When Confidential Meets The Crime-Fraud Exception And Conflict

Much interest has been raised by the intersection of Donald Trump’s “complaint” about United States District Judge Gonzalo Curiel’s “bias,” and the efficacy of seeking the judge’s recusal not because there is any legitimacy to the bias argument itself, but that Trump’s making a stink about Judge Curiel’s heritage and associations creates a new level of antagonism.  This, of course, gives rise to no legal basis to seek recusal.

There are two points to be made: first, that behaving like a jerk (whether you think Trump was racist or had a legit beef) cannot give rise to demanding recusal based upon the jerk behavior. Second, that there may well be actual antagonism as a result of such behavior, such that the judge is, in fact, biased against a litigant, doesn’t change the fact that it would be legally untenable to allow this to serve as a basis for recusal.  After all, if that were allowed, anybody could create a rift with a judge they didn’t want by calling the judge a name, thus accomplishing by being offensive that which they couldn’t accomplish otherwise.

That the judge might now really hate the litigant because of his actions has nothing to do with it.  And that’s how legal doctrine works, as it should.

So why then is it entirely different when the government seeks to separate a defendant from his lawyer?  Say hi to the Curcio hearing, which was held after United States Attorney for the Southern District of New York, Preet Bharara, prevailed in compelling two defense lawyers to appear before a grand jury to reveal their client’s confidences.

It is not every day that two prominent lawyers are brought before a federal grand jury and directed to provide documents and testimony about conversations they had with a wealthy client.

But that is what happened with two partners at Williams & Connolly, the prestigious Washington law firm, who are representing Morris E. Zukerman, a former Morgan Stanley banker and oil investor. Last month, Mr. Zukerman was accused of failing to pay $45 million in income and sales taxes on works of art and profits from the sale of an oil company.

Zukerman was represented by lawyers, which is his right under the Sixth Amendment. Except when it’s not.

Typically, lawyers cannot be compelled to testify or produce evidence against a client in a grand jury investigation. But in rare cases, judges can require it, if there is evidence that clients’ communication with their lawyers was done purposely to further a crime or a fraud. In the law, it is known as the crime-fraud exception to the attorney-client privilege.

What information or evidence gave rise to this claim that their work fell under the crime-fraud exception, where the lawyer’s services are in furtherance of the client’s crime, is unclear.  What is clear is that it was ruled by a judge and upheld by the Second Circuit.  Inexplicably, the lawyers aren’t alleged to have done anything wrong.

The two lawyers from Williams & Connolly, James A. Bruton III and James T. Fuller III, are both seasoned white-collar defense lawyers who specialize in tax law. They were ordered last summer by a Manhattan federal judge to appear before a grand jury that was investigating Mr. Zukerman to determine whether he had used the lawyers during the course of that I.R.S. audit and inquiry to conceal his activities.

Isn’t “conceal his activities” kinda what defense lawyers are supposed to do? Well, yes and no, as lawyers are duty-bound to defend conduct that has occurred, but not to enable ongoing or future criminal conduct. It can be a very fine line, so fine that it’s entirely imperceptible to anyone but an eagle-eyed prosecutor and the judges who love him.  Yes, that’s unfair, and may not apply here at all.

Now that his lawyers are being compelled to appear before a grand jury to reveal client confidences against a current client, the government has created by their own hand a conflict of interest.  The witnesses against Zukerman are his own lawyers. Uh oh.

Wearing a dark suit and round tortoiseshell glasses, and using a cane, Mr. Zukerman told Judge Analisa Torres of the Federal District Court in Manhattan that he was aware of a conflict of interest and was waiving his right because he was “the source of the information” his lawyers gave the I.R.S.

The judge pressed him several times but eventually allowed Mr. Zukerman to waive his right to raise the conflict as a future issue.

The so-called Curcio hearing is used in federal court to make sure a criminal defendant is fully aware of the ramifications of retaining a lawyer who may have a potential conflict of interest.

Whether a Curcio hearing accomplishes the task of making a defendant appreciate the significance of the conflict is dubious, even when a guy wears a dark suit and tortoiseshell glasses. And uses a cane. The problem is that the ramifications of conflict appear down the road in unanticipated ways. What if there is a trial and in the middle, because of something that comes out on cross, the prosecutor decides he wants to call defense counsel as a witness on a material detail?  Worse yet, an immaterial detail. It’s not a good optic for the jury, if nothing else.

And for the thinking-challenged, here’s the “expert” commentary to explain stuff:

It is uncommon for the government to subpoena lawyers to testify before a grand jury, said Daniel C. Richman, a professor of criminal law at Columbia University.

“This case itself highlights the complications obtaining such testimony can create. And it involves a target apparently ready to plead guilty,” Mr. Richman added.

How fortunate that Professor Richman was available to provide that insight.

While Zukerman waived the conflict at the Curcio hearing, that doesn’t change the fact that the conflict is very real and very serious.  Yet, the conflict between defendant and his lawyers of choice is created by the government, the adversary who won’t cry sad tears if Zukerman’s relationship to his lawyers is just a wee bit impaired.

So why is it doctrinally acceptable that an adversary can create a conflict between defendant and lawyer, but unacceptable when the conflict may be just as real between litigant and judge? Well, Bharara is a beloved and trusted prosecutor. Trump is merely the presumptive Republican nominee for president. Who you gonna believe?

3 thoughts on “When Confidential Meets The Crime-Fraud Exception And Conflict

  1. John Barleycorn

    Reverse “discovery” what a concept!?

    No wonder good CDL’s are so good at interrupting their clients stream of consciousness rants. You CDL’s really ought to get ordained by some of those churches that advertise in the back of various trade magizines.

    How cool would it be to dig out your collar from your pocket and use a cordless iron to iron that sucker out on the defense table before you put it on and take the stand during your clients trial.

    P.S. Where the fuck are your guilded readers with cases of rotten tomatoes to throw and then help pile on when you post this sort of bedrock “stuff”?

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