In Re Motion to Quash Bar Counsel Subpoena
2009 ME 104, 982 A.2d 330, 2009 Me. LEXIS 107 (2009)
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Rule of Law:
The attorney-client privilege does not apply under the crime-fraud exception if a client sought or obtained a lawyer's services to enable or aid in the commission or concealment of an ongoing or future crime or fraud, provided the party invoking the exception proves the client's intent by a preponderance of the evidence.
Facts:
- John Duncan, a former partner at Verrill Dana LLP, engaged in misconduct, including stealing client funds.
- In June 2007, Duncan's former secretary reported his theft of client funds to at least two attorneys at Verrill Dana LLP.
- The secretary subsequently retained counsel and filed a grievance complaint against Duncan and several other Verrill Dana attorneys with the Board of Overseers of the Bar.
- Verrill Dana LLP engaged Attorney Gene Libby, its general counsel since 1996, to represent the firm in the matter and undertake an investigation.
- Libby conducted an investigation, during which he amassed numerous emails and documents and wrote memos detailing his conclusions.
- Libby resigned from Verrill Dana LLP on November 26, 2007, and two days later, reported to Bar Counsel that he had 'unprivileged knowledge of violations of the Maine Bar Rules' that required reporting.
- Verrill Dana LLP and Libby reached an agreement that Libby would not disclose any information conveyed to him as general counsel unless required by court order.
Procedural Posture:
- Former attorney John Duncan was disbarred for life by a single justice of the Maine Supreme Judicial Court for misconduct.
- Bar Counsel for the Board of Overseers of the Bar initiated an investigation into the conduct of other attorneys at Verrill Dana LLP regarding their handling of Duncan's actions.
- On September 8, 2008, Bar Counsel issued a subpoena to Attorney Gene Libby, compelling his testimony and the production of documents supporting his earlier report.
- Verrill Dana LLP filed a motion to quash the subpoena with the Board of Overseers of the Bar, asserting attorney-client privilege and the work product doctrine.
- Bar Counsel responded to the motion to quash, arguing that the crime-fraud exception applied.
- The parties agreed to submit the dispute regarding the motion to quash to a single justice of the Maine Supreme Judicial Court.
- The single justice reviewed the disputed documents in camera.
- The single justice found that Libby 'may have uncovered criminal conduct' by Verrill Dana LLP partners and ruled that the crime-fraud exception (M.R. Evid. 502(d)(1)) applied to all documents, ordering them to be turned over to Bar Counsel.
- Verrill Dana LLP appealed the single justice's order to the Maine Supreme Judicial Court (the Law Court).
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Issue:
Does the crime-fraud exception to attorney-client privilege apply when a client's past conduct is under investigation, and what is the proper test and burden of proof for its application?
Opinions:
Majority - Mead, J.
No, the single justice's order denying the motion to quash is vacated, and the case is remanded, because it is unclear whether the correct legal test for applying the crime-fraud exception and the appropriate burden of proof were applied. The attorney-client privilege, which encourages open communication between clients and attorneys, does not protect communications where the client seeks legal advice to commit or conceal ongoing or future wrongdoing, though it does protect communications regarding past wrongdoing. This includes situations where a lawyer's services are used to actively conceal past wrongdoing that is continuing. The applicability of the crime-fraud exception hinges on the client's intent to use the attorney's services to facilitate or conceal such illicit activity; the attorney's intent is irrelevant. The Court established a two-part test: (1) the client was engaged in (or planning) criminal or fraudulent activity when the attorney-client communications took place; AND (2) the communications were intended by the client to facilitate or conceal the criminal or fraudulent activity. Crucially, the party seeking to invoke the crime-fraud exception must prove these elements by a preponderance of the evidence, a higher standard than merely a 'prima facie showing' or 'reasonable basis,' reflecting the importance of protecting the attorney-client privilege. The single justice's findings were ambiguous, failing to specify whether the conduct was ongoing, whether the firm intended to use Libby's services for concealment, or what burden of proof was applied. Therefore, the case must be remanded for clarification and further findings consistent with this clarified standard.
Dissenting - Alexander, J.
Yes, the single justice appropriately denied the motion to quash, and the decision should be affirmed. At the preliminary discovery stage, Bar Counsel is entitled to seek information that 'appears reasonably calculated to lead to the discovery of admissible evidence' under M.R. Civ. P. 26(b)(1). The opposition to the subpoena failed to conclusively demonstrate that the subpoenaed information could not lead to admissible evidence. Furthermore, it was appropriate for the single justice to make only limited findings at this early stage, as detailed findings might prematurely suggest a prejudgment of issues that are not yet ready for full factual determination. The case should not delve into facts and inferences from facts until discovery is complete and the facts can be fully addressed in an appropriate forum.
Analysis:
This case significantly clarifies the application of the crime-fraud exception to attorney-client privilege in Maine, establishing a specific two-part test and, notably, a 'preponderance of the evidence' burden of proof for the party seeking to pierce the privilege. This higher burden of proof, compared to the 'prima facie showing' used in some federal circuits, reinforces the sanctity of attorney-client communications, making it more challenging to overcome the privilege. The decision emphasizes the distinction between advice regarding past wrongs (protected) and advice sought to further or conceal ongoing/future wrongs (not protected), providing critical guidance for attorneys and clients alike on the boundaries of confidentiality and ethical obligations. It underscores the judiciary's inherent authority to regulate the practice of law and ensure adherence to procedural rules while also recognizing exceptions for substantial rights that would be irreparably lost.
