply if the perjuring witness is the client. See I told my lawyer I’m planning on telling a lie on the stand. What will happen?)
  • Crucial evidence. If the client gives the attorney a crucial piece of evidence, the attorney may have to turn it over. (For more detail on this issue, see If I give something to my lawyer, can I expect him to keep it away from the police?)
  • Missing person. If the client tells the attorney the location of a missing witness or victim whose life is in imminent danger, the attorney may have to disclose it.
  • Threats. If the client threatens to harm someone—for instance, a witness, attorney or judge—the lawyer may have to report the threat.

Most states allow—or require—attorneys to disclose information learned from a client that will prevent death or serious injury. Many have a similar rule where revealing otherwise confidential information would prevent or remedy financial injury due to a crime or fraud.

(For related reading, see If I tell my psychologist about a crime I committed can I get in trouble?)

State ethics rules specify which communications lawyers must disclose, and they may vary somewhat. But these rules tend to have procedures intended to minimize the amount of information the lawyer discloses. The idea is to allow the reporting of critical information while minimizing the extent to which the lawyer implicates the client.

State Variations and Expert Help

Although there are many similarities in the attorney-client privilege from state to state, and in state and federal court, there are variations. Evidence rules, statutes, and court decisions shape the privilege, and determine when the crime-fraud exception applies. Although every state recognizes the crime-fraud exception, when and how it operates may vary somewhat.

While there are some rules of thumb, whether the exception applies almost always turns on the particular facts of each case. Clients and potential clients should rely on advice from a lawyer about which communications will be privileged.

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