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Ethics in Practice: How to Keep the Crime-Fraud Exception from Swallowing Privilege—or You—Whole

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Ethics in Practice: How to Keep the Crime-Fraud Exception from Swallowing Privilege—or You—Whole

As attorneys, we often believe that attorney-client privilege is sacrosanct. However, exceptions to, and ways to forcibly breach, privilege exist. One is the crime-fraud exception. Attorney-client privilege cannot shield a crime or a fraud. Courts, investigators, and prosecutors can force an exception to privilege, if they present evidence of a crime or a fraud. What does a prosecutor or opposing counsel have to present to a court to breach privilege? What are the duties of an attorney facing prosecution or a civil court order that seeks access to privileged materials and communications? What procedures do you ask the court to adopt, should you find yourself fending off an accusation that crime or fraud has occurred and justifies vitiating privilege? Put simply, this course will explain what to do as an attorney to protect yourself and your clients – and discharge your ethical duties – when the government or the court comes for your files.

Transcript

Hello, my name is Jessica McElfresh. I'm an attorney in San Diego, California. I focus there on criminal defense as well as cannabis regulatory licensing and license discipline law. And I've been doing that since about 2010. Today, we're going to talk about how to keep the crime fraud exception from swallowing attorney client privilege or you. This can come up most commonly, I think, actually in a civil litigation context. I don't think a lot of people understand that. They hear the words crime fraud. And not only do they sort of go, ooh, that doesn't sound good. They also rather automatically in their minds, go to criminal court. And while it absolutely can be an issue in criminal court, when an attorney is under investigation, a search warrant is served, perhaps they receive a subpoena. Something along those lines or a charged? This absolutely can. And more commonly, in some ways comes up in civil litigation. Companies such as Facebook in recent years have dealt with allegations of the crime fraud exception as part of contentious litigation. So just just bear that in mind that even though, you know, we we it's the crime fraud exception, that fraud piece of it or even the crime one can come up in a civil litigation context. Basically the idea perhaps that a client and their attorneys are working together to not keep something away from the tribunal or otherwise subvert justice or something. Similarly just I think it's always worth pointing that out because we just we far too often think that this is an obscure, unlikely cannot affect me. I don't know what this is. Um, or purely academic or in high profile news matter. And that's simply not the case. It can come up in relatively garden variety litigation, and it's important to discuss that. So where do some of this come from? If you look, for example, at your state's version of the ABA model rules, you will find 1.2 and 1.2. And most states have an equivalent of this, including California's, which we'll discuss. Is that a lawyer shall not counsel a client to engage or assist a client in conduct that the lawyer knows is criminal or fraudulent. But a lawyer may discuss the legal consequences of any proposed course of conduct of the client, counsel them, help them to make a good faith choice. Something along those lines. But it's really sort of this first part that talks about that you're not going to help your client basically do something that the lawyer knows is criminal or fraudulent. And whenever I read this rule, I really think back to when I took professional responsibility in law school for a very specific reason. Um, I really liked that course, which I realize is, is a little unusual. But part of why I liked it was I really liked the professor. But. But I'm never going to forget the one thing he did that kind of annoyed me and has only annoyed me more in the years since, which is he basically said like, Yeah, this isn't a big deal and the exception to privilege isn't a big deal because basically it's don't commit crimes with your clients. And if you don't commit crimes with your clients, you have nothing to worry about. Oh, if only the world were that simple. One that just completely leaves out the civil litigation, um, piece of it, which admittedly can be very mushy or open to interpretation or debate. It also leaves out several important things regarding the crime fraud exception in a criminal context, one of which, of course, is the presumption of innocence. To say maybe the client who's under investigation. It also leaves out in the cold any clients the attorney may have who are completely unrelated to the criminal investigation going on. And of course, if the attorney themselves is charged with a crime, it leaves out their presumption of innocence. Now, having because it just sort of assumes like, well, you know, this won't happen if you don't commit a crime. Uh, that's the thing, though. There's the presumption of innocence. There's the fact that laws are constantly changing. Regulations may be in flux. Certain things may be open to debate. It's just by the time you're making that all the way to the end. Assumption, you've really. You've really diminished how complex some of this can be, as well as the importance of the presumption of innocence. You've also honestly diminished the importance of attorney client privilege, and that's the other reason why, honestly, I wish we spent more time talking about the crime fraud exception to attorney client privilege, because to be honest, it's really an incredible teaching tool around attorney client privilege and what attorney client privilege is and what it means and why it is so important. I'm showing you California's rule equivalent to 1.2 D rule here briefly, But let's talk for a minute before we go much further about privilege. I think far too often today, lawyers can somewhat either take attorney client privilege for granted or more be of the mindset that it is. It's almost like a. Information we trade or we're a lockbox that clients pay to hold their secrets. And that's really not. At core. The best way to think of privilege and the best way to think of privilege is your job as an attorney is to essentially assist clients in solving their problems, helping them determine what is legal, what is the right course of action, perhaps how to change a law or regulation, how to comply, and of course, to assist people in a defense when things have gone wrong. None of that is going to go well unless we have tremendous respect, which we do in American jurisprudence, for attorney client