Joel Cohen ()
Clients come to us all the time for “legal advice.” That’s what we’re here for—even if the client seeks our endorsement or imprimatur of conduct that may be against the ethical mores to which we (or even society) might subscribe. They might even want us to bless proposed conduct that borders on, or even strays across the border of, what is legal. The client might not know the technical value of a “reliance on the advice of counsel” defense—meaning that counsel, having approved the conduct (assuming he was told the relevant facts) might earn his client a defense that would negate criminal intent1—but still might want the emotional consolation that counsel basically gave his okay.
But there are times clients come to counsel for the wrong reasons—they “know” that their proposed course of conduct is illegal, and are hoping to use the lawyer to further it. Maybe they want the lawyer’s advice on how to best stash the weapon, or to bury the technological materials, or to revise the incriminating document. Perhaps they want the lawyer to help “paper” the proposed, but obviously fraudulent, transaction. Or they want the lawyer to be (way) out front as mouthpiece, or scribe a lawyer’s letter to “extort” some gain that will surely be ill-gotten.
Most of the time, the lawyer will simply say: “No, you can’t do that.” Therewith, the client will probably abide by his counsellor’s advice, and that will be the end of it. But not always. The headstrong client, the client who knew it was wrong but mischievously came to the lawyer for advance absolution (or, perhaps, questionable guidance) will proceed nonetheless. When that scenario occurs and prosecutors “get onto” the conduct, there may be a parting of ways between client and counsel—and maybe even a divergence of recollections. Or, counsel may have resigned or been fired as a consequence, and therefore his status is now former counsel. Although it may be in the attorney’s best interest to simply disclose what he knows to the authorities, important ethical considerations come into play. Lest it go unsaid, the duties of confidentiality remain intact whether the lawyer continues as counsel, or is no longer so.2
‘In re Grand Jury Subpoena’
Let’s see how this plays out in the real world, and take as an example a recent decision by the U.S. Court of Appeals for the Third Circuit. The specific facts in In Re Grand Jury Subpoena3 are largely unknown because the litigation occurred in the context of a secret grand jury investigation in which the prosecutor submitted an ex parte affidavit supporting the government’s basis to subpoena the attorney. Its contents were not disclosed to the targets of the investigation, nor in the opinions of the District Court4 or the Third Circuit.5 In sum, the Third Circuit affirmed the procedure employed by the District Court to find that the “crime fraud” exception applied, thus compelling the attorney to testify before the grand jury about his confidential communications with his client.
Stripped to their bare bones, the facts are these: “C” corporation, a consulting firm retained to obtain financing for several entities engaged in oil and gas projects, and its president “P” were under investigation for allegedly violating the Foreign Corrupt Practices Act (FCPA). The investigation was focused on business transactions with a bank headquartered in the UK. An official at the bank (Banker) approved the financing, resulting in nearly $8 million in fees for C. C, for its part, made payments totaling $3.5 million to the Banker’s sister, who had nothing to do with the bank nor the transactions in question6—the obvious conclusion was that she was a conduit for, let’s call them, questionable payments.
The attorney, who worked out of C’s office but who practiced law independently of C, consulted from time to time with P, acting on C’s behalf.7 Accordingly, at a relevant time, P approached the attorney explaining that he planned on paying Banker to make sure the project progressed swiftly, because Banker had threatened to slow down the approval process. After doing some preliminary research and quickly reviewing the FCPA, the attorney could not conclude whether the transaction was legal or illegal, in part because there was a question as to whether the bank and Banker were a governmental agency and official; the attorney thus told P not to make the payment to Banker, or presumably, to Banker’s sister.
