The year 2022 brought us more privilege-related issues and court rulings—some baffling, some concerning, and all educational.  Others published timely articles on a few unsettled privilege questions, which I identify and link in Ideas, Opinions, and Advocacy: Privilege Publications in 2022.  As for judicial decisions, the year 2022 saw the U.S. Supreme Court wade into two significant privilege areas, courts grapple with privilege issues arising in internal investigations, courts concerned with government filter teams, and an unfortunate lawyer suspension for a privilege breach. Let’s review 2022 and learn from it as we anticipate major privilege decisions in 2023.

Attorney-Client Privilege in the U.S. Supreme Court

In October 2022, the U.S. Supreme Court agreed to hear a case about the scope of the corporate attorney-client privilege. The question is whether the privilege protects so-called dual-purpose communications–those communications created for legal-advice purposes and non-legal purposes. The petitioner argues for the significant-purpose test, adopted in then-Judge Kavanaugh’s opinion in In re Kellogg Brown & Root, Inc., a decision I discussed here, which applies the privilege to a dual-purpose communication so long as one of its significant purposes is legal advice. The federal government argues for the primary-purpose test, which applies the privilege only where the communication’s primary purpose is seeking or delivering legal advice.

I authored and filed an amicus brief on behalf of DRI’s Center for Law and Public Policy, arguing that the Kellogg significant-purpose test better recognizes the role that in-house lawyers play in today’s corporate environment. I have also followed and explained arguments of other amici, the petitioner, and the government, including arguments made at the petition stage. Oral argument will be held in January 2023 and we expect this much-needed and important decision to arrive before the end of the current term.

State-Secrets Privilege in the U.S. Supreme Court

Quite remarkably, the U.S. Supreme Court issued two decisions in 2022 that bolstered the state-secrets privilege. This privilege allows the federal government to prevent disclosure of information related to the country’s national security interests.  In United States v. Zubaydah, ___ U.S. ___ (2022), available here, the Court held that the privilege permitted the CIA to withhold information that would confirm–or deny–that it maintained a detention camp in Poland.  In FBI v. Fazaga, ___ U.S. ___ (2022), available here, the Court held that the Foreign Intelligence Surveillance Act of 1978 (FISA) does not displace or override the government’s ability to assert the state-secrets privilege.  Texas Law Professor Robert Chesney published this article in the Harvard Law Review addressing these two opinions, and I commend it to you.

Internal Investigations

Courts continue to grapple with deciding privilege issues that arise during an entity’s internal investigation, and we saw at least two decisions that illustrate the importance of a lawyer’s engagement letter in determining whether the lawyer’s investigation was for legal-advice purposes or simply to gather facts. In a case involving the University of Iowa’s internal investigation into race-related allegations by current and former football players, the Court found that the engagement letter proved the lawyer’s investigation was not for legal-advice purposes. Read about it in No Privilege for University of Iowa’s Internal Investigation, Court Rules.

By contrast, an Illinois court ruled that a lawyer’s engagement agreement sufficiently proved that the privilege protected her investigation because it specifically noted the legal-advice reasons for her retention. Learn why in Court Upholds Privilege for Company’s Internal Investigation—Here’s Why

North Carolina’s Major Decision

Speaking of internal investigations, the North Carolina Supreme Court issued a decision–that effectively incorporated a lengthy opinion from a Business Court–holding that the privilege did not protect from disclosure a law firm’s internal investigation into sexual-harassment allegations. The decision did not specifically turn on the law firm’s engagement letter but instead on the entity’s sexual-harassment policy mandating an investigation. The court held that the mandate meant that any investigation had to be for business reasons and not legal reasons–no matter how the investigating law firm papered the engagement. The opinions in this case make it difficult to ascertain the exact reasons why the privilege failed, so read my analysis in N.C. Courts Speak on Privilege Consequences of Required Investigations and Legal Purpose. We Should Listen and see how this may affect your future investigations.