privilege, as the Ninth Circuit said in Baird versus Conner. Privilege ensures the right of every person to freely and fully confer and confide in one having knowledge of the law and skilled in its practice in order that the former may have adequate advice and a proper defense. Privilege really is the whole ballgame, and you're just not going to have a relationship with your client, nor are you going to truly be able to assist your client unless privilege is intact and in place. Now, of course, we're here to talk about a pretty significant exception to it and one with rules around it. So of course, there are exceptions to attorney client privilege. There are ways to avoid it. We're not debating whether that's possible. We're not even debating whether at times that's going to be the appropriate result or that there are never going to be questions or investigations. What we're here to talk about is the process around it, because there's candidly a lot of mythos and lack of understanding around the crime fraud exception to attorney client privilege and how it works when an attorney is under investigation. But there's also, I think when we talk about it, sort of leaving out the importance of privilege and this process and why this process is as relatively detailed and specific as it is. And the reason for that is, well, think about it for a minute. If it were just very easy to void attorney client privilege by alleging, say, a fraud in a filing on a court, well, we just wouldn't really have attorney client privilege anymore. Uh, it just wouldn't work if every time people were tempted to use it tactically or maybe they even had a suspicion or there were something. Oh, nope, sorry. We're just going to get rid of that. Uh, we wouldn't have a profession. We wouldn't have a legal system, and we simply would not be able to adequately represent clients. And candidly, why would any client ever confide anything in you if it were that easy to get through, particularly in a civil litigation context or even candidly, a criminal one, if basically you could try to trigger an investigation on opposing counsel or one of your business competitors at that point and potentially void privilege that way. It just. Yeah, none of this would work really quickly. And I know that sounds terribly cynical, like people shouldn't people play fair? Shouldn't they respect each other? And yes, of course, I like to go around with those expectations and hopes, but I'm also not naive. Um, and I think. More importantly, we just we have this process to limit that temptation and not allow that to occur. So, uh, excuse me. And in terms of where we sort of start with this with privilege, and I imagine a lot of other states have an equivalent in California. If you look at Business Professions Code Section 60, 68, it discusses the duties of an attorney. This is sort of an addition to the rules of professional conduct. And if you look at subsection E one, it will state that one of the duties of an attorney is to maintain inviolate the confidence and at every peril to himself or herself to preserve the secrets of his or her client. Setting aside the fact that sounds a little Lord of the Rings or Game of Thrones. That's a pretty stringent burden for an attorney to take on and to have to meet to basically maintain these secrets, including at every peril to yourself. You're never going to get a clearer, more focused take on that than within the attorney. The crime fraud exception to attorney client privilege. And when an attorney is accused of having or basically in a position where privilege may be may be vitiated for that reason. It's just it's just never going to get clearer. So let's get down to this a bit and talk about what exactly do you do when a subpoena or a civil court order or a search warrant seeks access to your files? And what exactly is the crime fraud exception and what does it really mean? One of the other things that's very interesting about the crime fraud exception to attorney client privilege is lawyers don't really talk about it. And I kind of get why some of it goes back to sort of the mindset that my professor, who I really did love, had that day. Um, and I can't I've lectured on this a number of times in person and, you know, you just can't get through one of these lectures without somebody raising their hands and smugly saying, well, none of this is a concern if you just follow the law. Okay, smart guy. Um, you know, in my experience, anytime lawyers try to reduce very complicated topics to lines that simple. Well, it's. It's just not as impressive as they think that it is. It's. It's just simply not that simple. If everything in the world were that simple, candidly, nobody would need lawyers. So we shouldn't talk like that. We shouldn't oversimplify these things. And yes, there are absolutely going to be clear cut cases out there where people have acted ridiculously. Um, and the crime fraud exception is going to apply, but there's going to be a lot of others where it's a far more nuanced question. And regardless, we still need to have knowledge of how this procedure works so that we preserve the rights of all clients. It's properly implemented and clients who have nothing to do with what may be being sought from an attorney or a situation to ensure that their rights and their privilege are respected. But because of this and also the fact that it's ugly and uncomfortable. I mean, you know, not the worms, the words crime fraud don't make you feel warm and fuzzy. Let's just be direct. Um. We just don't talk about it. And that is just such a shame because even more than the fact that it does merit discussion and it's candidly very interesting. When things are cloaked in mystery, they tend to cause trouble. And if lawyers don't understand the crime fraud exception to attorney client privilege, why exactly would we expect the general public to? And when lawyers don't understand it, that means eventually judges and investigators are not going to understand it. And that's where we start to have a lot of trouble. We have trouble because things we don't understand. Well, then they run amok. They're implemented incorrectly, and that damages clients and it damages attorney client privilege. This is somewhat my personal prejudice, but we're not going to do an intensive, deep dive into this piece of it today. But for example, in California, I regularly run into criminal defense attorneys and civil litigators who. They're of the mindset, for example, that the minute there's a search warrant or an attorney is arrested and that has something to do with their client files that, well, a special master has been appointed. They do all the work. We don't have any further role. There's nothing we do. In fact, I've even had attorneys be like, well, is there some way that I can file a motion