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What is the Crime-Fraud Exception to the Attorney-Client Privilege?

Posted by Giovanna A. D'Orazio | Apr 16, 2018 | 0 Comments

Some big news of late involves the raid of the office (and home and hotel room) of President Trump's longtime personal attorney and “fixer” Michael Cohen. The FBI (in connection with an investigation by the US Attorney's Office for the Southern District of New York) executed a search warrant at Mr. Cohen's office and confiscated documents and records that Mr. Cohen and his clients would have liked to think were protected by the attorney-client privilege. 

As a result, President Trump has announced that attorney-client privilege is now “dead”, and others are wondering if that's true. 

Well, most every privilege has its exceptions and the one everyone is talking about now is the crime-fraud exception.  So, what is that?  (This article is limited to New York State civil law).

Generally, confidential communications between attorney and client, for the purpose of obtaining legal advice, are privileged and cannot be disclosed without the client's consent or waiver.  (The rule applicable to discovery of privileged communications appears at CPLR 3101(b) and the rule of evidence at CPLR 4503). 

There, are of course, exceptions one of which is where the communications were made in furtherance of a crime or fraud.  That exception has been described as follows: “The crime-fraud exception encompasses a fraudulent scheme, an alleged breach of fiduciary duty or an accusation of some other wrongful conduct. [A]dvice in furtherance of a fraudulent or unlawful goal cannot be considered ‘sound.' Rather advice in furtherance of such goals is socially perverse, and the client's communications seeking such advice are not worthy of protection”.  In re New York City Asbestos Litigation, 109 A.D.3d 7, 10 (1st Dep't 2013) (internal quotation marks and citations omitted).

If a party wants to override the attorney-client privilege based on this exception, it “must demonstrate that there is a factual basis for a showing of probable cause to believe that a fraud or crime has been committed and that the communications in question were in furtherance of the fraud or crime.”  Id.

How does this practically work in litigation as opposed to a criminal investigation?

In the context of a lawsuit, the parties engage in discovery which includes the exchange of documents.  If, in response to a request for documents, a party wishes to assert a privilege, the Civil Practice Law and Rules (CPLR) requires the party to object and provide information as to the nature of the documents that are being withheld.   If there is a dispute as to whether the privilege actually applies, the Court will often conduct an in camera review.  That means, you submit your allegedly privileged documents to the Court with your argument as to why they are privileged and the Court reviews them and makes a ruling as to whether or not they are privileged.  The other party would also have the opportunity to make its argument as to why the privilege does not apply.  That argument is made somewhat blind and without knowing exactly what information the documents contain.

Whether or not Mr. Cohen's documents are privileged has yet to be decided but, for now, it does not appear that attorney-client privilege is dead.

If you are in need of legal assistance, give us a call.  We are happy to see if we can help.

About the Author

Giovanna A. D'Orazio

Giovanna has experience litigating, among other things, commercial, general civil, employment, land use and personal injury matters in New York State and federal courts. Giovanna focuses her practice on plaintiff's employment and personal injury matters, with a particular interest in women's rights and employment discrimination and harassment.

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