At its root, attorney-client privilege is a simple concept. The idea is that for a lawyer to fairly represent a client, the client must feel that it's safe to communicate all the relevant information necessary without fearing that the attorney will then reveal that information, willingly or unwillingly.
Like many other elements of the legal system, this privilege isn't established in the U.S. Constitution. Nor does it have its origin in any legislation. It's a legal tradition established by precedent in common law. The U.S. and Canadian legal systems, based as they are in English common law, rely on precedent for much of the manner in which they function. That's why cases like Annesley v. Anglesea are considered so crucial. Over the years, as different courts have dealt with issues of attorney-client privilege, they've established a record of precedents that have come to define our modern understanding and use of the privilege [source: The Law Dictionary].
Accordingly, a number of exceptions to the attorney-client privilege have been established. One of the most important of these exceptions is known as the crime-fraud exception. Lawyer and writer David O. Stewart offers an example to illustrate the exception: If, for instance, a client has used a lawyer to set up a phony company that's meant to be a front for some numbers-running operation, then the communications involved in this endeavor are not considered to be protected by attorney-client privilege.
Lawyers frequently do more than offer legal counsel; they also often help clients with business dealings. It's when this happens that things can get, as Stewart notes, "messy." Clients will sometimes claim that any and all dealings with their lawyers should be considered "communicative acts," but courts are "generally skeptical" of that claim, Stewart says. Business is business and the law is the law. The attorney-client privilege is meant to pertain only to legal matters, not business dealings.