Opinion ID: 800884
Heading Depth: 1
Heading Rank: 4

Heading: Effect of Current Representation by the Law Firms

Text: Finally, although not addressed by the majority, the Government argues that the Perlman doctrine does not apply in this instance because the law firms are not [dis]interested [t]hird [p]arties due to their current representation of the Subjects. (Appellee's Br. 15.) I believe that the Perlman doctrine applies to current attorneys and would reject this argument. As an initial matter, our Court's interpretation of the Perlman doctrine does not require strict disinterest, at least in the sense of requiring total non-affiliation with the privilege holder. [7] We have instead tended to focus our analysis on whether the privilege holder is in a position to control the [subpoenaed custodian's] decision whether to produce the records, and on whether the third-party's personal stake in the matter is substantial enough for it to likely stand in contempt to protect the privilege holder's rights. In re Grand Jury Matter, 802 F.2d at 99; see In re Grand Jury ( C. Schmidt & Sons, Inc. ), 619 F.2d at 1024-25 (holding that the privilege holder's employees are third-parties under Perlman because employees are unlikely to stand in contempt to protect their employer). Applying this framework, we have already held that a privilege holder's former attorney qualifies as a third-party custodian under the Perlman doctrine, reasoning that a former attorney is not guaranteed to stand in contempt to protect his or her former client's privilege. See In re Grand Jury Proceedings ( FMC Corp. ), 604 F.2d at 800-01. I believe, as do the majority of other circuits that have addressed this issue, that there is no reason to apply a different rule to current attorneys. [8] See, e.g., In re Grand Jury Subpoenas, 123 F.3d 695, 699 (1st Cir.1997) ([W]e adopt the majority rule and apply the Perlman exception to those cases wherein a client seeks immediate appeal of an order compelling production of a client's records from his attorney.); In re Grand Jury Proceedings in Matter of Fine, 641 F.2d at 203 (holding that current attorneys qualify as third-parties under Perlman ); In re Grand Jury Proceedings ( Gordon ), 722 F.2d 303, 307 (6th Cir.1983) (This Court ... joins the majority of other Circuits in applying the Perlman exception in those cases wherein a client seeks immediate appeal of an order compelling testimony from his attorney.); In re Klein, 776 F.2d 628, 632 (7th Cir.1985) (applying the Perlman doctrine to current attorneys); In re Grand Jury Proceedings, 655 F.2d 882, 885 (8th Cir.1981) ([T]he Perlman exception is available to a client-intervenor when he is appealing an order compelling testimony or documents from his attorney.); In re Grand Jury Proceedings, 689 F.2d 1351, 1352 n. 1 (11th Cir.1982) (explaining that the Eleventh Circuit is bound by the Fifth Circuit's rule holding that attorneys are third-parties under Perlman ). While a client's interests may be more closely aligned with his or her current attorney than with a former attorney, a client cannot control whether his or her attorney chooses to stand in contempt. As discussed in Section I(B) supra, after asserting all non-frivolous arguments against disclosing a client's privileged information, attorneys are generally permitted to comply with a district court order compelling production. See Model Rules of Prof. 1 Conduct R. 1.6(6) & cmt. 13 (2010). Moreover, to the extent that current attorneys are interested parties, they, like former attorneys, are unlikely to be so interested that they will stand in contempt to protect their client's privilege. See In re Grand Jury Proceedings in Matter of Fine, 641 F.2d at 203 (we can say without reservation that some significant number of client-intervenors might find themselves denied all meaningful appeal by attorneys unwilling to stand in contempt on their client's behalf). Accordingly, because an attorney need not, and probably will not, stand in contempt to protect his or her client's privilege, I believe that our Court's longstanding interpretation of the Perlman doctrine requires finding that current attorneys are third-parties. Additionally, requiring attorneys to stand in contempt to enable their clients to appeal unnecessarily fosters conflicts of interest between attorneys and their clients. As the First Circuit explained in overruling its prior decision excluding attorneys from the Perlman doctrine, requiring attorneys to stand in contempt pits lawyers against their clients by requiring attorneys to choose between protecting their clients' interests