to speed up the special master's review of all the files? Because we don't think there's anything in there and my client just wants them back, their client, the lawyer. And that's not how it works. That's not how it works. That's not the rule of special masters under California law. That's not how searches of attorney materials seized under search warrants work in California. None of that is correct. And I don't say that to be superior. I say that because it's underdiscussed and because it's under discussed. People have these assumptions. They think they know what it means. And the truth is they don't because it's extremely obscure. There's very little out there that attempts to synthesize and put all of this together. So of course, that's part of why I'm really thrilled I get to talk about this today. So let's keep moving here into some of the differences between California law and federal law around privilege and attorney client privilege. I am a California practitioner. And another reason why it is interesting to talk about California, not just for me, it's also interesting because California is the single most zealous state in protecting attorney client privilege in the country. Um, it is. And this applies not only in general, but also on the crime fraud exception. So, for example, in the federal system we have United States versus Zolan is sort of the granddaddy of them all case from the United States Supreme Court. And that states that the court is the ultimate arbiter of what is privileged. And the court can also review communications themselves to determine if, A they are privileged, or B, they contain evidence that the crime fraud exception applies. By contrast, California is not quite that flexible. Number one, the attorney who holds privilege, which can be the attorney who's basically under investigation or against whom the exception is being sought, they are the main decider of what is privileged. And the court itself cannot review communications to determine if they are privileged or if evidence of crime fraud exists. That might sound a little bit circular, but what it means is, number one, the attorney gets to say something is privileged. That's their call. Um, and typically the court cannot disturb it without, uh, nor can they typically disturb an attorney arguing that in a crime. For context, unless we'll talk more about this, there is extensive independent extrinsic evidence that is non privileged of crime fraud and typically two in California, the court does not get to look at communications themselves to determine if crime fraud exists. They have to determine that there is enough evidence first to only then begin to go through the privileged communications. By contrast, in federal court, well, you absolutely do have to have independent extrinsic evidence to justify reviewing communications. The court can look at communications themselves to sort of figure out if they can connect the dots for for sort of a silly way of putting it, but it's true. So let's talk a little bit more about the federal system and the federal system. The party that wants to defeat privilege. Again, they have to have some independent, non privileged evidence of crime fraud. It has to support a good faith basis. And it's got to be a specific showing particularity. You can't just say, oh, I think opposing counsel is lying in this brief to the court or I think opposing counsel directed their their client to shred files. Um, you know, it's not that simple. You need something specific that's reliable. It can't just be an accusation because and honestly, this makes a lot of sense, not only because we don't want people making vague statements and accusations of one another, particularly within court, given the duty of candor to the tribunal. Et cetera. But also, again, we just wouldn't have attorney client privilege if it could be voided so easily and so often. I mean, why would why would any of us do this? As I told you before, the court can review the communications themselves to look for it. As for the standard of proof you're going to find when you do reading on this in both federal court and California court, that exactly what is the standard of proof a court applies to see if crime fraud has occurred? It's just not super clearly defined. It is typically or almost always higher than what is required for a search warrant that is explicit in California law. It is implicit in federal law. Um, and I think the California system does a great job of explaining why. And so we'll go through those reasons in a few minutes. Uh, but in the federal system, it's they we typically agree that it's higher than just to sort of to, to conclude that it exists. You need more evidence than just to start the review, which seems rather obvious. Uh, but it's a little, it's a little mushy. It's a circumstantial, holistic standard. The court can basically. Be presented with some evidence and they can. It's not automatically triggered. They have to weigh it before they begin a search. Or they could ask for more. But typically, they're going to want to look at the specific facts of the case, the importance of the privileged materials and the likelihood that the review will produce evidence of crime fraud. So basically, there's got to be something there in advance before a federal judge is going to even consider going down this road. Um, at this, various federal circuits have applied a variety of standards when they've gotten more specific. For example, the eighth Circuit has said that you need prima facie evidence that the client was engaging in illegal or fraudulent conduct when he sought legal advice. So basically, that was sort of the core goal of his relationship with the attorney. Uh, the ninth Circuit has said reasonable cause that the client was using attorneys to further a crime or fraud is sufficient. Um, so it seems a bit lighter in the ninth Circuit, which might surprise some people. Uh, sixth Circuit, that there is evidence sufficient for a prudent person to reasonably suspect crime or fraud. And in the day, the kind of one of the most complete cases on this in the federal system, in addition to Zolan, is going to be in re green grand jury, which is a 2007 eighth Circuit case that summarizes a lot of these standards. And it's kind of fair to say, I mean, these standards, ping pong between that the crime of fraud has to be established or presenting probable cause like prima facie or probable cause to even start this process in the federal system. Uh, one other thing we're going to talk about with the federal system is just sort of how, um, we're going to have these discussions, uh, and who's going to make the final decisions about privilege in the federal system and whether the holder of privilege against whom they're trying to cancel privilege gets a hearing. Uh, federal