KKR-Kirkland Email Ruling Shows Legal Privilege Is No Guarantee

That federal prosecutors successfully obtained and reviewed communications between the private equity firm KKR & Co. and its lawyers at Kirkland & Ellis should hardly come as a surprise to any practitioner in high-stakes, high-profile litigation.

A party can commit fraud by repeated and intentional efforts to conceal, manipulate records, or produce misleading records. An opposing party can ask a court (without notifying the other side) for the withheld materials, including otherwise attorney-client privileged communications. The court can compel this review under the crime-fraud exception, an important but oft-relied-upon deviation from the attorney-client privilege established by the US Supreme Court in 1824.

KKR, like many other companies, must submit filings to the US government for antitrust review of its acquisition activity. Its counsel should be prepared for the government to demand materials. The government would ask any court for attorney-client privileged communications discussing the relevant documents.

Professional ethics rules and court opinions across the country increasingly are being remodeled to ensure lawyers aren’t effectively functioning as shields for alleged fraudulent conduct by clients.

Crime-Fraud Exception

The basis for attorney-client privilege is unfettered communication, so attorneys can give fully informed legal advice. There is no such legitimate interest when the communication or advice intends to further the commission of a crime or fraud.

In numerous federal jurisdictions, a party seeking to invoke the crime-fraud exception must at least demonstrate there is probable cause to believe that a crime or fraud has been attempted or committed and that the communications furthered it.

The exception applies to both the attorney-client privilege and the work product doctrine. It also applies even if the attorney is unaware that his advice is sought in furtherance of a crime or fraud. There is no need to show that a lawyer intentionally assisted in these efforts or was even aware of a client’s objectives. It’s simply enough to find that the lawyer was an instrument of the fraud.

In the instance of KKR, the government didn’t need to show, and the court didn’t need to find, that the lawyers were complicit in the alleged conduct for a court to rule that the crime-fraud exception applied. In accepting the application on an ex-parte basis, the court agreed with the government’s argument that giving notice to KKR and its counsel likely would have endangered the materials they sought.

Important Steps

Attorneys involved in mergers and acquisitions can take the following actions as they navigate the exception:

Counsel M&A clients to follow the letter and spirit of the law. The purpose of the Hart-Scott Rodino filings to the Federal Trade Commission and Justice Department is to allow antitrust authorities to review transactions for potential competitive harm before they’re completed.

As of March, pre-2025 HSR filing rules are in effect, following a US Court of Appeals for the Fifth Circuit decision that invalidated the FTC’s expanded rules. This reinstated prior, less burdensome reporting framework, which primarily requires standard revenue data, documents prepared for officers and directors relating to competition, as well as basic structural information.

Insofar as competitive harm information is in a client’s hands, such information should be considered part of the overall submission, with the lawyers attempting to mitigate harm with arguments about the benefit of the M&A activity. Omitting such information is likely to be fodder for the sorts of ex-parte applications indicated in the KKR situation.

Give clear legal advice to the client. M&A transactions are intense. Clients are reluctant to hear about potential roadblocks to completing a transaction; they want solutions. There is increased momentum from ethics rulemaking bodies pushing lawyers to be clear with clients about legal requirements. Such clarity mitigates situations where the lawyer can be held as an unwitting instrumentality in a fraud.

For example, revisions to ABA Model Rule 1.16 in 2023 impose a duty on the lawyer to do diligence into representation at the time of the engagement and throughout the representation, and mandates withdrawal if the client seeks to use or persists in using the lawyer’s services to commit or further a fraud. This ethical obligation applies throughout the M&A transaction life cycle.

Even scenarios where the crime-fraud exception is applied, a lawyer will want a reviewing court to hold that the lawyer’s advice wasn’t ambiguous and couldn’t be viewed to facilitate fraudulent conduct.

Structure communications to protect the attorney-client privilege. Privilege can be undermined in numerous ways. Attorneys and clients inadvertently can waive privilege by including an unrelated third-party on an email or in a critical meeting. An important closing memo containing sensitive antitrust discussions might end up with a marketing person who uses part of the document to draft a news release about the pending deal.

As alleged in the KKR situation, communications with the lawyer might be used to further a plan to conceal information that should be reported to the government.

The crime-fraud exception now poses a material risk at every stage of the M&A transaction lifecycle. During the pre-deal phase, counsel must ensure competitive harm analysis, and disclosure decisions are documented with clear legal reasoning.

During documentation and filing, communications between deal counsel and the client should be explicit and contemporaneous about what information is material and why certain disclosures are required. This creates a record that demonstrates legal judgment rather than strategic omission.

Looking Ahead

Privilege becomes most vulnerable post-closing, when investigations intensify and regulators seek to reconstruct deal-phase decision-making. Communications that appear to reflect counsel’s assistance in withholding or characterizing information (even inadvertently) invite ex-parte applications and crime-fraud exception challenges.

To protect both the transaction and the firm, deal counsel must establish clear protocols now, documenting the business rationale for all material disclosures and omissions, and ensuring that every communication reflects meaningful legal advice rather than transaction facilitation. The difference between privilege and exposure often turns on decisions made in the deal room, not the courtroom.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Derrelle Janey is a partner at Olshan Frome Wolosky.

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