In the film The Godfather, not even Peter Clemenza could make mafia lawyer Tom Hagen sing about his “special practice” or his “one client.” However, a recent ruling by Judge Saylor of the United States District Court for the District of Massachusetts (part of the First Circuit) reaffirms that in the real world, the so-called “crime-fraud exception” may prevent legal consigliores from staying “mum” with the court.

The attorney-client privilege ordinarily prohibits lawyers from revealing information relating to the representation of their clients, to ensure “the trust that is the hallmark of the client-lawyer relationship.”¹  Under the crime-fraud exception, attorney-client communications may not be kept confidential where there is a “reasonable basis” to believe that the lawyer’s services were used by the client to further the commission of a crime or fraudulent act. The First Circuit has clarified this rule, holding that the crime-fraud exception is triggered when (1) the client was engaged in (or was planning) criminal or fraudulent activity, and (2) with the intent to facilitate or conceal the criminal or fraudulent activity. Under this standard, attorney-client communications should remain confidential unless the client is engaged in a criminal activity and is intentionally using his attorney to either assist in or cover up the crime. It is a narrow but potentially significant exception to the attorney client privilege.

The pending criminal case of United States v. Gorski should serve as a warning to contractors and Tom Hagens alike that in some cases of mutual wrongdoing, placing their trust in the attorney-client privilege could be legally fatal The indictment in this case alleges that from late 2005 to November 2010, David Gorski of Chelmsford-based Legion Construction, Inc. (“Legion”) defrauded the United States by knowingly misrepresenting to federal contracting agencies that Legion was a Service-Disabled Veteran-Owned Small Business Entity (SDVOSB), in order to obtain bidding preferences and other lucrative set-aside work available only to SDVOSB contractors and other contractors with “disadvantaged” status. According to the indictment, Gorski is not a service-disabled veteran, but concealed his “true ownership and control of Legion from the [government] by making false statements, representations, and omissions regarding the ownership, operation, and control of Legion” to perpetuate Legion’s false SDVOSB-status. The government further alleges that Gorski enlisted the services of a prominent Boston-based law firm in connection with the 2010 restructuring to create fraudulently backdated documents to help perpetuate the scheme – documents that purport to show a corporate restructuring by Legion on February 1, 2010, in advance of a significant regulatory change that went into effect on February 8, 2010.

On September 4, 2014, in response to motions brought by the parties, the court ruled that the crime-fraud exception applied to over 3,000 documents exchanged between Gorski and his attorneys, that may evidence Gorski’s alleged wrongdoings. Although the court’s ruling was a procedural decision that did not bear on the question of Gorski’s guilt or innocence, it is bound to prejudice Gorski’s case, as thousands of communications Gorski clearly believed would remain secret are now being closely scrutinized by the government.

Judge Saylor’s ruling in Gorski consequently leaves lawyers and clients with at least one important lesson: for clients bent on perpetrating a crime or illegal scheme, the attorney-client privilege – and the assumed perpetual confidentiality of associated documents and e-mails – may disappear without a trace.

^{1 Rule 1.6[Comments]. Professional Responsibility Standards & Rules (2011-2012 Abridged Version). John S. Dzienkowski Ed. West (2011).}