U.S. Supreme Court to Address Corporate Attorney-Client Privilege: The Petitioner’s Merits Arguments

For the first time in some time, the United States Supreme Court agreed to hear a case involving the corporate attorney–client privilege.  The issue is the proper standard courts should use to determine whether the attorney–client privilege protects dual-purpose communications—those created for legal and non-legal purposes.  In re Grand Jury, No. 21–1397 (U.S.).  The specific question presented is—

Whether a communication involving both legal and non-legal advice is protected by attorney–client privilege where obtaining or providing legal advice was one of the significant purposes behind the communication.

In a series of posts, I’ll follow and comment on the case and final decision.  I previously examined the Court of Appeals’ decision, reviewed the appellant’s petition for writ of certiorari, the government’s opposition, and the supporting amici positions.  In this post, I examine the petitioner’s merits arguments, which you may read in full in its brief, available here.  And I later review position of the fourteen amici parties and the government’s opposition.

Dual-Purpose Communications are Inevitable

The petitioner set the table by emphasizing that a robust application of the attorney–client privilege promotes vital public interests. The privilege stimulates legal compliance by encouraging clients to provide candid information so that lawyers can provide them with sound legal advice.  A narrow application of the privilege, on the other hand, deters clients from providing that needed unhindered information.

And it is inevitable, the petitioner argued, that communications between clients and lawyers will be intertwined with legal and non-legal advice.  These dual-purpose communications arise across the legal field.  For example, corporate lawyers advise clients on legal structures but also business risks associated with those structures. Probate lawyers prepare legal instruments for elderly clients but also ask questions related to health and medical care.  A robust application of the privilege should protect these dual-purpose communications.

The Court Should Adopt the Significant Purpose Test

The petitioner urged the Court to consider two principles when deciding this case.  First, the Court should avoid a restrictive privilege interpretation that would discourage attorney–client communications and thereby frustrate the privilege’s purpose.  Second, the Court should adopt a rule that is “clear and administrable” so that the privilege comes with predictability.

Applying these two principles, the petitioner argued, the Court should adopt the significant purpose test enunciated in In re Kellogg Brown & Root, 756 F.3d 754 (D.C. Cir. 2014), which you may read about in Significant D.C. Circuit Decision for Attorney–Client Privilege and Internal Investigations.

So long as courts require that a communication’s legal purpose be significant, then this test will neither expand nor contract the privilege’s scope.  The privilege’s proponent must still prove that the significant purpose, but if it does, then whether the communication contains other purposes becomes irrelevant.   The significant purpose provides a higher degree of certainty because it is one standard rather than a standard, like the primary purpose standard, that necessarily invites uncertainty through the weighing and balancing of multiple purposes.

The Primary Purpose Test Will Erode the Privilege

The petitioner argued that the primary purpose provides insufficient protection because it requires trial courts to later determine whether a communication’s legal purpose outweighs other purposes.  It compared this situation to the Supreme Court’s 1981 decision to reject the control-group test in Upjohn Co. v. United States, 449 U.S. 383 (1981), which you may read about in Happy Anniversary, Upjohn!.  Just like the control-group test, which narrows the scope of employees with whom lawyers can have privileged discussions, the primary purpose test is too narrow because it centers on a single primary purpose which often is difficult to find.

Nor can trial courts easily administer the primary purpose test because it requires making a “rigid distinction” between a legal purpose and a business purpose when these purposes are likely overlapping and intertwined. And, quoting then-Judge Kavanaugh’s words in Kellogg, the petitioner stated:

It thus makes no sense to ask whether the purpose was A or B when the purpose was A and B.

The upshot is that requiring trial courts to “disentangle and compare the relative weights of legal and non-legal purposes all but guarantees unpredictable and arbitrary results.”

The Significant Purpose Test Should Apply in the Tax Context

The petitioner, as it must, spent a good portion of its brief to discussing how the significant purpose test would and should apply where the lawyer–client communication involves tax advice.  Anticipating that the government will try to limit the Court’s privilege focus to tax issues, the petitioner argued that—

This Court has never embraced different attorney–client privilege rules for different areas of law, and it should not do so here.

There should not be a “privilege rule” for tax communications and a different “privilege rule” for general-law discussions, the petitioner argued, and adopting two standards would yield “precisely the ‘uncertain privilege’ this Court warned against in Upjohn.”

We will see how the government responds, but a host of amicus parties filed briefs in support of the petitioner’s position.  We will review those next.