How far does privilege go when lawyers apparently have knowledge of a Ponzi scheme? Perhaps not far enough to block a duty to speak, according to an appellate court in Canada, and a McCarthy Tretualt article.
The fact pattern is unusual because the suit at issue is against a law firm that represented both the Ponzi scheme defendants and an investor in a company that was part of a scheme. The investor client sought securities advice related to the businesses in the alleged Ponzi scheme. On review of a pretrial motion to strike, the appellate court held that the case should go forward to trial. According to the appellate court, the facts revealed at trial might result in striking the privilege and holding the lawyers to a duty to speak about what they knew about the Ponzi scheme.
The case truly does involve an unusual fact pattern. On the other hand, that fact pattern is not terribly far removed from a fact pattern in which a law firm provides a generic opinion letter to a client that is part of a Ponzi-scheme. It's more than foreseeable that investors will be offered the opinion letter, and may allege reliance on the opinion letter even though the letter presumably disclaims any intent to allow reliance by third-parties.