rule of evidence 104 A basically says that the judge is going to be the ultimate decider, but they are allowed in the federal system to defer pretty substantially if they want to, to a special master or even a taint team, uh, that is less restrictive than California's rules. And for the most part, my practice tipped people in the federal system would be to strongly encourage or push the judge to make the to make the final decisions and conduct a lot of the review themselves. I know that sounds like a big ask and it is, but it is very important. Um, a special master is not necessarily going to be as familiar with the cases or the arguments at a minimum, if they're going to be making these decisions, you're going to want them to be attending. Those adversarial hearings candidly, would be appalling if they weren't. But you may need to push for that taint team. I'm not as keen on, um, it can play a role in the initial separation, but the problem with the taint team is, again, they're not going to be as familiar, particularly in criminal investigations. Taint teams tend to be not directly part of the prosecutorial team. They have to be sort of different and unrelated, but they do tend to come from the same agencies. And again, they're probably because they have to sort of not be involved. They're not going to be as familiar with the overall situation. So it they're just not the best to make the final determination for all those reasons. And the federal system, it's pretty clear that in a civil accusation you are entitled to an adversarial hearing before there's any review in criminal. It's it's not clear, nor is it entirely clear in California. But there really are some very good reasons why these hearings have to occur. And one is basically that, you know, you can't unring a bell once it's wrong, you can't restore privilege once it has been. Pierced or vitiated or breached. So let's move into our summary of California. Oh, wait, sorry. One more. Uh, just a few other quotes in the federal system from Solon itself on how this review starts. The judge should require a showing of a factual basis, adequate to support a good faith belief by a reasonable person that it's going to be productive in re bank America. The party seeking to defeat privilege cannot rely on general claims. Instead, they must make a specific showing that a particular document or communication was made in furtherance of the alleged crime fraud. Hold on tight not only to the specific showing piece, but the particular document or communication. Another big myth out there about the crime fraud exception is that it's sort of this wholesale open door. Once you find it to either all of an attorney's files or most people don't think that, but I've heard it, so I want to just get out of the way. That is so absolutely not the case. And again, the reasons for that should be obvious, but it is also not a wholesale opening of, say, the entire client who's under investigations file. It's not that. That's what I mean when I talk about how it doesn't swallow privilege whole, or at least it should not be permitted to. This is about specific evidence and it's about specific documents and communications related to, again, a specific allegation. It's not everything. And we'll talk more about what that looks like. California. Okay. Uh, California. Our initial standards are quite high. The privilege that wants to defeat, uh, sorry. The party that wants to defeat privilege has to have prima facie evidence of crime fraud based entirely on independent, extrinsic, non-privileged evidence. You don't get to look at communications. The court cannot look at the communications themselves to make this initial determination. They have to make it based entirely on the independent, non-privileged, extensive, extensive evidence. Uh. The standard. And for example, there's also a quote in Cunningham versus Connecticut Mutual Life that's very useful in this. Um, you can only look at not only nonprivileged relevant evidence lawfully obtained, nonprivileged relevant evidence lawfully obtained. Don't forget about that lawfully obtained part. It's not impossible in a criminal investigation for one search warrant to sort of build or continue on each other. There's nothing inherently wrong with that. It's pretty normal, actually. It's just that when there was an earlier warrant that may have yielded evidence that led to this, you're also going to need to look at that earlier warrant to determine if it was. For lack of a better term, lawful or appropriate, and it'll go from there. Then we get into the standard of proof in California. It is abundantly explicit in California jurisprudence that the standard of proof is higher than what you need for a search warrant, which is merely probable cause. It's a very limited exception. If it applies, it's very narrow, and it only applies specifically to matters related to the alleged crime fraud. It's not a wholesale cancellation. Bp Alaska exploration, which is a civil case. A prima facie showing fraud, cannot open a defendant's files or give plaintiffs carte blanche with respect to attorney client communications. The documents in question must have a reasonable relation to the ongoing fraud to be discoverable under the crime fraud exception. Another very important case in this, so important it's called out by name in our code in California, people versus Superior Court laugh from 2001, from the California Supreme Court, a court that has authorized a search, including a search warrant, has an obligation to consider and determine claims that material seized pursuant to a search warrant from an attorney themselves, they cannot farm it out to a taint team or a special master. Also, this is contained in California Penal code section 1524, subdivision C, which explicitly forbids the court from farming out the final determination of privilege to a special master. I just can't be any other way in California. Um, again, in California, we are very zealous. The judge is going to make the final determination. It's not a special master. It's not a taint team. And it cannot be. Uh, they the judge has to look at it themselves and make the decisions. And another crucial step here that is explicit in California law and required is that judges only do that after receiving a privilege log from the attorney under investigation. We're going to talk more about that. But it's very important to remember that in California, a privilege log is required. This is also why those questions around, well, why can't the special master just look at everything we can get this over with from the attorney under investigation. Bug me. Um, the privilege log is something that attorneys have to do to protect their clients. It's also something they should be doing to do their own jobs. As I'll talk about another