Waiver–Precarious and Broad

Each year brings several waiver decisions and 2022 was no different. For my 400th post since starting this blog, I discussed a court’s decision distinguishing waiver rules for the work-product doctrine and the attorney-client privilege. Read about it in My 400th Post: Court Applies Different Waiver Rules for Work-Product Doctrine and Attorney–Client Privilege.

One company lost privilege protection by disclosing privileged internal-investigation information to the SEC, with the court imposing the broad subject-matter waiver doctrine, which it found to be a significant waiver. See what you think of the opinion by reading Court Imposes “Significant Waiver” for Disclosure of Privileged Investigation to DOJ and SEC.

Subject-matter waiver was also front-and-center in a Connecticut case where the court adopted doctrine as a matter of state common law. Understand why and the doctrine’s limits in First Impression: Connecticut Court Adopts Subject Matter Waiver Doctrine.

Batson Challenge and Privilege

Aren’t a lawyer’s jury-selection notes protected by the work-product doctrine? One would think so, but a court found that an opposing party’s Batson challenge may require waiver of the work-product protection so that the striking lawyer can prove a non-discriminatory reason for her decision. Perhaps these are unique facts, but read my discussion of the issue in Hobson’s Choice? Batson Challenge, Jury-Selection Notes, and Work-Product Waiver and see how this waiver issue may apply in future Batson challenges.

Prosecutors and Filter Teams

The year 2022 saw more attention given to federal prosecutors’ use of a filter team to review putatively privileged information before turning over ostensibly nonprivileged documents to their investigating peers. In fact, I appeared on MSNBC’s The Katie Phang Show to discuss use of a Special Master when a federal district judge did not approve of U.S. Attorneys’ use of a filter team to review former President Trump’s documents seized from Mar-a-Lago.

In another case, a federal district judge disapproved of prosecutors’ self-imposed protocols on its filter team and imposed its own standards. Read about this decision in Fox in the Privilege Henhouse: Court Scraps USAO’s Filter Team Protocol and Unilateral Privilege Decisions and see if this will guide your actions when clients face this issue.

Business Communications or Marital Communications?

The marital-communications privilege protects from disclosure a married couple’s private conversations, right? But is that true when those cozy conversations pertain to their business interests? One court adopted a business-communications exception, and I suggest you read about it in Honey, I Shrunk the Profits! Court Adopts “Business Communications” Exception to the Marital Communications Privilege because I suppose lawyers overlook this potentially wide-ranging exception.

Stolen Privileged Documents–Don’t Do It

Discovery takes many forms, mostly formal but some informal. But when that informal discovery results in the receipt of obviously privileged information, bad things can happen, as the lawyer suing Cristiano Ronaldo learned in a case I discussed in Red Card! Court Terminates Case for Lawyer’s Use of Cristiano Ronaldo’s Purloined Privileged Documents.

Privilege Breaches and Lawyer Sanctions

What seems obvious in retrospect often is not so obvious in real time, or at least that is what one lawyer argued after he signed an affidavit revealing privileged information received from a former client. The disciplinary authority was not amused, issuing severe sanctions as I relay in Only in the Movies? Court Suspends Lawyer for Breaching Attorney–Client Privilege. Read it, heed it, and don’t let this happen to you.

On:

Somewhat remarkably, I am not the only lawyer who writes about evidentiary privileges.  I maintain a resources page listing influential treatises, newsletters, and articles. Some of these same authors, along with new ones, published articles in 2022 ranging from the rarely litigated states-secrets privilege to a piece advocating for a privilege for discussions held in the presence of Alexa—yes, that Alexa.  I’ll briefly identify and summarize these important articles below, and I commend them to your reading list.

2022 Witnessed Several Doggone Good Privilege Articles

Functional Equivalent Doctrine

The terrific Louisville Law Professor and prolific privilege scholar Grace Giesel has again published a must-read law review article on the attorney-client privilege.  Recognizing that the attorney-client privilege generally protects communications between a company’s lawyer and its employee-representatives, Professor Giesel notes that courts have struggled with a rational analytical framework for applying the privilege to a company’s non-employee representatives—consultants. Most courts apply the privilege to those individuals who operate as a “functional equivalent” of an employee, but the professor challenges the factors that courts consider to make this decision, particularly in a post-pandemic world, and proposes a different analysis.  Read the article, available here, to see that analysis—it’s worth your time.

