BEN M. BUTIN—In the midst of an already controversial Supreme Court term, the Court just agreed to hear a case that will greatly impact lawyers nation-wide. On October 3rd, the Supreme Court granted certiorari in In re Grand Jury to resolve a circuit split over whether a communication involving both legal and non-legal advice is protected by attorney-client privilege, when obtaining or providing legal advice was one of the significant purposes behind the communication. Phrased another way, the Court will decide between two different attorney-client privilege standards for analyzing whether dual-purpose communication is privileged: (1) was legal advice a significant/primary purpose of the communications or (2) was the legal advice the primary purpose of the communication.
Before taking a deep dive into the specific facts of the case, it is important to have some context. Attorney-client privilege is the oldest protection of confidential communication known to common law. Its origins are practical and make sense given the attorney-client relationship. Any client, whether a Fortune 500 company or a local minority-owned restaurant, will be reluctant to confide in its lawyer when any potentially damaging information disclosed could be readily obtained by subpoena. Similarly, a lawyer will likely be hesitant to provide the highest quality representation when her communications may not remain confidential.
Specifically, as defined by Fischer v. United States, attorney-client privilege protects against the release of confidential communications between an attorney and her client made to obtain or provide legal advice. Regarding tax-related documents, which are at issue in In Re Grand Jury, tax advice relating to planning and controversy is treated as legal and privileged. However, the preparation of a tax return is unprivileged as it is deemed a non-legal function. But as one can imagine, confusion arises when attorneys communicate with their clients for multiple purposes.
This exact situation may arise as clients occasionally seek advice from lawyers with multiple goals in mind. As a result, lawyers might give advice that is both legal and non-legal in nature. The current state of the law regarding these so-called “dual-purpose” communications remains unsettled across the country—especially concerning tax documents. Two Circuits have announced different and incompatible tests for dual-purpose communications. In the D.C. Circuit, then-Judge Kavanaugh articulated that such a communication is privileged so long as obtaining or providing legal advice was one of the significant legal purposes of the communication. However, in the Seventh Circuit, dual-purpose communications are never privileged no matter how significant the legal purposes, at least in situations involving tax returns. The Ninth Circuit has now added to this split, holding that courts must weight all of the purposes for a communication, and that a communication is only privileged when providing legal advice is the primary purpose of the communication.
With the chessboard set, we can now turn to the specific facts before the Court in In re Grand Jury. The petitioner, a law firm whose name has been redacted, received a grand jury subpoena seeking various tax documents as part of a federal criminal investigation. However, the law firm, citing attorney-client privilege, only partially complied with the subpoena and withheld key documents. The law firm argued the withheld documents were privileged because they were made not only to facilitate the law firm’s preparation of its client’s tax returns, but also to provide its client with legal advice about the client’s taxes.
After reviewing the case, the District Court adopted a formulation of the primary purpose test to review dual-purpose communications, holding that the relevant consideration in dual-purpose communications is whether the primary or predominate purpose of the communication was to seek or provide legal advice. Applying that articulation, the court reasoned that certain tax documents were not privileged, since the primary purpose for their creation was not furnishing legal advice. The Ninth Circuit affirmed the District Court’s holding and refused to adopt the D.C. Circuit’s test since, in its view, the D.C. Circuit’s test was limited to internal investigations and was only relevant when the legal and non-legal purposes were of equal weight. But, the Ninth Circuit never fully answered whether the legal purpose for the disputed communications was still a significant purpose of the communication. The petitioner then filed a writ of certiorari to the Supreme Court.
In preparation for oral arguments, both the California Lawyers Association and the Washington Legal Foundation have filed Amicus briefs in support of the anonymous petitioner. The Petitioner and the Washington Legal Foundation both maintain the Ninth Circuit’s test is unworkable as it will inevitably lead to lengthy and costly litigation to uncover the true primary purpose of any attorney-client communication. Such an intensive fact-finding procedure in the judicial proceeding, the Washington Legal Foundation argues, is in violation of Rule 1’s mandate that courts interpret rules to promote the efficient administration of justice. The California Lawyers Association also stressed that the Ninth Circuit’s balancing requirement will create uncertainty between attorneys and clients and thus impede on attorneys’ ability to advise clients since relevant information may not be disclosed. Both Amicus Briefs argue for an adoption of the D.C. Circuit’s a significant/primary purpose test as the most practical formulation of the test to be applied to attorney-client privilege dual-purpose documents.
While the facts in In re Grand Jury pertain to tax documents, the Ninth Circuit’s requirement that legal advice be the primary purpose of the communication will likely not be limited to tax documents. In September 2022, a California District Court held that emails between Apple’s CEO and its general counsel discussing public revisions of revenue estimates were not privileged since their primary purpose was not legal, but business advice. Despite the lack of protest that many predict will follow after the ruling by the Supreme Court, the outcome will in fact carry broad practical effects for practitioners across the country. Hopefully, regardless of the result, the Court will provide a clear rule that will allow attorneys and clients to have greater certainty regarding the protection of their day-to-day communications.