important thing in California and in general, these reviews by the Court of Privileged Communications. Again, the privilege log is required. It just should never happen behind the attorney's back or even or the client's. I just can't begin to emphasize that enough. We do have some case law in California in the civil context. Um, which is going to specifically be Titmus v Superior Court, um, from 2001. Which basically says that when attorney client privilege is at stake, the trial attorney must accord a full hearing with oral argument before considering the revelation of client confidences to the other side. They basically say that this is crucial because of the importance of attorney client privilege and once lost, it can never be retained again. It also helps ensure that the party that is seeking to vitiate or cancel privilege can actually meet the burden of proof required in California. Kind of hard to demonstrate that you can win your argument if it's untested by the other side in a full adversarial hearing. It. I just. Yeah, it's just never going to get any clearer than that. If somebody is attempting to deny you a hearing in a civil litigation or a criminal context on privilege, you need to demand a full noticed adversarial hearing. You're really you're opening yourself up to not doing your job if you fail to do that. As the court noted in Titmus. And if a court is going to deny you that that hearing, there's a good chance that they are violating somebody's due process rights because of basic due process concerns. Law in Motion Judges are always on shaky ground where they entirely bar parties from having a say for fairly obvious reasons. Again, privilege is the whole ballgame. We got to stay focused on this. The court does, the other side does. And above all, you the holder of privilege or the person representing that person does it just you just can't sit around and let somebody else do this? No, it's mean in a way, but it's just true. And again in California, we continue to state that it's got to be the court. We've discussed the penal code sections here. Another thing about penal code, section 1524, subsection C or subdivision C, excuse me, subdivision I of C, I basically further states quote Nothing in this section is intended to limit an attorney's ability to request an in-camera hearing pursuant to the holding of the Supreme court of California and people versus superior court laugh from 2001. I highlight this because one, it's very unusual for a code section to explicitly call out a ruling in a case by name. And the reason why they do that is laugh makes it abundantly clear that these are rights enjoyed not only by a, quote, innocent attorney, meaning they're really after the client, not the attorney. It includes and laugh. An attorney charged themselves with participating in the crime fraud or with a crime. It's not just for, quote, innocent attorneys that we have these whole processes and privilege logs and all that. It includes attorneys under investigation and charged. California's extremely clear. But again, this is another one of these things that's just cloaked in mystery because it's rare and because it's uncomfortable. And also important to remember in California law is this repeated and explicit statement that the simple fact that investigators got a judge to issue a search warrant for an attorney's files is in no way the end of the process. And part of that is, is that a search warrant is an ex-parte presentation. It's not a notice to adversarial hearing. It's simply an affidavit. It's not prone to scrutiny by the other side. It's also just simply a determination of probable cause. And in California, we require prima facie evidence of criminal activity for the crime fraud exception to apply. Big difference between those two things. And also it's going to be more explicit search warrants. While they cannot be general and they are supposed to be as tailored and narrow as possible, inevitably they're not going to be quite as tailored or narrow as the attorney client, as sorry as the crime fraud exception to attorney client privilege as we'll go through. Stated another way simply getting a search warrant does not obviate privilege. It doesn't replace the prima facie standard and it doesn't get rid of these evidence burdens. Laf also refers to an earlier case in California from the 90s People versus Superior Court. Bauman and Rose, If you do reading in this area, you'll hear Bauman and Rose a lot. Um, that case is from 1995 and it again is very explicit. On the search warrant front, the prosecution cannot argue the crime fraud exception automatically applies, quote, when the attorney is suspected of criminal activity regarding the specific documents described in the search. This is no more than a restatement of the claim that the probable cause finding in the search warrant implies a waiver of privilege and we reject it. It's just not going to get any clearer. The search warrant alone is not enough. And again, this makes sense because otherwise it would be just too easy to void privilege. Innocent clients who have nothing to do with the investigation or situation would be harmed. And it also has to do with just the tremendous amount of value that we put on attorney client privilege and the work that attorneys do. Also in California. As I've said, it's got to be specific. Even once you've got that prima facie showing a fraud, justify the search. It is not a wholesale opening of a defendant's files, let alone unrelated client's files. And it does not give plaintiffs carte blanche with respect to attorney client communications. This is from BP, Alaska, which again, is a civil case. Instead, when crime fraud is shown, the documentation and question must have a reasonable relation to the ongoing fraud to be discoverable. It's got to be specific stuff. It just doesn't open the whole file. Another case worth mentioning or circling back to again is laugh in the criminal context. And again, they quote Bauman, Bauman and Rose, which is the fact that A, that the attorney is suspected of criminal activity does not lessen the client's interest in the confidentiality of his or her files or obviate privilege with respect to those files. A suspect no less than a non suspect attorney is entitled to assert the privilege on behalf of his or her client. I would actually go further than Bauman and Rose and argue that honestly, an attorney is required to assert privilege on behalf of their clients. To fail to do so is to fail to meet that duty under Business Professions Code Section 668, which is that you will hold your client's secrets at every peril to yourself. Yes, you're at peril to yourself when you're under investigation, but you're still a lawyer if you can. I'm sure we all remember those discussions and professional responsibility