Healthcare Consultants and Privilege

Three Foley & Lardner lawyers published a nice article on how to handle privilege issues when healthcare clients engage third-party consultants, such as statisticians, coding experts, and clinical specialists.  After identifying several issues, the authors raise the question how “can the work of a non-lawyer consultant fall under the protection of either attorney-client privilege or work product?”  They discuss how the Kovel doctrine, which I explained in Deck the Halls with Boughs of Kovel, and address several points “that an attorney and health care client should keep in mind.”  You may access the article on Westlaw at 24 No. 5 J. Health Care Compliance 17.

Common Interest Doctrine

Anyone who has attended one of my privilege presentations has likely heard my discussion on courts’ completely inconsistent and incongruent application of the common-interest doctrine.  Cody Michael Austin apparently agrees, because his article published in the Mississippi Law Journal states that “there are many variations of the doctrine with little-to-no consistency across jurisdictions.”   While I may quibble with the author’s identifying the concept as a “privilege” and “an extension of the attorney-client privilege”—it’s a non-waiver doctrine—he does a good job of reviewing the history of the doctrine’s evolution and proposing a new model doctrine to bring some uniformity in this non-uniform area.  Read the article here.

Mediation Privilege

Lawyers published two articles discussing the federal mediation privilege, with both advocating for some consistency in application. Kate Myers of Phoenix firm Christian Dichter & Sluga, home of super lawyer Gena Sluga, published an article comparing mediation privileges under federal law and state law, noting that “they vary widely in their definition and application.”  Kate offers a few takeaways, which you may read here.

Tyler Layne of Nashville’s Waller Lansden firm authored a piece in the American Bankruptcy Institute Journal discussing how bankruptcy courts’ local rules, combined with inconsistent recognition of a common-law mediation privilege, can make it difficult for mediation parties to know what will remain confidential and what will not.  You may access the article on Westlaw at 41-MAY Am. Bankr. Inst. J. 42.

Privilege Application in Transactions

Alicia F. Castro published a nice article in Corporate Counsel Review discussing how to “thread the needle” between disclosures and the attorney-client privilege in merger-and-acquisition transactions.  She provides an appropriate overview of the privilege and compares the privilege elements to disclosure considerations that arise in the M&A area. As if that isn’t enough, she weaves in a discussion of pertinent ethical considerations.  You may access the article on Westlaw at 41 Corp. Couns. Rev. 1.

Lawyers Chip Leyens and Natalie Maples published an interesting article discussing whether and how the attorney-client privilege applies in real-estate transactions, including in such practical situations where the attorney, client, and real-estate broker participate in a conversation.  You may purchase the article at this site or access it on Westlaw at 68 No.2 PRACLAW 13.

State-Secrets Privilege

The U.S. Supreme Court issued two opinions in 2022 dealing with the state-secrets privilege, which protects from disclosure governmental communications that implicate national security concerns, a phenomenon that is “remarkable.”  Texas Law Professor Robert Chesney published an article in Harvard Law Review providing a history of the state-secrets privilege and discussing how the two opinions bolster the privilege’s application. Read this thorough article here.

Alexa, Assistants, and Privilege

Did you know that Alexa, Siri, and other so-called assistants can listen, record, and do who-knows-what with your conversations?  Scary.  Lauren Chlouber Howell discusses these issues in her Comment, Alexa Hears with Her Little Ears—But Does She Have a Privilege?.  Ms. Howell ultimately advocates for recognition of evidentiary privilege to protect those eavesdropped conversations. Do you agree? Read the article here and decide.

