The U.S. Court of Appeals for the Third Circuit held that evidence of a client thinking about using a lawyer’s advice to cover up a money-laundering scheme was not enough to defeat work- product protection.
As a result, a grand jury should have never seen a privileged email that the appellant received from his lawyer, but later forwarded to his accountant.
The appellate panel agreed with the district court that the appellant waived his attorney-client protection by forwarding the email to his accountant. However, the three-judge panel disagreed that the crime-fraud exception to the work-product privilege applied in this case.
Every state’s jurisprudence has some version of the crime-fraud exception, which allows the disclosure of certain communications that would otherwise be confidential. This exception to the work-product privilege is meant to prevent abuses of the privilege.
A party must satisfy two requirements when invoking the crime-fraud exception:
- That the lawyer or client was committing or intending to commit an act of fraud
- That the attorney work product was used in furtherance of that alleged crime or fraud
In this case, the “evidence is strong, but it is not sufficient by itself to pierce work-product protection.” The appellate panel reasoned that the second requirement can only be satisfied by a showing that the defendant actually engaged in an overt act to further the crime.
Merely thinking about a bad act is not enough to strip work-product protection, no matter how much evidence there is that the lawyer or client was intending to commit an act of fraud.
However, when a client uses work product to further a fraud, “the [client-lawyer] relationship has broken down, and the lawyer’s services have been misused.”
To read the full opinion, click here.
