Legal Definitions - crime-fraud exception

The crime-fraud exception is a legal principle that limits the scope of certain important legal protections, specifically the attorney-client privilege and the attorney work-product privilege.

Normally, the attorney-client privilege ensures that confidential communications between a client and their lawyer are protected from disclosure. This encourages clients to be open and honest with their legal counsel. Similarly, the attorney work-product privilege protects materials prepared by a lawyer in anticipation of litigation from being discovered by opposing parties.

However, the crime-fraud exception states that these protections do not apply when a client communicates with their attorney, or when an attorney prepares materials, in furtherance of a current or planned crime or fraud. This means if a client is using their lawyer's services or advice to commit or plan an illegal act, the usual confidentiality and protection are lost, and those communications or materials may be revealed.

Here are some examples illustrating the crime-fraud exception:

• Example 1: Planning a Fraudulent Scheme

  A business owner consults an attorney to draft complex contracts and corporate documents. Unbeknownst to the attorney, the owner's true intention is to use these documents to create a shell company, mislead investors about its financial health, and then abscond with their money. If investigators later uncover the fraudulent scheme, the communications between the business owner and their attorney regarding the creation of those specific documents would likely not be protected by attorney-client privilege, as they were made in furtherance of a planned fraud.

• Example 2: Obstructing Justice

  A client is involved in an incident and asks their attorney for advice on how to destroy crucial evidence, such as deleting incriminating digital files or disposing of a physical object related to the event, before law enforcement can seize it. The client's communications with their attorney seeking guidance on how to tamper with or destroy evidence would fall under the crime-fraud exception because they are aimed at committing the crime of obstruction of justice. Therefore, these communications would not be privileged.

• Example 3: Facilitating Perjury

  A witness in a civil lawsuit discusses with their attorney how to fabricate an alibi or provide false testimony to mislead the court and avoid liability. If it is later discovered that the witness's communications with their attorney were specifically about planning or executing perjury (lying under oath), those discussions would not be protected by attorney-client privilege. The exception applies because the communications were made to further a criminal act, namely perjury.