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Understanding the Crime-Fraud Exception for Federal Subpoenas
|Last Updated on: 2nd October 2023, 06:52 pm
Understanding the Crime-Fraud Exception for Federal Subpoenas
When can the government get access to conversations between a lawyer and client? This question comes up a lot these days, with high profile cases in the news. Lawyers aren’t supposed to share what their clients tell them. That’s called “attorney-client privilege.” But there are exceptions.
One big exception is something called the “crime-fraud exception.” This says attorney-client privilege doesn’t apply if the client talked to the lawyer about an ongoing or future crime or fraud. Let’s break this down into simpler terms.
What is attorney-client privilege?
Attorney-client privilege means lawyers can’t share confidential stuff clients tell them. The idea is people should be able to talk openly with their lawyers to get good legal advice. But privilege doesn’t apply when clients want help with crimes or fraud.
When does the crime-fraud exception apply?
There are two basic requirements for the crime-fraud exception:
- The client was planning or doing a crime or fraud when talking to the lawyer
- The talk was about the crime or fraud
Both things need to be true. Let’s look closer at each one.
Requirement 1: Client is planning or doing a crime or fraud
The crime or fraud can be in the past, present, or future. But it has to be more than just thinking about it. There must be actual planning or doing.
Examples:
- A client who already robbed a bank tells their lawyer about it. This is a past crime.
- A client asks their lawyer how to illegally hide money. This is planning a future crime.
- A client currently running a Ponzi scheme asks their lawyer for help covering it up. This is an ongoing crime.
See the difference? Just thinking “Maybe I’ll rob a bank” isn’t enough. There must be actual planning or committing of the crime or fraud.
Requirement 2: The talk is about the crime or fraud
The client must be talking to the lawyer about the specific crime or fraud. Some examples:
- Asking how to cover up financial crimes
- Discussing details of a fraudulent business scheme
- Trying to hide assets during a divorce
But talks about other stuff are still privileged, like:
- General questions about the law
- Personal issues not related to crimes
- Asking about legal defenses if charged with a crime
The key is the talk must be about the actual crime or fraud to lose privilege.
How does the government prove this?
It’s not enough for the government to suspect crime or fraud. They must make a “prima facie” case. This means showing evidence that the two requirements likely exist.
This evidence usually comes from sources like:
- Records seized from the client
- Testimony of witnesses
- The lawyer’s own statements
If the evidence seems strong, the judge can review the communications and decide if the exception applies. The judge looks at the timing, content, and context.
What happens if the exception applies?
If the judge finds the crime-fraud exception applies, attorney-client privilege is lost for those talks. The lawyer can now be forced to share them. This is usually done by a subpoena.
Then, the lawyer might have to:
- Testify about the conversations
- Turn over documents discussed with the client
- Reveal other information about the crime or fraud
In some cases, the lawyer may even be found to have assisted the crime or fraud. Then they could face charges too.
When doesn’t it apply?
The crime-fraud exception doesn’t apply when:
- The crime or fraud was only discussed after it ended
- The client had not actually planned or committed the crime or fraud yet
- The talks with the lawyer were not about the specific crime or fraud
In these cases, attorney-client privilege remains. The government won’t be able to get the communications.
What should lawyers do?
Lawyers need to be very careful about client conversations that might fall under the crime-fraud exception. It’s best for them to avoid knowingly assisting any crimes or frauds clients discuss.
If lawyers think the exception could apply, common responses include:
- Refusing to discuss the issue further
- Withdrawing from representing the client
- Warning the client they may report the crime or fraud
Lawyers who knowingly assist can face consequences like loss of license, charges, and civil liability.
The bottom line
Attorney-client privilege is not absolute. The crime-fraud exception means lawyers may have to disclose conversations planning or covering up crimes or frauds. This exception balances attorney-client confidentiality with the interests of justice and public policy.
But the exception is narrow. It only applies when talks with a lawyer were specifically to further an actual crime or fraud. In all other cases, attorney-client confidentiality remains protected.
References
Here are some resources with more details on the crime-fraud exception: