The longstanding pillar of attorney-client privilege will be under scrutiny in front of the U.S. Supreme Court Jan. 9 during an oral argument.
According to the petition for a writ of certiorari, the question being asked is whether communication involving both legal and non-legal advice is protected by attorney-client privilege when obtaining or providing legal advice was one of the main purposes behind the communication.
The petition argued three circuits have different and incompatible tests for dual-purpose communications, including the D.C. Circuit Court of Appeals holding such a communication is privileged if it has a significant legal purpose.
In this case, the petition said, the 9th Circuit Court of Appeals found courts must weigh all purposes of the communication and it’s only privileged where a legal purpose for a communication is at least as significant as the non-legal purpose — the primary purpose test.
Another example brought forward in the petition was in the 7th Circuit Court of Appeals, where dual-purpose communications aren’t privileged no matter what the legal purpose, “at least in cases, like the present one, involving tax returns.”
“The Court should grant the petition to resolve this clear and significant conflict among the circuits, to allow lawyers and their clients throughout the country to predict with a high degree of certainty whether their communications are privileged,” according to the petition.
The petitioner is a law firm, which is unnamed in the writ of certiorari, specializing in international tax issues which included advising clients on tax consequences of expatriation. The petition said the firm provided legal advice to a client regarding the tax consequences of its anticipated expatriation, while preparing many of the client’s tax forms to certify compliance with expatriation tax requirements.
The firm and two of its employees ended up being served with grand jury subpoenas wanting documents for a criminal investigation of the client, according to the petition. Those subpoenas sought communications, along with other materials, for the client’s expatriation and tax return prep. The petitioner produced more than 1,700 records, but others were withheld due to attorney-client privilege and work-product doctrine.
The petition contended when work was done by an attorney in a tax situation, courts usually distinguished between two types of work performed. It argued advice for tax planning and controversy is considered legal, and communications for that are privileged. The preparation of a tax return is a non-legal function, the petition surmised, and communications regarding those purposes aren’t privileged.
The petition goes on to argue some of the communications the petitioner withheld for attorney-client privilege were made both to allow the petitioner to provide the client with legal advice about taxes and to facilitate the preparation for the client’s tax return.
The government filed a motion to compel, requesting the district court to order the petitioner to produce withheld records. The district court, according to the petition, adopted a formulation of a test that gave consideration for whether the primary or predominant purpose of the communication was to seek legal advice or provide corresponding legal advice.
The district court held some documents were privileged and were made for the primary purpose of receiving or providing legal advice. The district court, however, concluded the outcome is different for communications where the predominant purpose was about the procedural aspects of preparing the client’s tax returns, the petition added.
The district court issued an order holding the petitioner in contempt for noncompliance with the court’s order to produce documents. On appeal, the 9th Circuit affirmed, holding the primary purpose test applied to attorney-client privilege for dual-purpose communication.
Colorado Legal Perspective
Law Week Colorado spoke with multiple legal leaders in the state to get their reaction to the upcoming case.
Ann Roan, the owner of the Law Offices of Ann M. Roan and member of the Colorado Criminal Defense Bar, believes when there’s a split between circuits, the U.S. Supreme Court should weigh in due to the importance of the question presented in the case.
“Given that lawyers frequently advise clients across jurisdictions, inconsistent interpretations of the scope of the attorney-client privilege sow chaos,” Roan wrote.
Roan expressed the best resolution would be to reject the 9th Circuit Court of Appeals’ primary purpose test. Roan added adopting any specific bright-line test, in this case, would be judicial overreach, triggering an avalanche of uncertainty and litigation.
“Any test that requires a client to speculate about what a judge at some time in the future might decide the primary or significant purpose of the communication is before disclosing information to her lawyer is unworkable,” Roan wrote.
Roan noted the importance of attorney-client privilege from the outset of when a lawyer begins working with a client.
“So, it’s common and important that initial attorney-client discussions are wide-ranging,” Roan wrote. “Anything that makes clients afraid to tell their lawyers the whole story hurts our adversarial legal system, which presumes that lawyers will give good legal advice based on full information, within the bounds of the law and the Rules of Professional Conduct.”
The Colorado Defense Lawyers Association also released a statement to Law Week about the upcoming U.S. Supreme Court case.
It read in part, the CDLA “recognizes the importance of establishing a consistent approach for whether dual-purpose communications will be afforded the attorney-client privilege. Attorneys and their clients should know the applicable test at the outset of their communications and such test should be uniform independent of the forum in which those communications may be sought.”
The CDLA went on to cite Upjohn v. United States, a U.S. Supreme Court decision from 1981. In that opinion, former Chief Justice William Rehnquist wrote in part: “if the purpose of the attorney-client privilege is to be served, the attorney and client must be able to predict with some degree of certainty whether particular discussions will be protected. An uncertain privilege, or one which purports to be certain but results in widely varying applications by the courts, is little better than no privilege at all.”
Numerous amicus briefs have been filed in the upcoming case before the U.S. Supreme Court including from the American Bar Association, which was in support of the petitioner.