Otherwise privileged communications between lawyers and their clients that further ongoing or even contemplated criminal conduct can lose their protection under the so-called “crime-fraud exception.” Courts disagree about this worrisome doctrine’s expansion to communications about fraudulent, or sometimes even willfully tortious, conduct.
In Eletson Holdings Inc. v. Levona Holdings Ltd., No. 23-cv-7331 (LJL), 2025 U.S. Dist. LEXIS 184584 (S.D.N.Y. Sept. 19, 2025), defendant pointed to the crime-fraud exception in moving to compel Reed Smith to produce documents. Among other things, the firm argued that it “was not a knowing participant in fraud” — supported by a declaration from one of its partners. Id. at *8. The court noted that even if the firm “was a victim of its client’s fraud rather than complicit in it, the crime-fraud exception would apply if the communications at issue were in furtherance of the fraud.” Id. at *8-9. The court denied defendant’s request for all of the firm’s documents on its privilege log, instead ordering a “meet and confer” to address the best way to review the firm’s documents and discuss retaining a special master. Id. at *10.
Even law firms and lawyers might find themselves facing the crime-fraud exception’s application — providing another reason to vet clients and be careful what they write.