Is a communication between a client and their lawyer that involves both legal and non-legal advice protected by attorney-client privilege if obtaining legal advice was a significant purpose of the communication, but not its primary purpose?
This case asks the Supreme Court to clarify whether communications involving both legal and non-legal advice (i.e., dual-purpose communications) are evaluated under the primary purpose test or the significant purpose test when determining whether communications are protected by the attorney-client privilege. The petitioner, a law firm, argues that the significant purpose test should be adopted because it is necessary to avoid deterring the communications the privilege exists to protect. The United States argues for the primary purpose test, contending that the significant purpose test would improperly and unnecessarily expand the privilege. This case has significant implications for protecting client honesty with their lawyers while also not excessively shielding the production of otherwise discoverable materials.
Questions as Framed for the Court by the Parties
Whether a communication involving both legal and non-legal advice is protected by the attorney-client privilege when obtaining or providing legal advice was one of the significant purposes behind the communication.
Pursuant to a criminal investigation, a grand jury issued subpoenas to the target of the investigation, the owner of a company who is also a client of a tax law firm. In re Grand Jury at 1090. These subpoenas requested communications and documents related to the investigation. Id. The company and the law firm, however, only produced some of the requested documents, withholding others on the ground that they were protected by the attorney-client privilege and the work-product doctrine. Id.
In response, the government moved to compel the production of the withheld documents. Id. The district court granted the government’s motion in part, explaining that the company and the law firm must turn over documents that it deemed were either discoverable under the crime-fraud exception or not protected by the attorney-client privilege. Id. Disagreeing with the district court’s decision, the company and the law firm continued to withhold the documents. Id. at 1090–91. As a result of this refusal, the government moved to have the company and the law firm held in contempt. Id. at 1091. The district court granted this motion, holding that the disputed documents contained “dual-purpose” communications which were not protected by the attorney-client privilege because their primary purpose was to obtain tax advice rather than legal advice. Id. at 1090.
The company and the law firm appealed the contempt order to the Ninth Circuit. Id. at 1091. The company and the law firm argued that the Ninth Circuit should adopt the “because of” test from the work-product doctrine context to determine whether dual-purpose communications are protected by the attorney-client privilege. Id. at 1091–93. Essentially, rather than asking whether litigation was a secondary or primary motive behind a document’s creation, the test asks whether a dual-purpose communication was made “because of” the need to receive or give legal advice. Id.
The court, however, declined to adopt this test, noting that the company and the law firm had offered “no persuasive reason” to deviate from the majority common law rule that focuses on a communication’s primary purpose. Id. at 1093. Although the attorney-client privilege and work-product doctrine are often mentioned together, the court noted that they are predicated on different policy goals, thereby justifying the application of different tests. Id. While the work-product doctrine serves to prevent attorneys from accessing their opponents’ strategies and theories in an adversarial setting, the court reasoned, the attorney-client privilege promotes “full and frank communication” between lawyers and clients. Id. The court also warned that the “because of” test could incentivize litigants to excessively withhold documents. Id.
The company and the law firm then argued that the court should adopt a test asking whether giving or receiving legal advice was “a primary purpose,” of the communication, rather than “the primary purpose.” Id. at 1094. Such a test, they argued, would spare the courts from the need to pick one primary purpose out of two potentially equal ones. Id. Because the court did not find this case to be particularly close such that a choice between these two tests would change the outcome, it found no reason to further engage with the question, but simply adopted the primary purpose test. Id. at 1092, 1094. Consequently, the Ninth Circuit held that the attorney-client privilege did not apply because the communication’s primary purpose was to seek tax advice as opposed to legal advice. Id.
The law firm appealed the Ninth Circuit’s decision and the Supreme Court granted certiorari on October 3, 2022. Brief for Respondent, United States at 1.
