The Crime-Fraud Exception: Open Questions for the Supreme Court

By Ian M. Comisky, Matthew D. Lee, and Bridget Mayer

Pending Cert Petition Presents Opportunity for the Supreme Court to Resolve Unanswered Questions With Respect to the Crime-Fraud Exception

The United States Supreme Court has not examined the crime-fraud exception to the attorney-client privilege since its decision in United States v. Zolin, 491 U.S. 554 (1989), over 25 years ago.

In Zolin, the Supreme Court determined that a party invoking the crime-fraud exception must make a threshold showing before a district court may review documented attorney-client communications in camera. The Court settled on the following standard:

Before engaging in in camera review to determine the applicability of the crime-fraud exception, the judge 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.

Zolin, 491 U.S. at 572 (internal citation omitted).

On behalf of one of its clients, Blank Rome LLP has filed a petition for a writ of certiorari in the Supreme Court (In re Grand Jury Subpoena, No. 14M14) which presents the Court with a unique and important opportunity to resolve two significant questions left open by Zolin: (1) the requisite standard of proof for the application of the crime-fraud exception, including the ultimate standard that must be met before the government may overcome the attorney-client privilege by alleging a crime or fraud; (2) the appropriate threshold standard to be met prior to an in camera interview regarding unrecorded oral communications. Supreme Court review is necessary to prevent a significant erosion of the privilege in the Third Circuit.

Case Background

This case arises from a grand jury investigation of potential violations of the Foreign Corrupt Practices Act (“FCPA”), 15 U.S.C. § 78dd-1, et seq. During its investigation, the government sought to compel a former attorney for the privilege holders to comply with a grand jury subpoena seeking testimony regarding his communications – the targets of the investigation.

The clients intervened to oppose the motion to compel on attorney-client privilege and attorney work product grounds. The government countered that the crime-fraud exception applied to defeat the privilege claim and asked that the district court evaluate its crime-fraud argument by conducting an in camera examination of the attorney. Over the intervenors/targets objections, the district court determined to conduct the in camera interview, outside the presence of the parties. The district court subsequently determined that the crime-fraud standard had been met. The district court reasoned, based upon an ex parte submission by the government and the attorney’s testimony, that because the attorney explained the contours of the FCPA, the attorney’s advice could have been used by the clients to commit a crime or fraud.

Third Circuit Appeal

On February 12, 2014, the Third Circuit affirmed the district court’s decision in its entirety, in an opinion that serves to substantially vitiate the privilege in the grand jury setting.

          In Camera Interview

As an initial matter, the Third Circuit affirmed the district court’s decision to conduct an in camera examination of the attorney. The Third Circuit, purporting to examine the same factors that the Supreme Court considered in Zolin, determined that the government need only meet the threshold standard set out in Zolin for the in camera review of documents in order for the district court to conduct a live interview in camera.

Although Zolin focused on (1) the potential erosion of the privilege, (2) due process implications, and (3) additional burdens on the district courts in settling on its threshold showing for an in camera review of documents, the Third Circuit rejected each of the arguments with respect to these factors. First, it was argued that an interview permits a much more intrusive invasion into the privilege because, unlike documents, which have fixed content, an interview is free-flowing and information reported can be impacted by the questions asked and the tone of the interview. Second, it was argued that the district court’s in camera interview without the grand jury target or targets prevented the targets from making a full crime-fraud argument. Third, the grand jury target argued that in camera interviews of the kind conducted here stand to impose a significant burden on district courts. The Third Circuit professed to find no relevant difference between examining documents and examining a live witness in camera such that a standard other than that set out in Zolin should apply.

With the Third Circuit’s approval of the in camera interview in this case, in camera interviews of counsel for grand jury targets stand to become far more common with the government seeking to utilize this procedure in almost every case involving counsel.


Generally speaking, in order to invoke the crime-fraud exception and vitiate the privilege the government must show that: (1) the client was committing or intended to commit a fraud or crime (the “intent requirement”), and (2) the client used the attorney-client communication in furtherance of the alleged crime or fraud (the “in furtherance requirement”). The Third Circuit’s decision substantially undercut these requirements, severely limiting the crime-fraud showing.

With respect to the intent requirement, prior to the Third Circuit’s decision, circuit courts and commentators recognized that the crime-fraud exception required evidence of specific client intent to utilize attorney advice in furtherance of a crime or fraud. Although the panel initially recognized that the crime-fraud exception does not apply where a client consults an attorney about a possible course of action and later forms the intent to commit a crime, it created a presumption of pre-existing wrongful intent whenever a client consults an attorney, receives information about the law, and is later accused of a crime or fraud. This presumption is based upon the notion that any intelligent client can figure out a better way to commit a crime after being given information about the law. This ruling conflicts with those of other circuit courts which require actual evidence, rather than speculation, of pre-existing intent; and effectively eviserates the intent requirement of the crime-fraud exception.

With respect to the in furtherance requirement, the general rule has been that an attorney’s advice must be used to facilitate a crime or fraud in some way, with several circuits holding that the crime-fraud exception does not apply if a client ignores attorney advice. Here, the Third Circuit concluded, despite its recognition that the attorney was unable to provide the client with definitive advice, that the district court did not abuse its discretion in determining that the attorney’s advice could have been used to shape the alleged misconduct. As a result, the Third Circuit has now approved an after the fact analysis to meet the in furtherance requirement; a standard that can be met in just about any case an attorney is consulted.

In affirming the district court’s crime-fraud finding, the Third Circuit persisted in its adoption of a “reasonable basis to suspect” standard to overcome the privilege. Not only is this standard lower than those adopted many other circuits, but it appears, on its face, to be indistinguishable from the standard adopted by the Supreme Court in Zolin for the in camera review of documents – a standard that is required to be lower than that for the ultimate vitiation of the privilege.


All told, the Third Circuit’s approach to the crime-fraud exception stands to significantly erode the attorney-client privilege. Not only is the government free to seek wide-ranging oral testimony from counsel for grand jury targets in just about any investigation, but the decision all but ensures the vitiation of the privilege in any grand jury case.

Despite the undeniable prevalence of privilege and crime-fraud issues in both civil and criminal actions, the Supreme Court has not yet fully-examined the scope of the crime-fraud exception. Given the significant differences among the circuits in examining the crime-fraud exception and the Third Circuit’s recent expansion of the crime-fraud exception, Supreme Court review is necessary to ensure the consistent treatment of litigants and protect the privilege.