The Crime-Fraud Exception to the Attorney-Client Privilege

The attorney-client privilege protects most confidential communications between clients and their lawyers. It's one of the oldest and jealously guarded privileges recognized in our legal system. The privilege promotes open and honest communication between clients and attorneys, so attorneys can represent their clients effectively. But, as with most legal rules, exceptions exist. This article discusses the crime-fraud exception, designed to protect the attorney-client relationship from abuse.

What Does the Attorney-Client Privilege Protect?

The attorney-client privilege is an evidentiary rule that prevents lawyers from being forced to testify about their clients' confidential communications with them. For example, while meeting privately with their criminal defense lawyer, a client confesses to having robbed a bank. The privilege prevents the lawyer from being forced to testify regarding the client's confession.

When Does the Attorney-Client Privilege Not Apply?

The attorney-client privilege belongs to the client. It applies unless the client gives up the privilege in some way.

Waiver. For instance, a client can affirmatively waive (or give up) the privilege and allow their attorney to disclose their communications.

Lose the privilege. Or the client might lose the privilege by acting in ways that don't protect the secrecy of their communications. Say that, instead of confessing the crime in a private meeting, the client tells their lawyer the information while speaking loudly on their cell phone in a restaurant. By failing to protect the secrecy of the information, the client has lost the attorney-client privilege.

Exceptions. Certain communications aren't protected by the privilege. One such exception involves a client who seeks legal advice to cover up or advance an ongoing or future crime or fraud. Some states have an exception when an attorney believes disclosure is necessary to prevent death or serious bodily harm to another.

What Is the Crime-Fraud Exception?

The crime-fraud exception overrides the attorney-client privilege in cases where a client seeks a lawyer's assistance to commit an ongoing or future crime or fraud. The rationale for the exception is that these types of communications go against the purpose of the privilege. The privilege exists to promote effective and ethical legal representation, not to advance or further criminal activity or harm. The lawyer may have to testify about the communication (or, in some cases, report the communication to the authorities).

A party that wants disclosure of the attorney-client communications must show:

• 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 the intent to further the crime or fraud or to cover it up.

Because the attorney-client privilege belongs to the client, the client's intent determines whether the crime-fraud exception applies. Most courts will apply the exception even if the attorney did not know of, and didn't participate in, the actual crime or fraud.

What Are "Crimes and Frauds"?

Whether the crime-fraud exception applies depends on the content and context of the communication. Common examples include when a client seeks their attorney's advice to:

• suborn perjury (asking the attorney to knowingly present false testimony)
• destroy or conceal evidence
• prevent a witness from testifying, or
• conceal 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 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 laundering 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 criminal fraud. The prosecution (assuming it suspects or has any indication that this conversation took place) could call the lawyer as a witness 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.

In some states, the crime-fraud exception isn't limited to criminal fraud. It also applies where the client's object is a civil fraud, such as an intentional tort or breach of a fiduciary duty. 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.

Does the Crime-Fraud Exception Apply to Past Crimes?

No. 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. Some connection must exist between the communication and the crime or fraud to trigger the exception. Not surprisingly, the line between present intent and possible future intent can be hazy. Ultimately, the court might need to decide whether the client was seeking legal advice to further a future crime or was merely asking about the consequences or legality of a proposed idea.

What Happens If the Crime-Fraud Exception Applies?

If the crime-fraud exception applies, the prosecution or party seeking the information can subpoena the attorney and force them to disclose the contents of the communication in question. The attorney might need to testify or produce documentation of the communication.

An attorney whose client is asking for assistance in committing a crime cannot engage in any conduct that the attorney knows is criminal or fraudulent. But the lawyer can discuss the legal consequences with the client, analyze various risks and penalties, and strongly advise against that action. If the client insists on continuing their illegal objective, the lawyer will usually need to withdraw from representation.

State Variations and Getting Expert Help

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.