in law school where it's like, you know, be careful what you say at the holiday party when you've had too much to drink or talking to your neighbor. You may be giving legal advice. Well, if you're always a lawyer, even then you're definitely still a lawyer when you're under investigation and your clients are, too, and you still owe them that duty of trying to keep your files intact. Continuing in Laugh seeks a court order precluding such disclosure in these circumstances doesn't get any more specific and on point than these circumstances in that case constitutes an appropriate and necessary exercise of the statutory and ethical obligations of the attorney. It's it just doesn't get any clearer. You never stop being an attorney. You never stop having to assert privilege on behalf of your clients. You just you never get a day off. Uh, again, continuing and laugh. We begin with the general proposition that an attorney owes a duty to the holder of privilege to claim that privilege and to take actions necessary to ensure that materials are not disclosed improperly, even when the attorney suspected of a crime, when the privilege materials are seized under a search warrant, he or she still owes a duty to take appropriate steps to protect the interest of the privilege holders and not disclosing the materials to law enforcement authorities or others. So as I keep saying, like a broken record, an indictment or a search warrant, it just. It is not the end. Being accused of a crime does not cancel out your duty or the right to assert attorney client privilege. It's just it's just not the end. If an attorney is charged or accused of a crime, you still must assert privilege. This comes from LAF issuance of a search warrant is not the end. This comes from Laugh Baldwin and Rose Penal Code section 1524. A search warrant itself is not proof of crime fraud, bombing and rose again. Oh. And so this is usually when I start to get questions about like, well, what a special master's actually do. Uh, and honestly, once you've said, well, the court is the final arbiter of privilege, the attorney gets to make a privilege log and then the court reviews that and making these decisions the court is going to determine in the first place if the search even occurs after an adversarial hearing and a presentation of extensive extrinsic non privileged, lawfully obtained evidence. Well, what do they do? Well, they look candidly, they participate in the search. That is the main and really the headline grabbing role of a special master in California. They show up during the service of a search warrant. If it is a non suspect attorney, they're typically required to communicate with the attorney and give the attorney the opportunity to produce the item sought first and hand them over to the special master. It's not as true when the attorney is a suspect, but regardless, then the special master is the one who is supposed to conduct the search for the items and seize them from the attorney's office or from their home. However, the special master also then basically holds the items until the court determines what to do with them, not the cops. The special master does. But. What also happens next then, is if the attorney or the person that you're taking the items from, if they say that basically these are privileged, they should not be disclosed, then they're going those items are sealed by the special master. They hold that, they seal them. And basically then the court will arrange for a hearing. And at that hearing, the party searched will be entitled to raise any issues that could be related to the search warrant itself under section 1530 8.5, penal code section, as well as deal with privilege claims. So again, the special master is there during the search. They seized the items initially and then they basically hold them because you should be asserting privilege. They don't start digging through everything. They don't start cataloging it. They don't start reading every email and conducting their own investigation. No, no, no, no, no. Um. Again, this seems cloaked in mystery, but it's it's it's actually it's actually when you put it together and read the case law, it's actually very clear they they are not the ones who primarily conduct this. This is also true, by the way, for work product. This webinar and this analysis is not focusing on work product, but it is also worth looking at a sub subdivision, subsection H of penal code section 1524, which discusses. Attorney work product. Under California law, no claim of it shall be sustained where there's probable cause to believe an attorney is engaging in criminal activity unless there is unless it is established at a hearing. And that word hearing with respect to the evidence seized under the warrant that the services of the attorney were sought or obtained to commit fraud. So basically it's the same standard. Initially, even the work product privilege is not as strong as attorney client privilege. You still got to go through that process. So let's talk a bit more about privilege logs. So there are requirement in California. In California, you assert the privilege. The court has to wait, as do the investigators and I suppose the special master. While the attorney is preparing the log, you get a copy of everything seized. You go through it. You're going to prepare a comprehensive privilege log and you're going to submit that under seal to the court for potential in-camera review. If this sounds exhausting, that's because it is. But again, this is where the whole well, why can't I just have the special master do It makes me crazy. It is your job, your requirement, your duty to assert privilege and put it together. Now, in California, privilege logs are required, but in the federal system. You can request to do a privilege log, and they're actually quite encouraged. They're even encouraged by the United States Department of Justice. Um, they don't have to let you do one in federal court, but I always strongly encourage people to push for and seek to assert that. And why exactly is this? Well, to be honest with you, there's more to it than just your duties to protect your clients, particularly your clients who have nothing to do with this investigation. It also has something to do if you're the attorney under investigation or question with yourself. You are the one who knows your files, who knows your client, who knows the claims of privilege, who knows the circumstances, the privilege log regarding those specific communications is your best chance for a dialogue. It is, in a sense, an extension of the adversarial hearing process. It's your opportunity to take these things and put them into context. Is this an argument process? No, it's not. It's a I receive this because of this. We were having this dialogue about this issue. It's