Volkswagen, Legal Advice and the Criminal-Communication Exclusion to Confidentiality and Privilege
In my last SLAW column I commented on the Volkswagen scandal and the classic ethics question: where were the lawyers? In this column I want to use that scandal to consider a more specific legal ethics issue: when lawyers are consulted about a criminal course of conduct, under what circumstances is that consultation confidential and privileged? This question relates to the scope of the criminal-communications exclusion to privilege, and the ability of a counter-party in litigation to gain access to solicitor-client communications. But it also goes to the ability of lawyers who are consulted in those circumstances to blow the whistle on their client’s criminal activities. Because if communications are neither confidential nor privileged, then the lawyer can blow the whistle to the same extent as any other employee (in the case of in-house counsel) or citizen (in the case of outside counsel).
The criminal-communications exclusion to privilege (and, I have argued, to solicitor-client confidentiality – Understanding Lawyers’ Ethics in Canada (2011) pp. 114-115) excludes information communicated to the lawyer which is in itself criminal, or which uses the lawyer’s services to further a criminal purpose. So where a client’s communication to a lawyer is fraudulent – e.g., a deliberately false statement on an application for legal aid (Descoteaux v Mierzwinski [1982] 1 SCR 860) – that communication is not privileged. Or where a lawyer has assisted a client to commit a criminal scheme – e.g., money-laundering (R v Rosenfeld 2009 ONCA 307) – the communications between the lawyer and client in furtherance of that criminal scheme are also not privileged.
The criminal-communications exclusion does not, though, exclude from the lawyer’s duty of confidentiality a bona fide effort by a client to discover whether an activity is lawful or not, even if that activity turns out to have been criminal. So if a client asks a lawyer for advice on the legality of a course of conduct, the lawyer advises that the conduct is lawful, but the court later determines that the conduct was in fact criminal, then those communications are nonetheless confidential and privileged (R v Campbell [1999] 1 SCR 565).
The challenge normally identified in relation to the criminal-communications exclusion is with respect to just how unlawful the activity needs to be before the exclusion is triggered. In his excellent treatise Solicitor-Client Privilege, Adam Dodek explores the case law that considers whether the activity must be criminal/fraudulent, or merely unlawful, to be excluded, concluding that at minimum the unlawful activity must involve intentionality for it to fit within the exclusion – e.g., unintentional torts and breach of contract would not fit within the exclusion (Dodek (2014) §3.94).
But at least one of my imagined scenarios involving the Volkswagen lawyers raises a different challenge with respect to the scope of the exclusion. In that hypothetical Volkswagen approached its legal counsel for advice, and the counsel advised that the installation of the defeat devices in the vehicles was clearly unlawful and potentially criminal. Volkswagen ignored the advice and installed the defeat devices anyway. The lawyers pursued internal channels to get the company to change direction, but it refused.
In that scenario the client has attempted to get the lawyers to assist it in a scheme that is at best intentionally wrongful and at worst fraudulent or criminal. They have ignored the legal advice they received, so there is a good case to be made that they were not making a bona fide attempt to get legal advice, but were merely hoping that they could get legal cover for their unlawful activities. They did not manage to do so, but that was arguably their intention. If a client came in and asked a lawyer to engage in money-laundering, would the lawyer’s refusal to do so change the exclusion of that request from the privilege? I wouldn’t have thought so – the client in that case has sought a criminal conspirator not a lawyer, and the lawyer has no obligation of professional secrecy in those circumstances. Once a client has deliberately tried to involve the lawyer in a course of intentional wrongdoing, even if only for advice on how to accomplish it, there seems no particular reason to have the classification of those communications as privileged depend on the nature of the advice that the lawyer gives.
On the other hand, a request for legal advice is not in itself criminal. And in this hypothetical the lawyer has not assisted the client in the commission of its criminal scheme. To use the words of Justice Binnie in R v Campbell, the lawyer was neither a “dupe [n]or conspirator” (Campbell at para. 62); the lawyer was simply asked for advice and gave it. As Adam Dodek notes, “Clients and lawyers are entitled to discuss whether or not a particular activity or transaction is unlawful without losing the protection of the privilege. As the Supreme Court and other courts have acknowledged, such discussions occur between lawyers and clients every day and are entirely proper subjects of legal advice” (Dodek, Solicitor-Client Privilege, §3.101). It seems troubling, and to have the potential to discourage clients from seeking legal counsel, to have information cease to be privileged simply because a lawyer thought an activity was unlawful but the client disagreed and ignored the lawyer’s advice.
To my mind both perspectives on this issue have merit, which suggests that whether lawyers have a duty of confidentiality in a scenario like this one requires more nuance. Where a client pursues a course of client that his lawyer has advised him is unlawful, whether the communications are excluded from the lawyer’s duty of confidentiality ought to vary with the facts. Specifically, was the conduct clearly unlawful or merely arguably so – did the lawyer, for example, have to weigh different considerations to reach a conclusion or know immediately that the proposed course of conduct was wrongful? How bad was the conduct – was it a serious criminal offence or something less serious? Did the client weigh the lawyer’s advice before ignoring it, or view the lawyer’s advice as irrelevant to its decision?
