Lawyers, particularly in-house lawyers, across the country had been anxiously awaiting the Supreme Court’s opinion on whether privilege attaches to attorney communications created for legal and non-legal purposes. In re Grand Jury, No. 21- 1397 (U.S.) The collective agita was perhaps misplaced, as the Supreme Court dismissed the case as improvidently granted on January 23, 2023. At issue, was an appeal in a Ninth Circuit case in which attorneys for an unnamed law firm focusing on international tax issues argued that certain documents pertaining to the preparation of the client’s tax returns contained privileged legal advice and should be shielded from production as privileged. The circuit fashioned a balancing test, holding that only where “the primary purpose of the communication is to give or receive legal advice, as opposed to business or tax advice,” will the attorney-client privilege apply. 23 F.4th 1088, 1091-92.
The specific question accepted for review by the Supreme Court in October was as follows:
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.
Oral argument was held on January 9, 2023. The Justices pointed out that each side seemed to stray from the tests outlined in their briefs with the petitioner arguing that “any legal purpose” would suffice to protect communications rather than the “significant purpose” test set forth in the briefs. Similarly, the government argued for the “primary purpose” test, but at oral argument espoused a “significant purpose” test which would apply when it is impossible to determine the primary purpose of the communication. This led to a discussion of what percentage of non-legal v. legal advice would apply when attempting to determining the primary purpose with Justice Jackson noting “judges don’t do math.”
Ultimately, Justice Kagan raised “the ancient legal principle, if it ain’t broke, don’t fit it,” to support her conclusion that most courts currently employ the primary purpose test without difficulty which is perhaps why the appeal was dismissed. Attorneys dealing with these issues are frustrated with the outcome as summed up by Susanna McDonald, of the Association of Corporate Counsel who said “[w]ithout guidance from the Supreme Court, the legal landscape for dual purpose communications remains murky[.] Because the circuit courts are split over which test should be used to determine privilege in these situations, in-house counsel are left wondering what test will apply when so many transactions are across state borders and many companies have operations in multiple states.”