THE PROPRIETY OF THE PRIMARY PURPOSE TEST
The law firm argues that the primary purpose test would impermissibly limit the attorney-client privilege’s availability. Brief for Petitioner at 13–14. The firm specifically maintains that dual-purpose communications are inevitable in today’s legal practice. Id. at 14. The firm notes that clients often seek out lawyers’ expertise not only to determine their legal obligations but also for advice on how to best act in light of those obligations, as well as advice on their other interests and needs. Id. This modern reality, the firm asserts, compels lawyers to advise their clients on what is desirable, in addition to merely discussing what is legally permissible. Id. at 15.
Due to dual-purpose communications’ asserted prevalence, the law firm argues that, consistent with past precedent, the Court should avoid a restrictive interpretation of the privilege. Id. at 17. Such an interpretation, the firm contends, would frustrate the privilege’s very purpose by discouraging clients and lawyers from communicating relevant information. Id. at 17. Moreover, the firm asserts that the primary purpose test insufficiently protects the privilege because it asks courts to determine whether communications are protected after such communications has already been made. Id. at 24. The firm maintains that subjecting communications to “unpredictable post hoc balancing” would burden communications with unpredictability and reduce the protection’s effectiveness. Id. at 27–28. Such unpredictability, the firm argues, would disincentivize the communications that the privilege is supposed to protect. Id. at 24–25.
Arguing in favor of affirming the Ninth Circuit’s decision, the United States contends that the primary purpose test best serves the interests underpinning and motivating the privilege. Brief for Respondent, United States at 22. Because the primary purpose is the one “driving the relevant portion of the communication,” the United States asserts, that purpose is the best one to use in determining whether a statement would have otherwise been made and whether the privilege should accordingly apply. Id. at 26. Essentially, the United States maintains, when the purpose of encouraging open communication with lawyers ends, so does the privilege’s application. Id. at 27–28.
The privilege, the United States asserts, ensures that legal advice is not deterred by the fear that it could be used against those who candidly and openly consult with their lawyers. Id. at 25. In these instances, the United States continues, infringement on truth-seeking is minimal because most of these statements would never be uttered if the privilege did not exist. Id. In the case of statements that will be made regardless, though, the United States argues that the same chilling effect and justification for the privilege do not exist. Id. at 25. This, the United States argues, is one of those cases. Id.
THE PROPRIETY OF THE SIGNIFICANT PURPOSE TEST
The law firm argues that the significant purpose test is appropriate because it “neither expands nor contracts” the scope of the privilege. Brief for Petitioner at 19. According to the law firm, a communication that serves a significant legal purpose meets the very definition of the attorney-client privilege, namely that the communication is made by the client for the purpose of seeking legal advice from a lawyer in their capacity as such. Id. at 18. The law firm asserts that this test will not allow the parties to shield their non-legal communications by merely copying or cc’ing a lawyer. Id. at 19. On the other hand, the firm continues, it does protect communications that serve a significant legal purpose even if they are later found to serve some other more significant purposes. Id.
The significant purpose test, according to the firm, safeguards communications that duly deserve protection while also ensuring predictability. Id. at 19–20. The firm explains that attempting to find a single primary purpose in dual-purpose communications is often difficult, if not inherently impossible. Id. at 20. The significant purpose test, the firm asserts, is “clearer, more precise, and more predictable” than the primary purpose test and helps reduce uncertainty. Id. Essentially, the firm emphasizes that any communication with a significant legal purpose should fall within the privilege, in light of how lawyers and clients communicate with each other in practice. Id. at 23–24.
The United States counters that adopting a significant purpose test would constitute a stark departure from the privilege’s primary purpose of encouraging the communication of legal advice. Brief for Respondent at 10. Because protections such as the privilege restrict access to probative information and “obstruct the search for truth,” the United States asserts that protections cannot be created lightly or construed expansively. Id. The United States stresses that public confidence in the judicial system and the system’s integrity itself depend on the “full disclosure of all facts,” particularly when a grand jury is vindicating its investigative function. Id. at 12. Accordingly, the United States maintains that the privilege should be applied narrowly, specifically only to communications that are “necessary to receive legal advice.” Id. at 14.