Guardians Ad Litem and Privilege

Courts routinely appoint guardians ad litem for minors, but not to serve them as a lawyer but rather to represent their best interests.  Lawyer Jacqueline M. Valdespino and family law consultant Laura Morgan note in their article that a guardian ad litem is not an attorney per se but an investigator and reporter.  Their article discusses confidentiality issues that arise in this relationship, including the degree to which the guardian ad litem holds the child’s privilege and whether the guardian ad litem can pierce the privilege of the parties.  You may read the article here.

Privilege in the Tax Context

Lawyers from Skadden and Ropes & Gray published an article discussing applicable privileges and the work-product doctrine in the tax context, including waiver issues and application of the crime-fraud exception.  This article is particularly pertinent given the upcoming Supreme Court opinion on privilege protection for dual-purpose tax-related communications.  You may purchase the article at the ALI page or access it on Westlaw at 36 No. 3 Prac. Tax Law. 8.

Restorative Justice

Restorative justice programs, generally speaking, offer an alternative to criminal punishment through use of a facilitator that, similar to a mediator, oversees meetings and discussions between the criminal defendant and the victim.  As one can imagine, comments from the participants could be used in subsequent criminal or civil proceedings, so the question arises whether an evidentiary privilege should protect restorative justice discussions.  Retired Judge Stuart Katz and Patrick Keenan-Devlin published an article in the Illinois Bar Journal explaining a new statutory privilege for restorative-justice communications—a statute written by the judge himself.  You may read it here.

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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 (1) examined the Court of Appeals’ decision, (2) reviewed the appellant’s petition for writ of certiorari, the government’s opposition, and the supporting amici positions, (3) examined the petitioner’s merits arguments, and (4) reviewed the briefs of the fourteen amicus parties.  The government has now filed its opposition brief, available here, so let’s explore what privilege standard it seeks and why.

Every Man’s Evidence

With the petitioner and fourteen amicus parties arguing for privilege protection of a communication where one of its purposes is nonlegal (so long as another, significant one is legal), the federal government reminded the Court that its starting baseline is that “the public has a right to every man’s evidence.”  Evidentiary privileges inherently shield otherwise relevant information and courts should treat them as exceptions to this long-held “fundamental principle.”  This principle compels courts to neither “lightly create” nor “expansively construe” privileges, including existing privileges such as the attorney–client privilege:

An existing privilege must be recognized only within the narrowest limits required by principle because every step beyond these limits helps to provide, without any real necessity, an obstacle to the administration of justice.

And, the government argued, this limiting principle is particularly critical in grand-jury proceedings because a grand jury’s investigative function is best served by making available all evidence needed to determine whether the target committed a criminal offense.

The Solicitor General Argues for the Primary Purpose Test

The Primary Purpose Test is Inherently Sound

The federal government emphasized that the narrow question before the Court is how to apply the attorney–client privilege to communications where segregation of legal and non-legal portions is not possible.  When courts can readily isolate a communication’s legal segment, they will permit that segment’s redaction and compel production of the rest.

For those communications where legal and nonlegal purposes are inextricably intertwined, however, the primary purpose test best serves the privilege’s rationale.  The attorney–client privilege encourages clients to communicate freely with their lawyers and the lack of privilege protection undesirably chills those communications. “The privilege is not intended to encourage clients to seek business or accounting advice from lawyers,” the government stated, and the primary purpose test is “the best measure of whether that particular communication would have been made absent the privilege.”

The petitioner and its amici expressed great concern that the primary purpose test discourages clients from seeking legal advice, but the government said that the threshold steps of segregation and redaction means that, “at most, clients will be discouraged from ‘intertwining’ a request for legal advice within a single portion of the communication.”

The government highlighted that a majority of states apply the primary purpose test, including two recent decisions from the supreme courts of Minnesota, In re Polaris, Inc., 967 N.W.2d 397 (Minn. 2021), and North Carolina, Buckley, LLP v. Series 1 of Oxford Ins. Co., NC, LLC, 876 S.E.2d 248 (N.C. 2022), which I reviewed and criticized in this blog post. The government argued that this majority rule of state courts “has proved to be a sensible test for reining in aggressive claims of privilege,” and concluded:

Overturning the consensus would destabilize courts, engender uncertainty in the application of a new approach, and impede the justice system’s search for truth.

