In re Criminal Investigation No. 1/296X

CHASANOW, Judge. This case involves the issue of whether an attorney may refuse to comply with a grand jury subpoena duces tecum which seeks the records of the attorney’s fees paid by a named current client. I. The Anne Arundel County Grand Jury has been conducting a criminal tax investigation of R.W. 1 since March, 1993. The investigation is part of the Attorney General’s “narco-tax” ⁴ program that targets known and suspected drug dealers for income tax investigation and, if warranted, prosecution.

The investigation utilizes the “net worth” method of accounting to expose individuals who expend more than the incomes reported on their tax returns. During this inquiry, the grand jury issued a subpoena duces tecum to M. Cristina Gutierrez, a member of the Maryland bar. The subpoena requested records of the attorney’s fees that R.W. paid to Gutierrez. Gutierrez initially was retained to represent R.W. in a narcotics case as well as state and federal forfeiture actions, all of which were pending when this investigation commenced.

Apparently she also is representing R.W. in the tax investigation for which the subpoena was issued. Gutierrez filed a motion to quash the subpoena in the Circuit Court for Anne Arundel County on the grounds that compelling an attorney to divulge fee information pertaining to a current client would violate the attorney-client privilege and the Sixth Amendment right to counsel. She also complained that releasing such information would result in a “chilling effect” on the relationship between counsel and her client. On October 8, 1993, Judge Bruce C. Williams issued a Memorandum Opinion and Order “staying] the enforcement of the subpoena until Ms. Gutierrez’s representation of her client has terminated.” Judge Williams based his decision, in part, on this potential “chilling effect” and its threat to the sanctity of the attorney-client relationship.

The State filed a Motion for Reconsideration that was denied by the circuit court. Thereafter, the State filed a Notice of Appeal to the Court of Special Appeals. Prior to the intermediate appellate court’s consideration of the case, we issued a writ of certiorari. When the circuit court delayed the enforcement of the subpoena until the termination of Ms. Gutierrez’s “representation of her client,” the court in effect permanently denied enforcement of the subpoena because as long as the tax investigation continues it is reasonable to assume that Ms. Gutierrez’s representation of R.W. also will continue.

There ⁵ fore, the order denying enforcement of the subpoena was an appealable final order. Although this is a case of first impression in Maryland, it is fundamentally an extension of our holding in In re Criminal Investigation No. 1/242Q, 326 Md. 1 , 602 A.2d 1220 (1992). In that case, we held that information pertaining to fees paid by a former client who was the subject of a tax investigation was not protected. Gutierrez attempts to distinguish the instant case from In re Criminal Investigation No. 1/242Q on the grounds that R.W. is a current client rather than a former client.

II

Attorney-Client Privilege We fully recognize the importance of the attorney-client privilege and its close relationship with the constitutional rights pertaining to the effective assistance of counsel. As we said in State v. Pratt, 284 Md. 516 , 398 A.2d 421 (1979), “[w]hile never given an explicit constitutional underpinning, the privilege is, nevertheless, closely tied to the federal, as well as this State’s, constitutional guarantees of effective assistance of counsel and could, if limited too severely, make these basic guarantees virtually meaningless.” (Emphasis added). 284 Md. at 520 , 398 A.2d at 423 . Initially, it has been suggested that, prior to issuing a subpoena for an attorney’s fee records, we should require the State to make a preliminary showing of necessity. No similar requirement exists for other grand jury subpoenas, and there is no reason why courts should create a pre-subpoena disclosure requirement for these records.

In In re Grand Jury Subpoena Served Upon Doe, 781 F.2d 238 (2d Cir.1985), cert. denied, 475 U.S. 1108 , 106 S.Ct. 1515 , 89 L.Ed.2d 914 (1986), the court stated the following: “To create new standards for obtaining fee information at the grand jury stage risks unacceptable interruption of the ⁶ grand jury process and inevitable probing into what information the grand jury already has in order to determine whether a heightened ‘need’ standard has been met. To allow a grand jury target to challenge the subpoena on the basis of a ‘need’ requirement would seriously jeopardize the secrecy of the proceeding and the grand jury’s investigative functions.” 781 F.2d at 248 . We reject the suggestion that, prior to issuing a subpoena for attorney fee records, the State should make a preliminary showing of necessity. In determining whether the fee information pertaining to a current client is protected by the attorney-client privilege, we should begin with our recent holding in In re Criminal Investigation No. 1/242Q, supra.