The United States also argues that allowing a secondary purpose to serve as the basis for the privilege would encourage individuals to simply include their counsel in communications in the hope that doing so will render the communications non-discoverable. Id. at 33. Such a rule, the United States maintains, amounts to “shepherding in a vast expansion” of the privilege. Id. at 34. Rather than providing clarity and predictability, the United States contends, a significant purpose test would force courts to rely on a vague term. Id. at 34–35. Such a test, the United States adds, does not avoid after-the-fact analysis at all, but would instead require the same backward-looking assessment that the primary purpose test does, analyzing the communication’s purpose at the time it was made. Id. at 36–37.
APPLICATION OF THE PRIVILEGE IN THE TAX CONTEXT
The law firm argues against a lesser privilege in tax cases. Brief for Petitioner at 29. The law firm notes that the Court has never embraced different rules of privilege “for different substantive areas of law” and argues that the Court should not do so here. Id. Such disparate rules, the firm maintains, would create the very uncertainty the Court has previously warned against introducing. Id. at 29–30. This would especially be the case, the firm asserts, because modern tax law practice inherently involves multiple areas of law, making clear distinctions between these practices impossible to draw. Id. at 30–31.
Considering the tax code’s “enormous complexity,” as well as tax law’s intersection with actual tax preparation, the firm asserts, legal advice about taxes often overlaps with more practical advice. Id. at 31–34. The firm contends that a strong privilege is particularly important in the tax context because tax law heavily relies on voluntary compliance, which necessarily precipitates a greater need for legal consultation. Id. at 31–32.
Accordingly, the firm maintains, legal advice on taxes cannot be “at risk of disclosure” whenever a lawyer assists someone with their legal tax obligations as well as the attendant execution of those obligations. Id. at 34. The firm argues that whether a non-lawyer could have performed the same task is irrelevant. Id. at 35–36. An attorney, the firm asserts, occupies a unique position, helping clients “navigate the complex legal requirements of modern society with specialized expertise.” Id. at 36.
In support of the Ninth Circuit’s decision, the United States argues that the privilege does not apply to tax advice “within the scope of an accountant’s services” merely because a lawyer is involved. Brief for Respondent at 10. Information that a non-lawyer could provide, the United States argues, is not privileged. Id. at 15. Because these sorts of communications, such as those rendered by accountants, are not privileged, the United States continues, they do not automatically become legal advice covered by the privilege merely because a lawyer provides them. Id. at 16. The United States argues that the Court’s past refusal to recognize an accountant-client privilege or work-product protection for accountants supports its argument. Id. at 12.
The United States further buttresses this point by noting that courts have generally found “tax return preparation” to be an accounting rather than a legal service. Id. at 16. Providing lawyers who render these services with a privilege unavailable to other practitioners in this area, the United States continues, would unfairly advantage affluent taxpayers and create the impression that “well-heeled taxpayers” are enabled by the privilege to conceal tax avoidance. Id. at 17.
Moreover, the United States notes that while Congress has given tax preparers and accountants a privilege, it is limited to situations where they are engaged in the practice of law and not acting in other capacities. Id. at 19. Expanding the privilege, the United States argues, would go beyond the limits that Congress imposed and would hamper the tax avoidance investigations “that Congress was careful to protect.” Id. at 20. Doing so, the United States contends, would create a form of impermissible “tax exceptionalism.” Id. at 21–22.
PROTECTING CLIENT HONESTY WITH THEIR LAWYER
The American Bar Association (“ABA”), in support of the law firm, argues in favor of the significant purpose test. Brief of Amicus Curiae American Bar Association, in Support of Petitioner at 27. The ABA explains that the attorney-client privilege encourages clients to honestly disclose all information relevant to their legal issue so that lawyers can give informed legal advice. Id. at 6. If the application of the attorney-client privilege was uncertain in the context of dual-purpose communications, the ABA continues, then clients may be reluctant to share necessary information with their lawyer if they fear that the information could be later discovered. Id. at 8–9. Thus, the ABA contends, a certain attorney-client privilege that protects dual-purpose communications would benefit society and the legal system to ensure lawyers are able to give the highest quality advice and promote compliance with the law. Id. at 11. Further, the DRI Center for Law and Public Policy argues that the significant purpose test results in a more consistent application of the attorney-client privilege because courts will only be required to determine whether legal advice was a significant purpose of the communication, rather than trying to discern the ambiguous primary purpose of the communication. Brief of Amicus Curiae DRI Center for Law and Public Policy, in Support of Petitioner at 7–9.
