Supreme Court Decides Not To Clarify Standard for Attorney-Client Privilege for Dual-Purpose Communications
Insights Michael S. Lazaroff · February 9, 2023
On January 23, the Supreme Court surprisingly decided to dismiss as “improvidently granted” the writ of certiorari it had granted in the case In re Grand Jury, No. 21-1397. This one-line dismissal order came after full briefing by the parties, thirteen substantive amicus briefs from various legal and business organizations, and oral argument. The issue originally presented to the Court in the petition for certiorari was “[w]hether 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 the underlying case, an unnamed client had received advice from a lawyer on tax issues that containing both legal and business advice about taxes intertwined in the same documents in a manner that could not be separated. At some later point, a criminal grand jury served a subpoena seeking documents about this advice. The client and law firm refused to produce certain of these dual-purpose documents as privileged under the attorney-client privilege. The district court used what it called a “primary purpose test”, reviewed documents in camera, and concluded that the primary purpose of some of the documents was business advice not legal advice. Thus, the district court ruled that these documents were not protected by the attorney-client privilege and should be produced. When the law firm still refused to produce the documents, the district court held the law firm and client in contempt.
The Ninth Circuit affirmed the order of the district court holding the client and the Law Firm in contempt. In re Grand Jury, 23 F. 4th 1088 (9th Cir. 2021). The Ninth Circuit explained that in making this determination it was holding “that the ‘primary purpose’ test applies to dual-purpose communications.” Id. at 1094. The Ninth Circuit elaborated on this test explaining that under this test a court should “look at whether the primary purpose of the communication is to give or receive legal advice, as opposed to business or tax advice…The natural implication of this inquiry is that a dual-purpose communication can only have a single ‘primary’ purpose”. Id. at 1091 (citation omitted).
The Ninth Circuit also pointed out that the “primary purpose” test is different than the test used to determine whether the attorney work-product doctrine covers dual-purpose communications. In the work product context, the Ninth Circuit explained the court “‘does not consider whether litigation was a primary or secondary motive behind the creation of a document.’” Id. (citation omitted). Instead, it “affords protection when it can fairly be said that the document was created because of anticipated litigation, and would not have been created in substantially similar form but for the prospect of that litigation.” Id. at 1092 (citation omitted). The Ninth Circuit explained that the fact that these two bases for privilege have different tests is not problematic because the “attorney-client privilege and the work-product protection doctrine are animated by different policy goals.” Id. at 1093.
Petitioner argued that the primary purpose test used by the Ninth Circuit is different than the standard used by the D.C. Circuit in applying the attorney-client privilege to dual-purpose documents in In re Kellogg Brown & Root, Inc., 756 F.3d 754, 759 (D.C. Cir. 2014). In that case, the D.C. Circuit explained in considering the attorney-client privilege for dual-purpose communications from an internal investigation that determining “the one primary purpose for a communication motivated by two sometimes overlapping purposes (one legal and one business, for example) can be an inherently impossible task… It is thus not correct for a court to presume that a communication can have only one primary purpose…Rather, it is clearer, more precise, and more predictable to articulate the test as follows: Was obtaining or providing legal advice a primary purpose of the communication, meaning one of the significant purposes of the communication?” Id. at 759-760 (emphasis in the original); see also Federal Trade Commission v. Boehringer Ingelheim Pharmaceuticals, Inc., 892 F.3d 1264 (D.C. Cir. 2018) (applying the same test).
The Seventh Circuit has also articulated what may be a third standard for at least some dual-purpose communication cases. The Seventh Circuit decided with regard to advice for tax returns that “a dual-purpose document—a document prepared for use in preparing tax returns and for use in litigation—is not privileged.” United States v. Frederick, 182 F.3d 496, 501 (7th Cir. 1999). It is unclear if the Seventh Circuit would apply this standard outside of the context of tax returns.
Thus, there is confusion about the standard federal courts should use to determine the applicability of the attorney-client privilege for dual-purpose communications. Yet, dual-purpose communications are prevalent. As the American Bar Association explained in its amicus brief “[t]he unhealthy difficulties of a ‘primary-purpose’ test are real. It is common for clients to seek legal counsel in situations where legal purposes substantially overlap with business, regulatory compliance, and other not-exclusively-law-related purposes.” The Supreme Court initially granted certiorari thereby expressing interest in the matter. Thirteen organizations ranging from the American Bar Association to the Chamber of Commerce filed amicus briefs (all generally supporting application of a broader test than the primary purpose test) demonstrating that there is strong interest in this issue from the legal and business community. The Supreme Court did not explain why it changed its mind and dismissed the case without issuing a decision. At oral argument, there was discussion of the parties changing their positions making it unclear what was being asked of the Court. At one point, Justice Gorsuch asked “What is the disagreement?” On the other hand, Justice Kagan stated “if it ain’t broke, don’t fix it” suggesting that there was no real issue for determination. It is, thus, unclear if the Supreme Court will consider this question in a later case that may be a better vehicle for resolution of this issue.
For now, there remains uncertainty about the standard that will be used by federal courts to determine whether the attorney-client privilege protects dual-purpose communications. In light of this, lawyers should assume the primary purpose test used by the Ninth Circuit may be applicable. Counsel should be careful to separate legal advice from business advice as much as possible. When it is not possible, counsel should clearly identify the legal advice and its importance when making any dual-purpose communications. Tax issues and internal investigations were identified in the briefing and oral argument as cases where the dual-purpose issue is more commonly prevalent. Thus, lawyers should be particularly careful to protect privilege in these circumstances. Finally, it is important to remember that the work product doctrine (if applicable) may provide protection for dual-purpose communications even if the attorney-client privilege is not applicable.
Michael Lazaroff is a partner in the Rimon Litigation group in the New York office. He is an experienced trial and appellate lawyer with over two decades of experience in complex commercial litigation and arbitration representing both defendants and plaintiffs. Read more here.
Rimon has 48 offices across five continents. The firm is widely known as being at the vanguard of legal innovation. The firm has been repeatedly recognized by the Financial Times as one of North America’s most innovative law firms. The firm’s Founding Partners were both named ‘Legal Rebels’ by the American Bar Association’s ABA Journal and have spoken on innovations in the practice of law at Harvard and Stanford Law Schools. Rimon and its lawyers have also received numerous awards for excellence, including from Best Lawyers and Chambers.