Grand Jury Subpoena Duces Tecum Served Upon Shargel, In re, 1448

Decision Date13 August 1984
Docket NumberD,No. 1448,1448
Parties16 Fed. R. Evid. Serv. 519 In re Grand Jury Subpoena Duces Tecum Served Upon Gerald L. SHARGEL, Esq. John DOE, Intervenor-Appellant, v. UNITED STATES of America, Appellee. ocket 84-1156.
CourtU.S. Court of Appeals — Second Circuit

Edward M. Shaw, New York City (Peter A. Chavkin, Stillman, Friedman & Shaw, P.C., New York City, of counsel), for intervenor-appellant.

Walter S. Mack, Jr., New York City (Paul Shechtman, Asst. U.S. Atty., Rudolph W. Giuliani, U.S. Atty. for the S.D.N.Y., New York City, of counsel), for appellee.

Before OAKES and WINTER, Circuit Judges and MISHLER, District Judge. *

WINTER, Circuit Judge:

John Doe, on behalf of himself and five other clients of Gerald L. Shargel, Esq., appeals from Judge Lasker's order denying a motion to quash a grand jury subpoena duces tecum requiring Mr. Shargel to produce records of all fee arrangements or property transfers from, to, or on behalf of ten named individuals, six of whom invoke the attorney-client privilege.

We affirm.

BACKGROUND

On March 5, 1984, a federal grand jury sitting in the Southern District of New York issued the subpoena in question requiring On April 26, 1984, Judge Lasker denied the motion to quash. John Doe, one of Mr. Shargel's clients, intervened to appeal from Judge Lasker's order. We granted a stay pursuant to Fed.R.App.P. 8(a) and expedited the appeal.

                inter alia, that Mr. Shargel produce records of any monies or property transferred to him by or on behalf of ten named individuals, eight of whom have been indicted for violating the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Secs. 1961 et seq.  (West Supp.1984).  The government states that the information is sought as evidence of "unexplained wealth," tax law violations, and payments of legal fees by "benefactors."    In moving to quash the grand jury subpoena, Mr. Shargel averred that (i) he has provided legal representation to eight of the ten individuals;  (ii) he has provided legal representation to six of those eight in connection with one or more of the acts named in the recently filed RICO indictment and that those six consulted him for legal advice about those acts well before any formal proceedings had been instituted;  and (iii) as to the remaining two individuals his representation concerned other matters in which they had already been publicly charged. 1   Mr. Shargel argued, inter alia, that the requested information fell within the attorney-client privilege because:  (i) he is a prominent criminal law specialist, and the disclosure of the identity of an individual consulting him would in effect divulge the communication "I have a criminal problem";  and (ii) the fact that each client consulted him shortly after the alleged events underlying the RICO indictment would support an inference of concerted activity
                
DISCUSSION

The underlying theory of the attorney-client privilege is

that encouraging clients to make the 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, 403, 96 S.Ct. 1569, 1577, 48 L.Ed.2d 39 (1976). Since the privilege prevents disclosure of relevant evidence and thus impedes the quest for truth, a distinguished commentator has said that it must "be strictly confined within the narrowest possible limits consistent with the logic of its principle." 8 J. Wigmore, Evidence Sec. 2291, at 554 (McNaughton rev. ed. 1961).

We have consistently held that client identity and fee information are, absent special circumstances, not privileged. Colton v. United States, 306 F.2d 633, 637-38 (2d Cir.1962), cert. denied, 371 U.S. 951, 83 S.Ct. 505, 9 L.Ed.2d 499 (1963), United States v. Pape, 144 F.2d 778, 782 (2d Cir.), cert. denied, 323 U.S. 752, 65 S.Ct. 86, 89 L.Ed. 602 (1944). This result follows from defining the privilege to encompass only those confidential communications necessary to obtain informed legal advice. This definition, which focuses upon facilitating the role of the lawyer as a professional advisor and advocate, is to be distinguished from the so-called "incrimination rationale," which focuses upon whether the materials sought may be used as evidence against the client. 2 Compare Matter of Witnesses Before the Special March 1980 Grand Jury, 729 F.2d 489, 492-94 (7th Cir.1984) with In re Grand Jury Proceedings (Pavlick), 680 F.2d 1026 (5th Cir.1982). See also J. Weinstein & M. Berger, Evidence, p 503(a)(4). While the attorney-client privilege historically arose at the same time as the privilege against self-incrimination, it was early established that the privileges had distinct policies and that the "point of honor"--the attorney's reluctance to incriminate his client--was not a valid reason to invoke the attorney-client privilege. 9 W. Holdsworth, A History of English Law, at 201-02 (1926).

The goal of enabling attorneys to offer informed professional advice and advocacy cannot be accomplished if courts may compel disclosure of communications between the client and attorney necessary to the provision of such services. Absent the privilege, an attorney could not even appraise the risk to the client of such a communication until it occurs. The attorney must thus decide early in the course of consultation whether to warn the client against communications which, however necessary to the rendering of competent legal advice, might be disclosed to an adversary in litigation. Lawyers would routinely have to choose between forgoing information indispensable to the provision of informed and competent legal representation or hearing the information and exposing the client to risk of subsequent disclosure to an adversary. Inadequate legal counsel would fall upon the innocent as well as upon the guilty and would in the long run impair the ability of courts to administer justice fairly. The privilege thus spares attorneys the necessity of making such Hobson's choices and protects the system of justice generally by allowing the client to shield confidential communications made in the course of seeking legal advice.

Absent special circumstances, disclosure of the identity of the client and fee information stand on a footing different from communications intended by the client to explain a problem to a lawyer in order to obtain legal advice. To be sure, the fact of consultation and the payment of a fee may be preconditions to seeking legal advice, and we would be less than candid not to concede that the lack of a privilege against disclosure of the fact of an attorney-client relationship may discourage some persons from seeking legal advice at all. Nevertheless, a general rule requiring disclosure of the fact of consultation does not place attorneys in the professional dilemma of cautioning against disclosure and rendering perhaps ill-informed advice or learning all the details and perhaps increasing the perils to the client of disclosure.

Where no such dilemma is created for the lawyer, information is not protected by the privilege even though the client may strongly fear the effects of disclosure, including incrimination. Professionally competent and informed advice can be rendered by an attorney even though he or she must disclose that a fee was a gem suspected to have been recently stolen, currency with certain serial numbers, or a sum far in excess of the client's reported income. Compare United States v. Jeffers, 532 F.2d 1101, 1115 (7th Cir.1976) with In re Grand Jury Proceedings (Jones), 517 F.2d 666, 671 (5th Cir.1975). In the instant case, the government seeks fee information as evidence of unexplained wealth which may have been derived from criminal activity, United States v. Barnes, 604 F.2d 121, 146 (2d Cir.1979), cert. denied 446 U.S. 907, 100 S.Ct. 1833, 64 L.Ed.2d 260 (1980) and as evidence of the violation of the tax laws. 3

It seems evident to us that a broad privilege against the disclosure of the identity of clients and of fee information might easily become an immunity for corrupt or criminal acts. See McCormick, Evidence Sec. 90 at 187 (2d ed. 1972) ("One who reviews ...

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