The United States, in support of affirming the decision of the Ninth Circuit, asserts that the primary purpose test will not result in clients’ diminished honesty in communications with their lawyers. Brief for Respondent, United States at 27. The United States asserts that the attorney-client privilege is not meant to protect communications that would be made regardless of whether the privilege applies. Id. at 25. The United States argues that individuals and businesses have to make non-legal decisions, such as business and tax-related decisions, for which they may consult with their attorneys about the legal consequences. Id. at 25–26. Nevertheless, the United States contends, the client is unlikely to refrain from communicating to their lawyer about a non-legal decision, even if such a communication would not be protected by attorney-client privilege, because the non-legal decision must be made regardless of the legal advice. Id. at 26. Furthermore, the U.S. emphasizes that non-legal communications are already not protected by attorney-client privilege because most States follow the primary purpose test. Id. at 27. Therefore, the U.S. concludes, using the primary purpose test, and excluding communications from the attorney-client privilege when their primary purpose is non-legal, will not result in less honest communications between clients and their lawyers. Id.
SHIELDING DISCLOSURE OF DISCOVERABLE COMMUNICATIONS
Lawyers for Civil Justice (“LCJ”), in support of the law firm, argues that the broader significant purpose test will not unduly prevent the disclosure of discoverable communications. Brief of Amicus Curiae Lawyers for Civil Justice, in Support of Petitioner at 24. LCJ asserts that a party seeking protection under the attorney-client privilege will still be required to prove with “reasonable certainty” that legal advice was a significant purpose of the communication, and this requirement is sufficient to prevent improper protection of otherwise discoverable communications. Id. at 24–25. LCJ denies that communications will be shielded from discovery by the attorney-client privilege when clients simply copy their lawyers on emails. Id. at 25. Further, LCJ explains that the attorney-client privilege is limited to preventing disclosure of a client’s communication to their attorney and does not prevent disclosure of the facts underlying the communication. Id. at 25–26. Therefore, LCJ concludes, even if a client’s communications are not discoverable, the relevant facts may be discoverable through other means of discovery. Id. at 26–27.
In contrast, the United States argues that broadening the attorney-client privilege under the significant purpose test would shield non-legal communications and impair the search for truth in legal actions. Brief for Respondent at 27. The United States explains that the scope of the protection of the attorney-client privilege is balanced against preventing undue obstruction of “the search for truth.” Id. at 25. If the scope of the attorney-client privilege was broadened to protect communications for which seeking legal advice was only a “significant” purpose, then, the United States contends, clients could prevent disclosure of any communication by simply sending it to their lawyer. Id. at 33. The United States asserts that this kind of broad protection could shield companies from having to disclose otherwise unprivileged documents to hide their wrongdoing. Id. at 32–33. Thus, the United States concludes, the narrower primary purpose test should be adopted to limit privilege and ensure broader disclosure to facilitate “ascertaining truth.” Id. at 26–27.
- Jared E. Dwyer, Barbara T. Kaplan, & Courtney A. Hopley, U.S. Supreme Court Grants Certiorari in Case Involving Application of Attorney-Client Privilege to Dual-Purpose Communications with Tax Attorneys, Greenberg Traurig (Oct. 6, 2022).
- Alison Frankel, U.S. Supreme Court Grants Review in Crucial Attorney-Client Privilege Case, Reuters (Oct. 3, 2022).
- Alison Frankel, ABA Asks Supreme Court for Client Privilege Protection Beyond what Business Groups Want, Reuters (Nov. 28, 2022).
- Dan Schweiter, Supreme Court Report: In re Grand Jury, 21-1397, National Association of Attorneys General (Oct. 17, 2022).