Every court recognizes that neither the attorney-client privilege nor the work product doctrine should protect communications that further the client’s criminal or fraudulent conduct. Although courts differ on some of the elements of the “crime-fraud” exception, they agree on some basic concepts.

In Everflow Technology Corp. v. Millennium Electronics, Inc., the court pointed to a California evidence rule stripping privilege and work product protection from communications if the moving party establishes “a prima facie case of crime or fraud,” and “a reasonable relationship between the crime or fraud and the attorney-client communication.” No. C07-05795 HRL, 2013 U.S. Dist. LEXIS 4810, at *5 (N.D. Cal. Jan. 11, 2013) (not for citation). The court found that plaintiff had carried this burden. At nearly the same time, the District of Nebraska declined to apply the crime-fraud exception, concluding that plaintiffs “have not offered sufficient evidence to show a factual basis adequate to support a good faith belief by a reasonable person that the crime-fraud exception applies.” Davis v. Hugo Enters., LLC, No. 8:11CV221, 2013 U.S. Dist. LEXIS 3357, at *11 (D. Neb. Jan. 9, 2013). A week later, the Eastern District of Pennsylvania found that the government had satisfied its burden, and ordered grand jury targets’ lawyer to testify about his conversations with his clients. In re Grand Jury Subpoena, G.J. No. 10-127-02, 2013 U.S. Dist. LEXIS 8127 (E.D. Pa. Jan. 18, 2013). As in Everflow Technology, the Grand Jury court articulated another universally applied rule: “The crime-fraud exception applies whether or not the attorney was actually aware that his or her advice was being used for nefarious purposes.” Id. at *10.

Litigants should remember that merely alleging an adversary’s crime or fraud does not result in forfeiture of privilege or work product protection. On the other hand, no court requires a litigant to actually prove the adversary’s criminal guilt or fraud liability.

Under the crime-fraud exception, courts sometimes strip away the privilege from communications between a client and lawyer in furtherance of a future crime, fraud or other intentional wrongdoing. Not surprisingly, the increasing number of criminal prosecutions for corporate crimes generates a growing number of cases analyzing the crime-fraud exception.

An adversary cannot overcome a litigant’s privilege merely by claiming that the litigant communicated with a lawyer about a crime or fraud. Instead, the adversary generally must make an independent prima facie showing that the litigant engaged in a crime or fraud, and that the communication furthered that wrongdoing. Over the course of a few weeks in June, four courts found that adversaries had not met that standard. In re Small, No. 08-08-00198-CV, 2009 Tex. App. LEXIS 4114 (Tex. App. June 10, 2009); United States ex rel. Smart v. Christus Health, Civ. A. No. C-05-287, 2009 U.S. Dist. LEXIS 49648 (S.D. Tex. June 12, 2009); Billings v. Stonewall Jackson Hosp., Civ. A. No. 6:08cv010, 2009 U.S. Dist. LEXIS 49736 (W.D. Va. June 15, 2009); Grain v. Trinity Health, Case No. 03-72486, 2009 U.S. Dist. LEXIS 54299 (E.D. Mich. June 26, 2009). Another mid-June decision highlighted the often subtle nature of the crime-fraud exception. In that case, the court examined many documents, ultimately concluding that the crime-fraud exception stripped away the privilege from some sentences within some documents, but not other sentences. SEC v. Teo, Civ. A. No. 09-1815(SWD), 2009 U.S. Dist. LEXIS 49537 (D.N.J. June 11, 2009) (unpublished opinion).

In an era of increasing criminal enforcement, companies and their lawyers should understand the crime-fraud exception.