In a scenario where a client has a clear and serious criminal purpose, and does not weigh the lawyer’s advice, then the criminal communications exclusion would apply. That scenario is more akin to a client who requests that a lawyer assist him with money-laundering than it is like traditional lawyer-client advising. It is not exactly the same – the client is asking for advice not assistance – but it is closer to that end of the continuum. Conversely, if the client’s conduct does not involve serious criminality, and its legality is more ambiguous, then the criminal-communications exclusion ought not to apply. A client ought to have that sort of room to both ask for legal advice and to ignore it without losing the protection of confidentiality and privilege.
Even with that nuance, however, I remain troubled. I am troubled by the thought that a person who is charged with a criminal offence could lose privilege over previous consultations with his lawyer on the grounds that since the conduct was criminal any communications with a lawyer about the conduct would be excluded. But I am equally troubled by the thought that a company who engaged in conduct like Volkswagen’s could use confidentiality and privilege to both shield production of its legal documents and to prevent its lawyers from speaking out to stop their misconduct.
This reveals perhaps the deeper point that more than any other area, the lawyer’s obligation of confidentiality and privilege puts values in conflict, the legal systemic values protected by lawyer confidentiality as against the public values of preventing or punishing serious and willful criminal conduct. When such values conflict, no fully satisfactory answer is likely to present itself.
What if the lawyer(s) didn’t understand the technology nor the implications of the technology and said something to the effect of: “To the best of my understanding what you’re explaining to me appears to be legal.” The client walks away with the belief that their proposal is lawful. Would the lawyer then be found to be condoning the proposed action?
Interesting analysis and highlighting of concerns. Might the likelihood (or certainty) that the behaviour would be ongoing play a factor in terms of whether to exclude a communication on public policy grounds? For instance, in the Volkswagen and money laundering example, if the lawyer is asked for advice about an ongoing scheme and knows or suspects it will go ahead anyway; versus being asked about a one-off illegal act which even if it proceeds is highly unlikely to be repeated.
For Volkswagen, is it also arguable that the risk of severely increased pollution would lead to increased health risks for humanity generally and enough of a chance of serious bodily harm to at least one person e.g. with an impaired respiratory system, might bring it within the scope of matters that may be reported to prevent serious harm? Similar to being asked about illegally dumping toxic waste in a schoolyard could be different from being asked about illegally dumping it in an already-contaminated landfill.
“if communications are neither confidential nor privileged, then the lawyer can blow the whistle to the same extent as any other employee (in the case of in-house counsel) or citizen (in the case of outside counsel)”
I find this a rather shocking conclusion to come to… the duty of loyalty to clients extends not only to confidential information. Forgive me if I have misunderstood.
The duty of loyalty is at the heart of our professional conduct as lawyers. One must balance that duty against very great social harms that such client conduct may represent (as it certainly did in the Volkswagen matter, where the conduct is both shocking to the conscience and productive of great physical harm to the public). But fundamental to our relationship to clients, is our duty of loyalty, to act as their fiduciaries. That a matter ceases to be confidential by rule does not affect that duty; in order to act against it, one must find it imbalanced by another positive duty.
I think, Alice, that this is where your issue with the loss of privilege (from the 2nd last paragraph) can find some purchase. It’s not every day that one’s other positive duties are so substantial that they can override that fiduciary duty.
Also, I would note: if these duties (of loyalty/fiduciary to clients and to other persons or the public at large) come into conflict, a lawyer’s rules of professional conduct will require following the relevant rules regarding conflicts of interest.
And another thing (sorry about the comment string!) is that this is where the lawyer’s duties and those of an ordinary employee or member of the public diverge. Your typical person does not have extensive fiduciary duties towards their employer (a director does, of course, depending on the relevant corporate law) or to most other persons. Our situation with respect to clients, is quite different.
Craig, fair comment on the duty of loyalty. Although I’m not sure it has much purchase here, insofar as the circumstances that would take this out of the confidentiality/privilege would also be such as to take it out of the duty of loyalty. I don’t owe any loyalty to someone who is trying to make me a dupe to their criminal scheme. Further, given how broad confidentiality is, I am in general not sure what purchase the duty of loyalty would have in circumstances where there was no confidentiality at stake. I’m not saying it couldn’t happen, but I’m guessing the circumstances are relatively rare.
And of course do remember that in general citizens and employees have moral obligations not to be disloyal or to tell other people’s secrets. So to say that there is no lawyerly duty here is not to say that there is no complex moral decision to be made about how to proceed.
This brings to mind a short quotation from Follett:
“It may not be unfit that I should repeat an observation I made in the course of the argument, namely, that it is not accurate to speak of cases of fraud contrived by the client and solicitor in concert together, as cases of exception to the general rule. They are cases not coming within the rule itself; for the rule does not apply to all which passes between a client and his solicitor, but only to what passes between them in professional confidence; and no Court can permit it to be said that the contriving of a fraud can form part of the professional occupation of an attorney or solicitor.”
It seems then, that if “what passes” is not professional confidence or is of an hypothetical nature, the question is moot !?
Follett v. Jefferyes, 1 Sim. (N. S.) at 16-17, 61 ER 6