In that case, the Anne Arundel County Grand Jury issued a subpoena duces tecum to William H. Murphy, Jr., Esquire, commanding him to reveal fee information regarding two former clients whom the grand jury was investigating for possible violations of Maryland tax law. Mr. Murphy moved to quash the subpoena on the basis that the information was privileged and confidential. The Circuit Court for Anne Arundel County granted Mr. Murphy’s motion and the State appealed. This Court granted certiorari before the Court of Special Appeals addressed the question.

After explaining that the attorney-client privilege, and not the Rules of Professional Conduct, governs the disclosure of an attorney’s fees, we proceeded to discuss whether the attorney-client privilege would shield Mr. Murphy from disclosing such • information. We first recognized that “[t]he overwhelming weight of authority holds that the attorney-client privilege is generally not violated by requiring disclosure of the payment of attorney’s fees and expenses.” In re Criminal Investigation No. 1/242Q, 826 Md. at 7, 602 A.2d at 1222 . See, e.g., In re Osterhoudt, 722 F.2d 591, 593 (9th Cir.1983); In re Grand Jury Matter, 926 F.2d 348 , 351 (4th Cir.1991). We then discussed, without adopting, three exceptions to this general rule which have received varying degrees of support in the federal court system.

See In re Criminal Investigation No. 1/242Q, 326 Md. at 7-10 , 602 A.2d at 1223 - ⁷ 24. We concluded that none of these exceptions was applicable to the facts of that case and therefore, even if we had adopted one or more of the exceptions, the grand jury could still compel disclosure of fees paid by a former client. The “last link” exception, primarily used in situations where the information sought is the client’s identity, was obviously inapplicable because Mr. Murphy’s clients were known to the state. See In re Criminal Investigation No. 1/242Q, 326 Md. at 8-9 , 602 A.2d at 1223 .

Another exception, the “communication” exception, protects information that is considered “ ‘tantamount to a confidential professional communication.’ ” In re Criminal Investigation No. 1/242Q, 326 Md. at 9 , 602 A.2d at 1224 (quoting Tornay v. United States, 840 F.2d 1424, 1428 (9th Cir.1988)). In In re Criminal Investigation No. 1/242Q, we offered two reasons why this exception would not apply. First, payment of a fee is a nonassertive act that is not intended to communicate information. Second, disclosure of the amount and method of the payment of a fee revealed nothing about the advice sought by the clients or given by the lawyer in that case. 326 Md. at 10 , 602 A.2d at 1224 .

See also United States v. Grand Jury Matter, 789 F.Supp. 693, 696 (D.Md.1992) (Hargrove, J.) (applying similar reasoning). The final exception that we considered was the “legal advice” exception. According to the Ninth Circuit, this exception applies where “disclosure of the information would implicate the client in the very matter for which legal advice was sought in the first case.” In re Grand Jury Subpoenas Duces Tecum (Marger/Merenbach), 695 F.2d 363, 365 (9th Cir.1982). We determined that the exception did not apply in In re Criminal Investigation No. 1/242Q because the clients did not retain Mr. Murphy for the tax investigation, and therefore the advice sought had nothing to do with the tax investigation.

In the instant case, Ms. Gutierrez does not claim privilege based on the “last link” or the “communication” exception. She does argue, however, that the “legal advice” exception should be adopted in the case at bar, and that this exception ⁸ would protect the fee information which the State sought by-subpoena. The facts in In re Criminal Investigation No. 1/242Q were quite similar to the facts in the instant case, and this Court held the attorney fee information was not privileged. The trial judge in the instant case sought to distinguish our prior holding on the basis that the attorney in our prior case no longer represented the target of the investigation, whereas in the instant case, she still does.

The decision in In re Criminal Investigation No. 1/242Q did involve a former client, but our holding was not based on that fact. The principle behind the attorney-client privilege—protecting confidential communications—applies to former and current clients. The attorney-client privilege does not cease with the termination of the relationship. In fact, the privilege is theoretically perpetual.