Notwithstanding the attorney’s advice, P insisted the transaction did not violate the statute and told the attorney that he would go ahead with it. The attorney gave P a copy of the statute and the parties’ relationship ended. The bank began an internal investigation; the Overseas Anti-Corruption Unit in the UK arrested Banker and Banker’s sister; and the FBI began its investigation of C and P on this side of the Pond.8
Upon a sworn ex parte affidavit, the attorney was subpoenaed to testify before the grand jury. The government sought to enforce the subpoena and C and P moved to intervene, for the purpose of asserting the attorney-client privilege, i.e., to prevent the attorney from testifying. The District Court, after granting leave to intervene, decided to hold an in camera examination of the attorney, without the presence of C, P or the government—but with the participation of Attorney’s own counsel. The court did, however, allow the intervenors and the government to submit questions to be asked of counsel—which they did.9
Following the examination, the District Court determined—and the Third Circuit affirmed—that there was a reasonable basis to believe that C and P intended to commit a crime when P consulted with the attorney, and that C and P could have used the information given during the consultation in furtherance of a crime.10 Accordingly, the attorney was directed to appear before the grand jury and to testify as to communications had with P.
The District Court (and the circuit) did raise an important issue about the crime-fraud exception itself, namely: For advice to be used in furtherance of a crime or fraud, “the advice must advance, or the client must intend the advice to advance, the client’s criminal or fraudulent purpose.”11 “The advice cannot merely relate to the crime or fraud.”12 More succinctly, “[i]f the attorney merely informs the client of the criminality of a proposed action, the crime fraud exception does not apply.”13
Notwithstanding, the circuit somehow found that because the attorney raised the question of whether the bank was a governmental entity and the Banker therefore a government official, the advice would logically lead to the idea of routing the payment through the Banker’s sister in order to avoid the reaches of FCPA or detection of a violation.14 Concededly, we know very little about the facts of the case; however the ruling seems like somewhat of a stretch. The client went to the attorney for advice and received it—importantly, even in this instance without the attorney saying that the conduct was illegal—only to have the attorney’s advice used against C and P before the grand jury, merely because the lawyer said “No.”
The Attorney’s Quandary
It is entirely appropriate for a client to approach a lawyer seeking to obtain an (ostensibly) expert opinion as to whether the conduct that he might wish to pursue is, in fact, legal or illegal.15 That’s precisely what lawyers are tasked—and ethically bound—to do.
The Third Circuit case tees up the dilemma, however, in which an attorney finds himself when he is asked to give testimony against or concerning a client or former client which may result in the revelation of confidential communications—even if the attorney believes the advice was well within the bounds of his legal and ethical obligations. The path of least resistance for the attorney, if the truth permits it, is to avoid at all costs the specter of the prosecutor coming to believe that, in some way, the attorney gave the client reason to believe that the (illegal) course of conduct he wished to undertake was somehow legally acceptable.
For some attorneys—whose ethics we herewith question—that might mean rushing to a prosecutor’s office with his own attorney in tow. This, without even having been subpoenaed, in order to gain a sympathetic ear from the prosecutor who—counsel may believe—will likely be moved by the attorney’s decision to come forward unilaterally.
It might be excruciating for an attorney to sit back and wait to hear from a prosecutor when he knows that a client (or former client) had come to him for advice concerning a proposal that might, at least arguably, violate the law. Nonetheless, it is the lawyer’s duty to sit on his hands.16
What is the lawyer’s duty when asked by the authorities to talk about a privileged communication of any kind? She must let the client know of the contact, and accord the client the opportunity—through separate counsel—to intervene, with the lawyer acting as stakeholder for the communications. Indeed, one may arguably conclude that it may even be incumbent on the attorney to undertake to move to quash the subpoena17 and, if the motion is denied, to exhaust any available appellate review before giving such testimony.18
That is, unless the lawyer feels that she is exposed criminally. In that case she may independently assert the Fifth Amendment, if appropriate—although she cannot herself assert the attorney-client privilege19 if the (now, newly represented) client, sees it in his “criminal” interest, to not waive it. The attorney-client privilege is always the client’s, never the lawyer’s.
Being an ethical attorney doesn’t permit the attorney to think about himself first. That is so even if he suffers some discomfort while according the client the opportunity to protect his rights (which may diverge from the rights of his counsel), and even when it seems that the client may conceivably have abused their relationship in seeking advice.
