Privilege Issues Confronting the Trump–Cohen Special Master

As detailed in my post, Reports of the Privilege’s Death are Greatly Exaggerated, the SDNY rejected the U.S. Attorney’s request that its “taint team” conduct the initial privilege review of documents seized in the FBI’s raid on attorney Michael Cohen’s Trump Tower office.  The Court likewise rejected Cohen and President Trump’s request that their respective legal teams make the initial privilege calls.

Instead, the court, in this Order, appointed former magistrate judge Barbara S. Jones as Special Master to conduct the privilege review. Special Master Jones submitted her initial report to the Court on May 4, 2018, which you may read in full here.

To date, the USAO has produced to Cohen and Special Master Jones electronic contents of certain telephones and iPads as well as electronic copies of eight boxes of hard-copy documents. The USAO anticipates producing the final bulk of seized materials by May 11, 2018.  The privilege review is underway, and Cohen and Trump’s lawyers will provide their first privilege designations to the Special Master today, May 7, 2018.

So, what privilege issues are likely to arise requiring the Special Master’s privilege decision?  Here are a few.

Disclosure Protections

Let’s first identify the legal protections that Cohen and Trump may assert to preclude documents from federal prosecutors’ review.

Obviously, Cohen and Trump will assert protections afforded by the attorney–client privilege.  The privilege is quite narrow, as it only protects confidential communications between a client and her lawyer made for legal-advice purposes.  The privilege belongs to Cohen’s clients, not Cohen, although Cohen must assert the privilege unless his client(s) direct otherwise.

It is likely that the raid consumed communications between Cohen and his lawyers, including lawyers representing him in adult-film star Stephanie Clifford’s pending California case against Trump.  If so, Cohen owns that privilege and will certainly assert it.

A less-mentioned protection that may become operative is the work-product doctrine.  This doctrine generally protects documents evidencing an attorney or party’s opinions and mental impressions made when involved in or anticipating litigation.  Given that Cohen negotiated a non-disclosure agreement with Clifford, whether on his behalf or Trump’s, a plausible argument exists that Cohen and Trump anticipated some litigation involving her.  They will have to prove it, though.

Who are the Clients?

Special Master Jones must identify Cohen’s attorney–client relationships before analyzing the privilege elements.  Cohen disclosed that, from 2007 through January 2017, he “worked at the Trump Organization” serving in the role of “Executive Vice President and Special Counsel to Donald J. Trump.”  In this role, he “served as legal counsel to Trump Organization, Donald J. Trump.”  What do these vague statements mean from a client-identification perspective?  Special Master Jones will need to know.

In 2017–2018, Cohen also represented three other clients. He represented President Trump in the Clifford matter and Elliot Broidy, the former RNC Deputy Finance Chairman, in a non-disclosure arrangement with a former model. (New York Times story here).

And he may or may not have represented Fox News’ Sean Hannity.  Cohen says yes, but Hannity denies it.  Special Master Jones must determine whether Cohen and Hannity had an attorney–client relationship before deciding whether the privilege protects their communications from federal prosecutors’ review.

Legal Advice or Business Advice?

Cohen’s role with the Trump Organization will pose another set of privilege issues.  Special Master Jones will consider whether the privilege protects communications between Cohen and other Trump Organization employees.  The privilege only covers communications made so that the lawyer—purportedly Cohen—can render legal advice to his client (whoever that is).

The privilege will not protect Cohen’s communications involving business advice for the Trump Organization.  More…

Court Rejects Crime–Fraud Exception for Peer-Review Privilege

The South Dakota Supreme Court has issued yet another first-impression privilege ruling.  You will recall that, in Wipf v. Altstiel, 2016 WL 7411290 (S.D. Dec. 21, 2016), the court, in a matter of first impression, ruled that the physician–patient privilege does not protect from disclosure anonymous, third-party medical records.  You may read my post on the decision here.