to put it forward as succinctly as possible for the review of the court. And again, it's required in California. They have to let you prepare that log and they have to wait for you to do that. Now, they're not going to give you forever. It's not uncommon to have to do, say, a 3000 item log in six weeks. It's a lot of work and you're going to need to move at a pace you can't just forestall an investigation forever. Um, and I would strongly discourage you not to because of course that's just stalling and it's doesn't do your clients any good and it doesn't do you any good. But it is required in California and they get they have to wait. State Compensation Insurance Fund versus Superior Court. Another an excellent California case on these questions. Court of Appeal ruled it will be necessary for petitioners who were attorneys under investigation for crimes to have access to the seized materials so that they can catalog and number the documents and determine which, if any, are privileged. After they make that law can object to disclosure. The court should then hold an in-camera hearing to determine the merits of petitioner's claims of privilege. You also need to look here at evidence code, section 915, which again also states that the court in California must be the one to review the materials to make a final decision. You can go in camera with the court to claim privilege and discuss specific matters. You can even wind up sitting in chambers with the judge having a dialogue about what was submitted and putting into context and answering their questions in the federal system. It's true we do allow the court to farm out the review of the privileged materials, even if they're the final determiner or to a special master or taint team. Uh, but you absolutely can and should push to make a log around attorney client privilege. Um, in federal court. It's absolutely essential. And again, it's for those same reasons, it's your chance to put it into context. It's your chance to explain what this is, why it was done, why it is there. Um, and typically I think a court should want to allow it, uh, even Department of Justice manuals state that the government should strongly consider providing an attorney under investigation or their counsel copies of the seized materials and letting them prepare a log. Um, one argument on this front that has always made me laugh pretty hard, which is. Oh, and I've heard it in California court, but I could see it coming up in federal court, which is basically well, we've seized this evidence from the attorney, all these records and things, and we can't give it back to them because it's evidence. And, you know, they might decide to destroy things or do whatever. Well, let's think about that one for a minute logically. These were the records of the attorney. They know better than anybody what is in them. So even though having a copy of them is necessary to do an appropriate privilege log, let's be logical here. It's not like the attorney has no idea what's in there. So this idea that if you give them a copy, then they're going to be able to run around doing bad things with it is just inherently hysterical to me. Um, it also really. Furthermore, it's very counterproductive because if you were to move, if the attorney is not already charged and then you move forward with charging them, you're going to have to turn these materials over and discovery. But again, by at that point, the privilege horse has already left the barn and it's been damaged and vitiated. But basically the point is here a lot of sort of the standard arguments you may hear during an investigation or during other types of court hearings and reviews for why you can't have evidence during an ongoing investigation or will this could be destroyed. They're just additionally nonsensical when it comes to materials seized from an attorney. They already know them. They already know what's in there. You need to give them a copy so that they can do a proper log and they can have that proper adversarial hearing and privilege can be protected and candidly so things can move forward in a remotely appropriate manner for as for what those DOJ manuals and materials are, that is going to, for example, involve the United States Department of Justice's Justice Manual, specifically Section nine Dash 13 for 20 searches of the premises of subject attorneys. You're also, particularly in this electronic era of paperless offices and emails and unfortunately, even text messages. Um, the DOJ searching and seizing the Department of Justice's searches and seizing computers and obtaining electronic evidence in criminal investigations. And you want to look at both because there's going to be good information in it. Um, for example, that justice manual section. It says that the government should search an attorney's premises only as a last resort. Second, generally, the United States attorney himself, or a pertinent assistant attorney general has to authorize the search warrant for the attorney's premises as part of justifying it. The investigators and prosecutors must state in detail how the search must occur and how it will be conducted. At times, the DOJ has had a standard form that sets this forth. I've been having a hard time finding a copy of that form. Um. But basically the idea that this is very serious is crucially important. And I do. I fully admit to my bias on believing that California is the most protective of attorney client privilege in general and the most protective regarding the crime fraud exception and requiring everybody to go through everything very carefully and explicitly. But I do have to sort of give the federal system a bit of a nod here. There's no explicit requirement in California law, for example, that say a district attorney or the state attorney general has to sign off on a search warrant before an attorney's premises is going to be searched. There's not even as much of a requirement as you would think or expect that how the search will be conducted will be put in great detail in a form. Now, of course, one likes to assume that special masters in conducting the search follow rules, try to be careful. There is, of course, penal code section 1524, etcetera. But to be honest, I would feel better if we had a standardized form and template and process that laid it out in clear, explicit language so that California attorneys didn't have to litigate this, didn't have to stumble around in the relative dark around what special masters do and how these searches work and go through these steps. You know, I've tried to give you as much of a roadmap as I can, but the truth is, a lot of this roadmap talks about what you do once you've had the search warrant is being executed and what you state. It would be nice if there were more of a process and more of a sign off that