The Crime-Fraud Exception to Attorney-Client Privilege

The attorney-client privilege protects from involuntary disclosure confidential communications between a client and her or his attorney for the purposes of obtaining or giving legal advice. In order words, the attorney cannot be compelled to disclose what the client communicated to the attorney. This brief comment provides an incomplete educational overview of one of the several exceptions to attorney-client privilege, the "crime-fraud exception." Always consult an experienced attorney in all legal matters.

Courts tend to find that the communications were for the purpose of obtaining legal advice, not in the furtherance of criminal or fraudulent activity. Complete and frank communications with one's attorney are encouraged. However, if there is evidence that the client was committing or planned to commit a crime or fraud and that the attorney-client communications were to further this crime or fraud, then the crime-fraud exception applies. The U.S. Supreme Court initially discussed this exception in the 1930s. Judges may conduct a private "in camera" (Latin for "in a chamber," the judge's office) review of documents or potential testimony to decide if the crime-fraud exception applies in a specific situation.

To apply the crime-fraud exception, Courts typically require that the following be demonstrated:

1. The client's actions or intent to commit a crime must exist before or at the present time when the attorney is consulted. A hypothetical discussion, "what would happen if I were to do this," does not by itself waive the privilege.

2. The legal advice must be used in furtherance of the unlawful fraud or crime. The advice must advance the crime, not just be related to the crime.

Note also, the following:

1. Legal opinion shopping, that is seeking opinions from several different attorneys concerning a possible course of action, does not waive the privilege. Thus, if one attorney simply informs the client that the proposed action is unlawful, this opinion alone does not waive the privilege.

2. The more specific and directive the legal advice becomes, "this way is illegal but that way is legal and will achieve your desired result," the more plausible become a reasonable inference that the advice was used in furtherance of a crime or fraud. However, an attorney may lawfully propose alternative legal approaches.

3. If the client specifically tells her or his attorney, I am going to commit X crime, the crime-fraud exception applies, if the attorney acts consistently with the state Bar's disciplinary rules under the particularly facts. A similar exception applies to general communications between the individual and a medical, psychiatric, or religious professional unless there was a court ordered examination or it was being conducted to prepare for trial. However, confessing a past completed crime to the attorney does not trigger the crime-fraud exception.

4. There is a complex legal history (beyond the scope of this brief comment) concerning the degree of cooperation shown by a corporation's waiver (giving up) of the attorney-client privilege in the context of a potential indictment or sentencing of the corporation for allegedly illegal conduct. Does this waiver reduce the culpability of the corporation? Given the complexity of this issue, including potential conflicts of interest and the very existence of an attorney-client relationship, an individual corporate officer or employee would be best served by independent legal counsel, not connected to the corporate employer.

5. An "abuse of discretion" standard controls an appellate court's review of a trial judge's application of the crime-fraud exception to a given situation. Appellate courts tend to defer to a trial judge's decision.

There is disagreement among federal courts concerning the precise legal standard to be applied in determining that the crime-fraud exception applies. For example, is it a "reasonable basis to suspect" or a "probable cause" standard? These are two of several possible formulations. These distinctions may appear to be minor technicalities, but may in fact influence the decision of a trial judge in specific situations.

There also seems to be a judicial distinction being made between proceedings before a grand jury (where secrecy of the proceedings is paramount) or in a criminal case, and those involved in a civil (non-criminal) case.

Consequently, it would be appropriate for the U.S. Supreme Court to articulate some bright-line rules, particularly with regard to the precise burden of proof on one seeking to waive the privilege, or at least better drawn guidelines concerning the precise application of the crime-fraud exception to the attorney-client privilege. Due process considerations also should allow defendants greater latitude in challenging a determination that the crime-fraud exception applies.

This comment provides a brief and incomplete legal overview of a complex topic and is not intended to provide legal advice. Always consult an experienced attorney in specific legal situations.