Tom Crone, who represented the now-defunct News of the World, testified before the Leveson Commission, The Daily Telegraph reported. Crone said he brought the e-mail, which said hacking was "rife," to a meeting with Murdoch in 2007 to discuss a settlement with soccer star Gordon Taylor.
The scandal about phone hacking exploded this year when The Guardian reported News of the World hacking extended beyond members of the royal family and celebrities to crime victims and their families. Outrage over allegations a private detective hacked into the cellphone of a missing schoolgirl who was later found dead led Rupert Murdoch to shut the venerable tabloid.
James Murdoch has said he did not realize how widespread the practice was until this year.
The Leveson Commission is considering whether Britain needs stricter regulation of the news media.