Chapter 18 The Crime-fraud Exception

• Library: A Virginia-Specific Summary Guide: Attorney-Client Privilege & Work Product Doctrine (Virginia CLE) (2016 Ed.)

Chapter 18

THE CRIME-FRAUD EXCEPTION

18.1 INTRODUCTION

The attorney-client privilege does not protect communications between clients and their lawyers that further the former's criminal, fraudulent, or other egregiously improper conduct. This principle is commonly called the "crime-fraud exception."

18.2 APPLICABILITY TO FUTURE WRONGDOING

The crime-fraud exception normally strips away privilege protection for communications related to a client's future wrongful acts—not acts the client has already taken.

Courts disagree about the exception's application to crimes or frauds that might be considered "ongoing."

• Most courts apply the exception to communications designed to conceal past crimes or frauds.

• It makes sense to apply this approach to active acts of concealment, but a simple failure to disclose a client's previous misconduct might intrude on the general principle finding the exception inapplicable to communications about past wrongdoing.

18.3 WRONGDOING COVERED BY THE EXCEPTION

The crime-fraud exception applies to clients' crimes and frauds, and courts have debated the exception's applicability to other wrongdoing. [18.301]

The exception clearly applies to clients' criminal conduct. [18.302]

Courts also extend the exception to clients' fraudulent conduct. [18.303]

[Page 104]

Courts disagree about the exception's application to other misconduct. [18.304]

Some courts take an expansive view, applying the exception to clients' wrongful conduct other than crimes or frauds.

• Examples include inequitable conduct in a patent context; conspiracy to elicit client confidences or secrets in violation of the ethics rules; causing a witness to not answer simple questions when being examined; intentional breach of fiduciary duty; deception and deceit; fraud on the United States Patent Office; spoliation of evidence in criminal cases and civil cases; insurance bad faith; securities fraud; baseless litigation (generally to the extent that it furthers some other wrongful conduct); violation of a foreign criminal law; intentional tort; lawyer's false discovery responses; lawyer's unprofessional behavior; lawyer's unethical behavior; lawyer's sanctionable conduct; gross negligence; intentional torts moored in fraud; serious unlawful activity, fraud on a court; conspiracy to deprive individuals of their civil rights; intentional infliction of emotional distress.

Some courts take a narrower approach, declining to apply the exception to some types of wrongdoing.

• Examples include inequitable conduct in patent cases; tortious conduct; trespass; filing of bankruptcy; frivolous lawsuit; government's malicious prosecution; firing or replacement of an employee; errors made during the discovery process; possible perjury in a malpractice case; late production of a document in litigation; insurance company's bad faith; unfair trade practices.

...