Neither Logic nor Precedent Supports the Kellogg Significant Purpose Test

This “new approach,” of course, is the significant purpose test adopted and applied by the D.C. Circuit in In re Kellogg Brown & Root, Inc., 756 F.3d 754 (2014) (Kavanaugh, J.) that I discussed in this blog post and further explored in this blog post.  The government identified this test as “relatively novel” with “little foundation in the animating principle of the attorney–client privilege.”  The test, as—according to the government—the petitioner and amici would apply it, “appears to be shepherding in a vast expansion of the privilege.”  And while the petitioner and amici argued that the significant purpose test would “provide clarity and predictability,” “it would in fact do the opposite,” the government claimed.

The privilege predictability falters because the term “significant” is “an amorphous concept.” The government argued that “any proffered definition would be unlikely to provide the concrete guidance that this context requires,” noting that the amicus briefs of the U.S. Chamber and DRI Center for Law and Public Policy Merits Stage Amicus Brief define significant as “legitimate or genuine” and “not incidental,” respectively. Moreover, two other amici, the ABA and APRL, argued for a less-stringent standard because determining whether a communication has a significant legal purpose is “susceptible to differing results” and “could likewise be difficult and unpredictable.”

Yet, for all its criticism, the government echoed the Ninth Circuit’s recognition of the merits of the significant purpose test by admitting that the test “might be easier to apply” “in some cases,” such as internal investigations. And, while effectively recognizing that the Court may find that the significant purpose test “would increase certainty for clients and lessen privilege-related litigation,” the government argued that the test would inappropriately expand the privilege, particularly for highly regulated industries and in-house counsel:

Given the reality of widespread regulation … and the broad participation by in-house counsel in “regular business matters,” … petitioner’s novel and expansive “significant purpose” standard would open the gates to a flood of attorney–client privilege claims colorably asserting that at least some non-insignificant purpose of a communication was related to legal advice.

Let’s Focus on the Tax Documents at Issue

The government argued that dual-purpose tax-related communications—the communications at issue here—exacerbate the problematic issues associated with the significant purpose test.  Federal common law does not recognize an accountant–client privilege and courts typically reject the attorney–client privilege for tax-preparation communications.  Adopting the significant purpose test, the government claimed, would raise to privileged status tax-preparation communications that would otherwise be subject to government review.

Tax-return preparation advice that an accountant could give is therefore not legal advice for purposes of the attorney–client privilege, even when performed by an attorney. … And a client may not buy a privilege by retaining an attorney to do something that a non-lawyer could do just as well.

As for the documents at issue, the government asserted, the district court got it right.  It ordered production of only communications solely related to tax-return preparation, and most of these communications were between the client and an accountant.  In fact, the at-issue communications are “so far from legal advice” that the privilege would not protect them even if the Court adopted and applied the significant purpose test.  In the end, regardless of the test adopted, “the grand jury is entitled to these documents.”

On:

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, and examined the petitioner’s merits arguments.  Fourteen amicus parties filed amicus briefs that argued against the Ninth Circuit’s primary purpose test, so let’s see what they have to say.

American Bar Association

The ABA’s amicus brief, available here, focused on discrediting the “unhealthy difficulties” of the Ninth Circuit’s primary purpose test. Clients and their lawyers often communicate “without regard to precise purpose-minding,” and requiring courts to dissect the multiple purposes and determine which one is “primary” will result in the disclosure of privileged communications “in unclear and unpredictable ways.” The ABA also views Kellogg‘s significant purpose test as “similarly problematic” because it requires courts to determine whether purposes of a communication are significant.  The privilege should instead apply any time “a purpose of the communication is to obtain or provide legal advice.”

