The saga builds! To summarize our previous coverage: Navient has turned the tables and sued a plaintiff firm – The Lohman law firm – for allegedly coaching clients to bilk Navient out of millions of dollars.  The alleged scheme: the Lohman firm had students stop paying their debts to Navient (and pay other entities); and gave a word-for-word script for the students to instruct Navient to cease all phone calls to them.  Once students defaulted on their monthly payments, Navient would call about their accounts.  The Lohman firm patiently waited for the phone calls from Navient to synthetically rack up TCPA fines past the debt amount, and eventually would sue Navient. 

The Lohman firm had rained down suits.  Last year, Navient smelt foul play and fired back a lawsuit. Now, Navient is going with both barrels at the Lohman firm in Navient Sols., LLC v. Law Offices of Jeffrey Lohman.  Navient asked for records of the Lohman firms’ communications with their student loan debtor clientele.  The Lohman firm objected and asserted the attorney-client privilege protection.  Navient filed a motion to compel for the attorney-client discussions.  Navient argued it’s entitled to the usually protected info under the ‘crime exception’ to the attorney-client privilege.  Magistrate says, I’ll allow it; the Court agreed.

A crime-fraud exception breaks the attorney-client privilege when communications are made “for the purpose of committing or furthering a crime”.  Lohman’s firm argued that only the attorneys are being accused of committing a fraud, so the crime-fraud exception was inapplicable here.  The Court ruled: “At bottom, it is clear that discovery of the communications at issue, which concern an allegedly sweeping scheme to defraud one of the country’s largest loan servicers at the expense of student loan debtors… would both serve the public good and advance the search for truth. Accordingly, the crime-fraud exception can apply where, as here, the attorney alone purportedly committed a crime or fraud of which the client was a victim.”

The Court did take off sanctions imposed by the magistrate on the Lohman firm for needlessly increasing litigation costs with supplemental briefings. The court noted a new firm has taken over representing the Lohman firm which has recently been complying with discovery, but warned there will be no hesitation to impose future sanctions for frivolous litigation tactics.  Battle won by Navient.  Will keep an eye on this unfolding story.