See 1 McCormick on Evidence § 94, at 348 (John W. Strong ed., 4th ed. 1992) (“The accepted theory is that the protection afforded by the privilege will in general survive the death of the client.”); 5 Lynn McLain, Maryland Evidence § 503.14, at 495 (1987) (stating that the privilege applies even after the attorney-client relationship has ended, “indeed, even after the client’s death”). In Harrison v. State, 276 Md. 122 , 345 A.2d 830 (1975), this Court reiterated that “confidential communications are not to be revealed at any period of time, either before or after the suit has been brought to an end, or in any other case; for, as to all such matter[s], his mouth is shut forever.” 276 Md. at 132 , 345 A.2d at 836 (internal quotation marks and attributions omitted) (emphasis omitted). Therefore, the attorney-client privilege extends beyond the duration of the relationship, rendering the distinction between former and current clients insignificant with respect to the privilege. Gutierrez suggests that if the general rule is that the attorney-client privilege does not prevent disclosure of a present client’s fee information, then “the Court of Appeals should adopt the ‘legal advice’ exception and hold that it is applicable to the instant case.” The legal advice exception would protect ⁹ fee information under the attorney-client privilege where “ ‘disclosure of the information would implicate the client in the very matter for which legal advice was sought in the first case.’ ” In re Criminal Investigation No. 1/242Q, 326 Md. at 7 , 602 A.2d at 1223 (quoting In re Grand Jury Subpoenas Duces Tecum (Marger/Merenbach), 695 F.2d at 365 ).

A similar issue was decided by the Fourth Circuit in In re Grand Jury Matter, supra, where a grand jury requested fee records from attorneys whose client was under investigation for possible income tax violations. The attorneys were representing the client in connection with the income tax violations being investigated, and they claimed that they were excused from producing the documents because the fee information would implicate the client in the same criminal activity for which he sought legal advice. The Fourth Circuit, however, held that the attorney-client privilege did not preclude the attorneys from producing the fee documents. Judge Murnaghan, writing for the three judge panel, discussed and then rejected the legal advice exception.

He explained as follows: “[The attorneys] argue for the application of an exception that recognizes a privilege ‘ “where the person invoking the privilege can show that a strong probability exists that disclosure of such information would implicate that client in the very criminal activity for which legal advice was sought.” ’ [United States v.] (Under Seal), 774 F.2d [624,] 628 [ (4th Cir.1985), cert. denied, 475 U.S. 1108 , 106 S.Ct. 1514 , 89 L.Ed.2d 913 (1986) ] (quoting United States v. Hodge and Zweig, 548 F.2d 1347, 1353 (9th Cir.1977)). Whatever label the attorneys give to their supposed exception, it involves recognizing a privilege for information implicating the client, regardless of whether it is a confidential communication. Such a privilege receives little support from current case law. The attorneys have suggested that although United States v. Ricks, 776 F.2d 455 (4th Cir.1985), questioned the validity of the exception, nonetheless, the Fourth Circuit intends to apply it.

We disagree. In Ricks , Chief Judge Harrison L. Winter recognized that Hodge & Zweig, the ¹⁰ case giving rise to the ‘exception,’ ‘may no longer be good law in the Ninth Circuit. See In re Osterhoudt, 722 F.2d 591, 593 (9th Cir.1983). Certainly its purported teaching has been rejected by other circuits.’ 776 F.2d at 465 (citing decisions by the Second, Sixth, Seventh, and Eleventh Circuits).

The attorney-client privilege protects only confidential communications. ‘Fee arrangements usually fall outside the scope of the privilege because such information ordinarily reveals no confidential professional communication between attorney and client, and not because such information may not be incriminating.’ In re Osterhoudt, 722 F.2d at 593 ; see Ricks, 776 F.2d at 465 . An exception such as the one suggested by the attorneys rests on an unconvincing rationale.” (Footnote omitted). In re Grand Jury Matter, 926 F.2d at 352. The legal advice exception has been expressly rejected by many courts.

See, e.g., In re Grand Jury Subpoenas, 803 F.2d 493, 497 (9th Cir.1986) (“It is not the law that the requisites of the attorney-client privilege are met whenever evidence regarding the fees paid the attorney would implicate the client in a criminal offense regarding which the client sought the attorney’s legal advice.”), corrected, 817 F.2d 64 (9th Cir.1987); United States v. Ricks, 776 F.2d 455, 465 (4th Cir.1985) (discussing the legal advice exception and noting that “its purported teaching has been rejected by other circuits”); In re Osterhoudt, 722 F.2d at 592-93 . We decline to adopt it as an exception to the general rule that attorney fee information is not privileged— especially under the circumstances of the instant case. Gutierrez was retained to represent R.W. in drug and forfeiture cases.