and protecting themselves against potentially serious contempt sanctions. In re Grand Jury Subpoenas, 123 F.3d at 699 (citing United States v. Edgar, 82 F.3d 499, 507-08 (1st Cir.1996)). I share the First Circuit's view that placing attorneys in this predicament hinders the fair representation of the client. Id. I am aware that the Ninth Circuit does not ordinarily permit Perlman appeals when the custodian is the privilege holder's current attorney. See, e.g., In re Grand Jury Subpoena, 825 F.2d 231, 237 (9th Cir.1987) (declining to apply the Perlman doctrine when the custodian is the privilege holder's current attorney). I cannot agree, however, with the Ninth Circuit's logic. The Ninth Circuit implies that a current attorney is more likely to stand in contempt than a former attorney, because a current attorney is both subject to the control of the person or entity asserting the privilege and is a participant in the relationship out of which the privilege emerges. Id. (quoting In re Grand Jury Subpoena Served upon Niren, 784 F.2d 939, 941 (9th Cir.1986)). This reasoning disregards the fact that a privilege holder's control over his or her attorney does not extend to deciding whether his or her attorney stands in contempt. Because the custodian's likelihood of standing in contempt is the relevant type of control under the Perlman doctrine, I do not find the Ninth Circuit's reasoning to be persuasive and would hold that we have jurisdiction. II. Merits Instead of dismissing for lack of jurisdiction, I would affirm the District Court's decision on the merits. The Subjects raise a plethora of legal arguments challenging the District Court's order compelling production, none of which has any merit. The Subjects' chief contention is that the District Court erred in finding that the crime-fraud exception vitiates their purported attorney-client and work-product privileges because, in their view, the District Court applied an improper standard for determining whether the crime-fraud exception applies. (Appellants' Br. 45.) I do not agree that the District Court committed any such error. The crime-fraud exception overrides the attorney-client and work-product privileges only when the legal advice `gives direction for the commission of [a] future fraud or crime.' In re Grand Jury Subpoena, 223 F.3d 213, 217 (3d Cir.2000) (quoting Haines v. Liggett Grp. Inc., 975 F.2d 81, 90 (3d Cir.1992)). The Government may invoke the crime-fraud exception by mak[ing] a prima facie showing that (1) the client was committing or intending to commit a fraud or crime, ... and (2) the attorney-client communications were in furtherance of that alleged crime or fraud. Id. (citations omitted). The Government satisfies its prima facie showing by present[ing] ... `evidence which, if believed by the fact-finder, would be sufficient to support a finding that the elements of the crime-fraud exception were met.' Id. (quoting Haines, 975 F.2d at 95-96). The Subjects argue that, in deciding whether the Government satisfied its prima facie case, the District Court improperly relied on what they assert was dicta from our decision in In re Grand Jury Investigation, 445 F.3d 266, 275 (3d Cir. 2006), instead of requiring the Government to present evidence sufficient to support a finding that the elements of the crime-fraud exception were met. In re Grand Jury Subpoena, 223 F.3d at 217 (quoting Haines, 975 F.2d at 90). Specifically, the Subjects contend that the District Court improperly lowered the standard for the Government's prima facie case by requiring evidence demonstrating [only] a reasonable basis to suspect the perpetration of a crime. (S.A.31) (quoting In re Grand Jury Investigation, 445 F.3d at 275). The District Court included both prongs of the prima facie case and the sufficient to support a finding standard in its opinion. (S.A.16.) It then thoroughly reviewed the record, including the submissions from both the Government and from the Subjects, to ascertain whether the Government showed adequate evidence of a crime or fraud. Thus, regardless of whether the District Court should not have used the reasonable basis to suspect language, its comprehensive review of the record demonstrates that it applied a standard as high as, if not higher than, the sufficient to support standard. Accordingly, I would reject the Subjects' argument concerning whether the District Court applied the correct standard for assessing the crime-fraud exception. As for the Subjects' remaining arguments, I would affirm for substantially the reasons given by the District Court in its thoughtful opinion.