Over the last quarter of 2018 and leading into this holiday season, several courts have issued decisions applying the Kovel Doctrine in a variety of settings. So, this seems like an excellent time to review the doctrine, explain it, and see how courts have recently applied it, including in settings involving adult children, public-relations consultants, investment bankers, and accountants.
What is the Kovel Doctrine?
Louis Kovel was, as we Southerners would say, a revenuer. He worked as an IRS agent but, in 1943, became employed as an accountant with Kamerman & Kamerman, a NY tax law firm. When a federal grand jury began investigating a man named Hopps for tax improprieties, Hopps sought counsel from the Kamerman firm, and specifically met with the non-lawyer, former revenuer Kovel.
Kovel was later subpoenaed to provide grand-jury testimony against Hopps, but refused to answer any questions on grounds that the attorney–client privilege protected his discussions with Hopps. Remember, there is no federal accountant–client privilege, so the attorney–client privilege was his only avenue for relief.
The district judge bluntly rejected Kovel’s privilege argument, omnisciently stating:
“You don’t have to give me authority on [the privilege]”;
“I’m not going to listen” to Kovel; and
“There is no privilege to this man at all.”
And when Kovel refused the judge’s order to disclose his communications with Hopps, the judge held him in criminal contempt and sentenced him to a year in jail.
The judge let Kovel out of jail after 4 days so that he could appeal to the Second Circuit, and so he did. Legendary judge Henry J. Friendly authored what became the seminal decision on