American College of Tax Counsel

The ACTC focused its amicus brief, available here, on explaining why the significant purpose test, contrary to the Ninth Circuit’s view, is the appropriate test to apply when determining whether the attorney-client privilege protects communication in the tax context.  In the tax context, many courts treat a lawyer’s communications regarding tax-return preparation as non-legal and therefore not privileged. This makes it difficult to ascertain whether a tax lawyer’s communications pertain to, for example, the viability of a tax position (privileged) and preparing the tax return (nonprivileged).  The group provided several examples to show “the futility of that endeavor” and urged the Court to rule that the attorney-client privilege protects dual-purpose communications “so long as ‘a significant purpose’ was for the client to obtain confidential legal advice from the lawyer.”

Association of Professional Responsibility Lawyers

The APRL consists of lawyer–members who regularly represent other lawyers in legal ethics and professional responsibility matters.  The organization submitted an amicus brief, which you may read here, but not in favor of either party because it has insufficient information about whether the privilege protects the at-issue tax documents.  It filed the brief, instead, to emphasize the critical importance of the attorney–client privilege.  The group argued that the privilege should apply to any communication where at least one purpose is the seeking or providing of legal advice. 

While “the significant purpose” test of Kellogg is the “most viable,” the APRL urged the Court to reject that test and the primary purpose test in favor a “better rule” where the privilege applies if at least one purpose of a communication is legal advice.

Atlantic Legal Foundation

The Atlantic Legal Foundation, a non-profit public-interest law firm with a mission of advancing the rule of law and civil justice, filed its amicus brief, available here, to explain why the Court should adopt a “reasonable, workable rule” that empowers in-house and outside counsel to safely perform their “multifarious legal duties in today’s corporate climate.”  The ALF found the Ninth Circuit’s primary purpose test unworkable, in part, because that appellate court did not provide clear guidance on how to apply it.  The group therefore advocated for the Kellogg “a primary purpose” or significant purpose test because it provides clear guidance to the business community that when “real legal advice is sought, that communication will be privileged.”

California Lawyers Association

The California Lawyers Association filed an amicus brief at the petition stage, available here, and filed one at the merits stage, available here, as well.  The CLA took a Goldilocks approach in its advocacy.  It found the Ninth Circuit’s primary purpose test too uncertain, with the decision left to the “subjective discretion” of the trial judge.  It found the Seventh Circuit’s test for tax-related communications too rigid and asked the Court to disapprove it.  But it found the D.C. Circuit’s significant purpose standard just right because it provides more certainty and furthers the privilege’s purpose.

DRI Center for Law and Public Policy

I was honored to lead a team of lawyers to author the amicus brief, available here, filed by DRI’s Center for Law and Public Policy.  The Center, which is the advocacy arm of DRI, the international organization of lawyers involved in the defense of civil litigation, focused its brief on a privilege standard that recognized the “valuable efforts” of in-house counsel in ensuring their business clients comply with the law.  In-house lawyers operate closer to corporate employees and engage in more multipurpose communications than other lawyers.  Given this consideration, the Center advocated for a standard that allows in-house lawyers and their clients to “predict with some degree of certainty whether particular discussions will be protected.”  The primary purpose standard “inappropriately conscripts judges into the task of determining the sole purpose for communications that do not have a sole purpose.”  The significant purpose test, by contrast, “creates a more predictable foundation through which in-house attorneys can assure their clients of the confidentiality of their communications.”  We concluded with this request:

The Court should task trial courts with answering the question that better aligns with this Court’s precedent: “Was obtaining or providing legal advice a primary purpose of the communication, meaning one of the significant purposes of the communication?”

Federation of Defense and Corporate Counsel

The terrific lawyer Mary-Christine Sungaila filed an amicus brief, available here, on behalf of the FDCC, an invitation-only organization composed of 1,550 defense and corporate counsel working in private practice, as in-house counsel, and as insurance industry professionals.  The FDCC emphasized that an effective attorney–client privilege is a predictable one and that this need for certainty “is heightened further by the new realities of corporate life.”  This new reality means that corporate clients often seek advice through digital channels, such as emails and Slack chains, that lead to “even more dual-purpose communications.”   The Kellogg “one significant purpose” test better absorbs the expanding role of in-house counsel and the ubiquitous use of email and online communications, and the FDCC argued that this test “strikes the right balance between what is privileged and what is not.”