educated and informed investigators, courts, prosecutors, special masters in advance in California on how this would work now. I'm not a fool. Having a written clear process does not necessarily mean that people are going to explicitly and clearly follow it, but there's a lot to be said for that. Um, so to that end, if you're in the position where this could ever be front loaded, looking at these DOJ manuals on how this is supposed to work, they are not saying they're always perfectly followed, but they are quite well thought out and detailed as well as that form that exists. And you know, maybe down the road over time, we should put more pressure on prosecutorial agencies in California to require higher level review and formal sign off on these matters. It's not a common situation, but it feels pretty important to turn back to the manual. Again, the government has to set forth these detailed procedures in their application on how they're going to protect privilege, including the use of a taint team as investigators seize items or a special master. They have to discuss in detail who will review the materials seized. Because, again, as we've discussed in the federal court, it's it's a bit there's a bit more choices and options. But you still have to talk about initially the court itself can review the materials. A special master or a taint team, to be fair, prosecutorial agencies. And in the manual, they do prefer to use a taint team. This is probably not surprising for a lot of reasons. Um, but in part because of that preference for the taint team, the government has to consider under the manual giving a copy of everything seized to the attorney under investigation or their counsel to let them provide a privilege log. Indeed, the manual specifically states, quote, providing copies of seized records is encouraged where such disclosure will not impede or obstruct the investigation. Now, again, this impede or obstruct part is rather amusing to me in a sense, because for the most part you've taken it from the attorney. They should know what's in there. Um, it shouldn't be a let's put it this way. If something bad is going to happen based on that, giving them a copy to allow for a proper privilege log is not likely to be the trigger on that. Um, instead, providing the law the materials is going to allow for the preparation of the log, which will help to protect privilege not only for the client under investigation, but very importantly for clients who have nothing to do with this. I mean, how can you know what to set aside if you're not writing it out and making it clear? Um, as for electronic records, you do want to look at the DOJ's searching and seizing computers and obtaining electronic evidence in criminal investigations. That's just really, honestly, a great publication to read, period, to understand how the DOJ goes about this. I'm not saying I agree with everything in it. I'm just saying it's a it's an excellent summary. And as we deal more and more as practitioners with computers and electronic evidence, not only in criminal investigations but in general, it's just a really good thing to go through. But on the attorney client piece, this publication states that the court a special master or a segregated taint team, meaning not directly part of the investigation, must review files that may contain privileged materials before they are released to investigators. It also supports having defense counsel prepare a privilege log, even though the law does not specifically require this step. Um. As we're going through this and we've got a little time here, I'm going to go back and talk to you for a little longer about California and its zealous protection of attorney client privilege in general. For example, under evidence code Section 915, typically a court may not require disclosure of information claimed to be privileged to rule on a claim of privilege. Another crucial case on this, which again, is a civil case, Costco versus Superior Court. The California Supreme Court agreed with that, stating a court may not order disclosure of a communication claim to be privileged to allow a ruling on the claim of privilege. Step here. Um. Another important matter or case on that is going to be Fam versus Cheadle. I just love that case names. It's kind of funny. From 2016, which states that a court, however, may not review the contents of a communication to determine whether privilege protects that communication. The attorney client privilege is an absolute privilege that prevents disclosure no matter how necessary or relevant. Now, again, these are more cases about privilege. They use cases that get into the crime fraud exception are an additional step. But another thing in California is just sort of how broad privilege can be, which again, from the same case, Fam attorney client privilege attaches to all confidential communications between an attorney or a client, regardless of whether the information communicated is in fact privileged. So to break that down a little, um, what that could mean basically is I could, for example, send an agenda of a public meeting to a client. The agenda is a public document. I it's an agenda, for goodness sakes. Um, but why I'm sending it. What was the purpose of that communication? That is privileged. So even though all I've done is send a public document, the communication itself can still be privileged. Further emphasizing that again from the case privilege Barr's discovery of the entire communication, including unprivileged material or in my example, that agenda. Um, further digging into into the crime fraud piece. Um. The crime fraud exception is a very limited exception to attorney client privilege, and the proponent of the exception bears the burden of proof of the existence of crime fraud. That's from action performance companies versus Bohbot from 2006. Now, again, this is just I think what we have to try to remember with this is privilege is really the core of our profession and what we offer clients and what they talk to us about. It really is the whole ballgame. It's you're not just a lock repository of secrets. It's your duty to protect them. It even at every peril to yourself. As the Business and Professions code states, this is obviously true in federal court as well. And it's candidly, you're just never going to get a better example of that. You never stop being an attorney and you never stop having duties to your clients. If you ever run into this situation and you want some help or somebody to talk to or scream at, feel free to reach out to me. I really do love and enjoy talking about this and I got this knowledge the hard way, so feel free to reach out. Thanks so much.

Presenter(s)

JMJ
Jessica McElfresh, JD
Attorney-at-Law
McElfresh Law, Inc.

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