Attorney Client Privilege: Crime Fraud Exception

Under the Crime-Fraud Exception to the Attorney-Client Privilege, a client’s communications to their attorney is not privileged if made with the intention of committing or covering up a “crime or fraud”.

Tax crimes (e.g. felonies) for willful evasion of tax, obstruction of tax collection, filing a false tax return may be not privileged under the Crime-Fraud Exception.

Since the attorney-client privilege belongs to the client, the client’s intent determines whether the exception applies. The crime fraud exception applies if the client was in the process of committing a crime or intended to commit a crime or fraud. The crime fraud exception covers communications about a variety of crimes and frauds, including:

1) Suborning Perjury (the client asks an attorney to present evidence the client knows is false);

2) Destroying or Concealing Evidence;

3) Witness Tampering;

4) Concealing Income or Assets.

Client communications about past crimes and frauds are usually privileged but communications about ongoing or future crimes are subject to the crime-fraud exception. The key issue is whether the client is presently committing a crime or is about to commit a crime in the future. If the crime-fraud exception applies the attorney may be subpoenaed and forced to disclose the contents of the communication in question.

Under CA Evidence Code Sec. 956: “there is no Attorney-client privilege if an attorney was sought or obtained to facilitate the commission of the planning of a crime or fraud. In order for the exception to apply, two elements must be shown:

1) A prima facie case of a crime or fraud must be established by the party who is opposing the privilege;

2) They must “establish” a reasonable relationship between the crime or fraud and the attorney-client privilege.

Regarding the prima facie showing of fraud, the elements required to establish the exception are:

a) A material misrepresentation of a material fact;

b) Knowledge of the representation’s falsity;

c) Intent to deceive;

d) the Right to rely on the representation.

See: BP Alaska Exploration, Inc v. Superior Court (1988) 199 Cal App. 3d 1240, 1263.

In California the crime-fraud exception only extends to communications “reasonably related to the crime or fraud”. It does not effect a complete waiver of the attorney-client privilege, The crime fraud exception of Evidence Code Sec. 956 applies only to attorney-client privilege if does not apply to information protected by work product immunity. See: State Farm Fire & Casualty Co, v. Superior Court (1997) 54 Cal App. 4th 625, 650; BP Alaska 199 Cal. App. 3d at 1250-1251.

Comments are closed.