Joel Cohen, a former prosecutor, is of counsel at Stroock & Stroock & Lavan. He teaches professional responsibility at Fordham Law School. Elizabeth C. Carter, a litigation associate at the firm, assisted in the preparation of this article.
1. See United States v. Evangelista, 122 F.3d 112, 117 (2d Cir. 1997) (“[I]f a man honestly and in good faith seeks advice of a lawyer as to what he may lawfully do…, and fully and honestly lays all the facts before his counsel, and in good faith and honestly follows such advice, relying upon it and believing it to be correct, and only intends that his acts shall be lawful, he could not be convicted of crime [sic] which involves willful and unlawful intent”); see also United States v. Beech-Nut Nutrition, 871 F.2d 1181, 1194-1195 (1989) (same).
2. See N.Y. Rules of Prof. Conduct 1.9, 22 N.Y.C.R.R. §1200.
3. No. 13-1237, 2014 WL 541216 (3d Cir. Feb. 12, 2014).
4. See In re Grand Jury Subpoena, G.J. No. 10-127-02, 2013 WL 228115, at *1 (E.D. Pa. Jan. 18, 2013).
5. 2014 WL 541216 at *1.
7. Id. at *2.
10. C and P argued on appeal that the District Court erred in excluding them from the in camera interview of the attorney. In the instance of a prosecutor seeking privileged documents, the Supreme Court had held in United States v. Zolin, 491 U.S. 554 (1989), that the District Court “‘should require a showing of a factual basis adequate to support a good faith belief by a reasonable person,’ …that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies.” 491 U.S. at 572. However, should the same standard apply in the case of oral testimony? While acknowledging the “‘dangers of inaccuracy and untrustworthiness’ in probing into the memory of an attorney regarding past communications that do not occur with documented communications,” 2014 WL 541216 at *5, the circuit held that the District Court properly held the in camera interview, even though outside the presence of counsel for C and P and even though it refused their request to make the transcript of the interview available, lest the intervenors learn the basis of the government’s claims. Id. at *6.
11. 2014 WL 541216 at *8.
13. Id. at *9.
15. See In re Grand Jury Subpoena Duces Tecum Dated Sept. 15, 1983, 731 F.2d 1032, 1038 (2d Cir. 1984) (“an attorney’s opinion as to the lawfulness of a transaction is certainly ‘legal advice’”).
16. The exception in Rule 1.6 of the Rules of Professional Conduct permitting attorneys to reveal client confidences to “prevent the client from committing a crime,” applies only to future crimes. See N.Y. Rules of Prof. Conduct 1.6, 22 N.Y.C.R.R. §1200
17. See NYC Eth. Op. 1986-5,1986 WL 293094, at *2. (advising that “if presented with a request by a governmental authority for production of information pertaining to escrow accounts when a client is a target of an investigation, a lawyer must, unless the client has consented to disclosure, decline to furnish such information on the ground either that it is protected by the attorney-client privilege or that it has been gained in the course of a confidential relationship” and that “[t]aking such a position (as in support of a motion to quash a subpoena) will usually result in a court order deciding the issue” thereby permitting the attorney to divulge such confidences without running afoul of the ethical rules).
18. N.Y. State 528 (1981) (a “lawyer may under certain circumstances ethically postpone giving court ordered testimony pending the timely exhaustion of available further review”); N.Y. State 681 (1996) (if the lawyer believes that information ordered by a court to be disclosed is a “confidence,” the “lawyer may have an ethical obligation to appeal the court’s ruling rather than comply with a trial court’s order to disclose what the lawyer believes in good faith is a communication governed by the attorney-client privilege”).
19. See Carte Blanche (Singapore) PTE v. Diners Club Int’l, 130 F.R.D. 28, 31 (S.D.N.Y. 1990) (holding that “the attorney-client privilege can be waived only by the client and cannot be waived by counsel”); see also N.Y. C.P.L.R. 4503 (McKinney) (absent client waiver, attorney cannot disclose confidential communication).