Lawyers for Civil Justice

The Lawyers for Civil Justice, in an amicus brief available here, focused its comments on the mandate that courts must interpret rules “to promote efficiency and fairness.”  The Ninth Circuit’s primary purpose standard “does the opposite” and is “effectively impossible to apply in practice.” In particular, this test is unworkable in the context of modern business communications. The significant purpose test “is a more easily applied, practical, and predictable standard.” The LCJ emphasized that this test will lead to fewer time-consuming and expensive privilege disputes and in camera reviews.  And that’s a good thing!

Silicon Valley Tax Directors Group

The SVTDG consists of tax-focused representatives from technology and other companies and promotes sound, long-term tax policies that support innovation and global competitiveness of the U.S. technology industry.  This tax group, in an amicus brief available here, found the Ninth Circuit’s primary purpose test “deeply flawed” because it subjects lawyer–client communications to “an indeterminate, post hoc assessment of whether ‘legal’ or non-legal ‘business’ concerns were the principal driver.” And these problems are “vividly illustrated” in the tax context.  While tax advice is legal advice, that advice often encompasses business advice because “the tax consequences of a particular transaction often bear directly on a business’s bottom line.” To the extent the Ninth Circuit and the government argue that a less protective test should apply in the tax context, “that approach has nothing to commend it.”

The Buckeye Institute

The Buckeye Institute is a think tank that advances free-market public policies and solutions in Ohio and states throughout the country.  In its amicus brief, available here, the institute emphasized that any person trying to engage in productive activity faces a “complicated morass” of tax authorities where even “minor reporting foot-falls can trigger massive penalties.”  As a result, and with no federal accountant–client privilege, it is essential that attorneys and clients have open and candid communications in the tax context.  But the Ninth Circuit’s standard is “simply unworkable” and the Court should reject it. The Court should also reject the Seventh Circuit’s treatment of tax-related communications in United States v. Frederick because those communications do “not justify a different rule.” The Kellogg significant purpose test, the institute argued, is “more appropriate.”

U.S. Chamber of Commerce, Association of Corporate Counsel, and Securities Industry and Financial Markets Association

The U.S. Chamber, ACC, and SIFMA joined forces in this amicus brief to supply the Court with multiple examples of how corporate counsel, and specifically in-house counsel, deal with a mixture of legal and business issues in their daily lawyer lives.  And using these examples, this troika argued against the Ninth Circuit’s primary purpose standard, declaring that judges should not have to wade through various legitimate purposes of a lawyer’s communication to “divine some metaphysical ‘primary’ purpose to the request for legal advice.”  The significant purpose test, on the other hand, reflects the realities of how companies and their counsel operate in today’s highly regulated environment.

Washington Legal Foundation

The Washington Legal Foundation filed an amicus brief at the petition stage, available here, and returned at the merits stage because “there are few things more important in our legal system than clients’ ability to communicate with their counsel without fear of having those communications later disclosed in litigation.” Its second amicus brief, available here, the WLF argued that companies lean heavily on in-house counsel for internal investigations and the Ninth Circuit’s primary purpose test “would have a chilling effect on the free exchange of information between in-house counsel and corporate executives.”  The WLF also criticized the Seventh Circuit’s “tax exceptionalism” privilege rule, arguing that it is “poorly reasoned as it misunderstands the intersection of tax preparation and legal advice.” And the Ninth Circuit’s test is simply “a different type of tax exceptionalism” even though “there is no reason that a dual-purpose communication should be treated differently in the tax context than it is in other contexts.” The Court has rejected tax exceptionalism before, the WLF argued, and “it should do so again.”

On:

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.

The Petitioner Argues for The Significant Purpose Test

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.

On: