ALF Brief Supports Broad Protection For In-House Attorney-Client Communications
“In all attorney-client communications, regardless of context, the attorney-client privilege should apply if legal advice is ‘a primary purpose’—that is, ‘a significant purpose’—for a written or oral communication, even if the communication serves dual or multiple purposes.” — Atlantic Legal Foundation
ALF Executive Vice President & General Counsel was quoted in a Bloomberg Law/U.S. Law Week article previewing the oral argument held by the Supreme Court on January 9, 2023.
The attorney-client privilege protects the confidentiality of communications between lawyers and their clients. In Upjohn Co. v. United States, 449 U.S. 383 (1981), the Supreme Court held that the privilege applies in the corporate context to in-house as well as outside counsel when legal advice is provided or sought. The privilege applies, for example, when a corporation’s in-house general counsel communicates with employees concerning the company’s compliance with federal or state regulations. Until now, however, the Court has not squarely addressed the extent to which the attorney-client privilege applies to communications that serve dual or multiple purposes by intertwining legal and business or other non-legal advice.
The Supreme Court has agreed to consider this issue in a case captioned In re Grand Jury, No. 21-1397. The Petitioner is a law firm that provides international tax advice. (The Court is keeping the law firm’s name under seal.) In response to a federal grand jury subpoena concerning one of its clients, the law firm asserted attorney-client privilege as to certain tax-related documents. According to the law firm, some of the withheld documents serve the dual purpose of providing the client with tax-related legal advice and facilitating the mechanical preparation of the client’s tax returns. The law firm’s brief asserts that “[t]hese ‘dual-purpose’ communications included, for example, interpretations of unsettled statutory requirements regarding whether certain assets are subject to Treasury Department foreign reporting requirements, strategies for filing amended income tax returns, and the Client’s questions about and comments on draft submissions to the IRS advocating for the abatement of a penalty assessment.”
The Ninth Circuit held in this case that to determine whether the attorney-client privilege applies to a particular dual-purpose communication, a court must determine whether providing legal advice was its single primary purpose. In contrast, the D.C. Circuit, in an opinion authored by then-Circuit Judge Brett Kavanaugh, explained in In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014), that “that the primary purpose test, sensibly and properly applied, cannot and does not draw a rigid distinction between a legal purpose on the one hand and a business purpose on the other. After all, trying to find 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.” Id. at 759. As a result, the D.C. Circuit held that to determine whether the privilege applies to a dual-purpose communication, a court should ask the following question: “Was obtaining or providing legal advice a primary purpose of the communication, meaning one of the significant purposes of the communication?” Id. at 760.
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.
ALF’s Amicus Brief:
ALF’s amicus brief joins the Petitioner and other amici in urging the Supreme Court to reject the Ninth Circuit’s often unrealistic and unworkable approach, and instead, to adopt the “significant purpose” test established by the D.C. Circuit in Kellogg. More specifically, ALF’s brief argues that in all attorney-client communications, regardless of context, and consistent with Kellogg, the attorney-client privilege should apply as long as the legal advice is a primary purpose—that is, a significant purpose—for the communication, even if not the sole primary purpose. In so doing, ALF’s brief emphasizes that the Kellogg “significant purpose” test works well in corporate settings, where in-house counsel, like outside counsel, are called upon, for example, to conduct internal investigations concerning corporate compliance or employee matters. The brief also discusses why the significant purpose test works in the tax advice context.