And in another medical-related case, the supreme court declined to adopt a crime–fraud exception to the state’s peer-review privilege.  Novotny v. Sacred Heart Health Servs., 887 N.W.2d 83 (S.D. 2016).  You may read the decision here.

The Sossan Litigation

The Novotny case involves several lawsuits against Allen Sossan, a former physician who allegedly defrauded patients into unnecessary surgeries and is reportedly now living in Iran.  Here is a story from Becker’s Spine Review about the ostensible doctor. More…

Court’s In Camera Examination of Attorney Leads to Crime-Fraud Exception Finding

In a grand jury investigation into FCPA violations, the Third Circuit upheld a district court’s in camera examination of a corporation’s attorney and application of the crime–fraud exception to overcome Business man pledgingthe attorney–client privilege. In doing so, the appellate court held that the Supreme Court’s standard in United States v. Zolin, 491 U.S. 554 (1989), governs whether a court may conduct an in camera witness examination to determine the crime–fraud exception’s application. In re Grand Jury Subpoena, 2014 WL 541216 (CTA3 Feb. 12, 2014). You may access the opinion here.

FCPA Grand Jury Investigation

During its investigation of a consulting company and its president for alleged FCPA violations, a grand jury in the Eastern District of Pennsylvania issued a subpoena to the company’s former attorney. The U.S. Attorney’s office sought enforcement of the subpoena, arguing that the crime–fraud exception overcame the company’s attorney–client privilege assertion.

Using the government’s questions, the district court examined the company’s attorney in camera, outside the presence of government or defense counsel, and, based on this in camera testimony, ruled that the crime–fraud exception applied. The court then compelled the attorney to provide the grand jury testimony concerning attorney–client conversations.  PoP profiled the district court’s decision in this post.

Standard for In Camera Examination

The Supreme Court ruled in Zolin that a district court may review in camera otherwise privileged documents to determine whether the crime–fraud exception applies. Before conducting an in camera document review, however, the district court “should require a showing of a factual basis adequate to support a good faith belief by a reasonable person that in camera review . . . may reveal evidence to establish the claim that the crime–fraud exception applies.”

The company and its president argued that the court should apply a higher standard before conducting an in camera oral examination because, unlike documents that memorialize statements, a witness’s memory is subject to inaccuracies. The court noted that “the pliability of a witness’s memory is a substantial one” because of “dangers of inaccuracy and untrustworthiness in probing into the memory of an attorney regarding past communications that do not occur with documented communications.”

But with little explanation, the Court expressed its confidence that district courts “will be able to question an attorney witness in a way that ensures that the attorney accurately recounts the communications with the client.” So, the Court held that the Zolin document standard applies equally to determine whether to examine a witness in camera.

Application of Crime–Fraud Exception

The crime–fraud exception applies only where the client was committing or intending to commit a crime or fraud at the time he consults an attorney. The exception does not apply where the client consults the attorney and later forms the criminal or fraudulent intent.  And the attorney’s advice must further the crime, not simply relate to the crime. To be “in furtherance” of a crime, the attorney’s advice must advance, or the client must intend for the advice to advance, the client’s criminal or fraudulent purpose.  Merely informing a client of the criminality of the proposed action does not invoke the exception; rather, the client must misuse or intend to misuse the attorney’s advice.

The grand jury was investigating whether the company and its president violated the FCPA by paying significant sums to the sister of an official with a United Kingdom bank from which the company was seeking a financial investment. The president informed the attorney that he planned to pay the bank official to ensure that the financial outlay moved swiftly, but the attorney advised the president not to make the payment.

The Third Circuit upheld the district court’s finding that this communication fell within the crime–fraud exception. Although noting that this was a “close case,” the district court found that the president used the attorney’s advice regarding direct payment to the bank official to circumvent the FCPA by making the payment to the official’s sister. The court applied the crime–fraud exception and required the attorney to testify before the grand jury about his confidential, privileged conversations with his client.