Grand Jury Proceeding, Cherney, Matter of, No. 89-1193

• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)
• Writing for the Court: Before CUMMINGS, WOOD, Jr., and FLAUM; FLAUM
• Citation: 898 F.2d 565
• Docket Number: No. 89-1193
• Decision Date: 19 July 1990
• Parties: , 30 Fed. R. Evid. Serv. 46 In the Matter of GRAND JURY PROCEEDING, Grand Jury 1988-2 David CHERNEY. Appeal of UNITED STATES of America.

Page 565

898 F.2d 565 58 USLW 2618, 30 Fed. R. Evid. Serv. 46 In the Matter of GRAND JURY PROCEEDING, Grand Jury 1988-2
David CHERNEY.
Appeal of UNITED STATES of America. No. 89-1193. United States Court of Appeals,
Seventh Circuit. Argued Jan. 11, 1990.
Decided March 27, 1990.
As Amended March 29, 1990.
Rehearing and Rehearing En Banc Denied July 19, 1990.

Page 566

Ralph M. Friederich, Asst. U.S. Atty., Office of the U.S. Atty., East St. Louis, Ill., for plaintiff-appellant.

Rick Halprin, Chicago, Ill., for defendant-appellee.

Benjamin S. Waxman, Jeffrey S. Weiner, Weiner, Robbins, Tunkey & Ross, Miami, Fla., for amicus curiae.

Before CUMMINGS, WOOD, Jr., and FLAUM, Circuit Judges.

FLAUM, Circuit Judge.

David Cherney was informed by the government that he would be subpoenaed to testify before the Grand Jury for the Southern District of Illinois regarding the identity of the individual who paid legal fees to him to represent an individual charged in a drug conspiracy. Cherney filed a motion to quash the subpoena claiming that the fee payer's identity was protected by the attorney-client privilege. After reviewing relevant documents in camera, the district court held that the information was protected by the privilege and granted the motion to quash. The government appeals. We affirm.

I.

David Cherney, the appellee, is an attorney. In 1985 he represented an individual named Jack Hrvatin in a conspiracy-narcotics trial in the District Court for the Southern District of Illinois. Hrvatin's legal fees were paid by an unknown third party. The identity of the fee payer is at the center of this dispute as apparently the fee payer was also involved in the drug conspiracy and consulted Cherney for legal advice concerning such involvement. Following Hrvatin's conviction, Cherney was advised by the United States Attorney's Office that he was to be served with a subpoena to appear before the 1988-2 Grand Jury for the Southern District of Illinois to answer questions regarding the identity of the individual who paid Cherney to represent Hrvatin. Cherney then filed a motion to quash the subpoena pursuant to Fed.Crim.P.R. 17(c) on the grounds that the identity of the fee payer was protected by the attorney-client privilege. Both parties briefed the issue and Cherney submitted documents for in camera review. The district

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court found that the in camera documents submitted by Cherney established that the fee payer sought personal legal advice from Cherney in advance of Cherney's representation of Hrvatin. The district court then granted the motion to quash, holding that the fee payer's identity was protected by the attorney-client privilege. The government appeals claiming that fee information is generally not protected by the privilege, and that the limited exception to this rule where the disclosure of such information would reveal confidential communications is inapplicable to this case.

The underlying theory of the attorney-client privilege is based on the premise "that encouraging clients to make fullest disclosure to their attorneys enables the latter to act more effectively, justly, and expeditiously, and that these benefits outweigh the risks posed by barring full revelation in court." J. Weinstein & M. Berger, Evidence, p 503(02) 1982. See Fisher v. United States, 425 U.S. 391, 405, 96 S.Ct. 1569, 1578, 48 L.Ed.2d 39 (1976). Because "the privilege has the effect of withholding relevant information from the factfinder, it applies only where necessary to achieve its purpose." Fisher, 425 U.S. at 403, 96 S.Ct. at 1577. The attorney-client relationship itself does not create a "cloak of protection draped around all occurrences and conversations which have any bearing, direct or indirect, upon the relationship of the attorney with his client." United States v. Goldfarb, 328 F.2d 280, 281-82 (6th Cir.), cert. denied, 377 U.S. 976, 84 S.Ct. 1883, 12 L.Ed.2d 746 (1964). Rather, the privilege protects only confidential communications by a client to an attorney made in order to obtain informed legal assistance. Fisher, 425 U.S. at 403, 96 S.Ct. at 1577. As a general principle, "information regarding a client's fees is not protected by the attorney-client privilege because the payment of fees is not a confidential communication between the attorney and the client." Matter of Witnesses Before Special March 1980 Grand Jury, 729 F.2d 489, 491 (7th Cir.1984); Matter of Walsh, 623 F.2d 489, 494 (7th Cir.), cert. denied, 449 U.S. 994, 101 S.Ct. 531, 66 L.Ed.2d 291 (1980). Payment of fees is incidental to the attorney client relationship and does not usually involve the disclosure of confidential communications arising from the professional relationship. Matter of Witnesses, 729 F.2d at 491. In certain situations, however, the disclosure of the identity of the fee payer may reveal the substance of a confidential communication and thus warrant protection under the privilege. Id.; See also Baird v. Koerner, 279 F.2d 623 (9th Cir.1960). Here, the...