This previous post highlighted a Third Circuit decision that Foreign Corrupt Practices Act practitioners should have reviewed regarding the crime-fraud exception to the attorney client privilege. The litigant in the case has petitioned the Supreme Court to review the decision and in this post Mara Senn (Arnold Porter) highlights the amicus brief she filed in the case on behalf of the National Association of Defense Lawyers (NACDL).
The issue the Supreme Court is being asked to address is a fascinating, and frightening, crime-fraud issue coming out of the Third Circuit. Basically, a client approaches a lawyer stating that he is planning to give a bonus to someone at a multilateral bank for helping him get financing and to help speed up a transaction and wants to know whether there is any issue with the payment. The lawyer comes across something called the FCPA. He goes back to the client, hands him a copy of the statute, and asks the client whether the banker is a foreign official. The lawyer says that he is not sure whether the payment is illegal but thinks that the client shouldn’t make it. The client says that the payment would not violate the FCPA and that he is thinks he is going to make the payment. The client proceeds to make the payment to the banker’s sister a month later.
The district court ruled that the government could subpoena the attorney to testify because the crime-fraud exception applied and used a “a reasonable basis to suspect” standard of proof. The district court found that the client had the intent to commit the crime at the time he sought the advice and that he used the legal advice in furtherance of the crime. The Third Circuit affirmed. The company is now trying to appeal to the Supreme Court. In the amicus, we argued that the Supreme Court should take the case because there is a circuit split about the standard of proof to use for the determination of the crime-fraud exception, that the standard of proof needs to be at least probable cause, and that the Third Circuit case sets a dangerous precedent.
Takeaway: As I am sure that most of you would agree, this sounds like a typical situation we all face with our clients. Our clients are not sure what to do, but may be leaning in one direction or another. They come to ask us our advice. We provide some sort of legal advice. Considering the advice, our clients make a decision about what to do. This sort of interaction falls within the core of the attorney-client privilege. However, under the reasoning of the Third Circuit, if there is some suspicion that a client committed a crime after receiving advice, there appears to be a retroactive inference that the client intended to commit the crime at the time he sought the advice, and therefore the government may question the attorney about previous conversations with his client under the theory of the crime-fraud exception. This of course undermines the purpose of the attorney-client privilege. The general rule would become that merely having the government suspect you of committing a crime is enough of a justification to allow them to talk to your lawyer about what you said.
Timing: This case is set for conference at the Supreme Court on November 7, where they will decide whether to hear the case. Given the corrosive influence this could have on the attorney-client privilege, let’s hope the Court takes the case.