By Stephen Gillers
on Jan. 5, 2023
at 9:55 am
A lawyer’s legal advice is privileged. A court cannot order the lawyer or the client to disclose it. But a lawyer’s non-legal advice is not privileged. What happens when advice is partly legal and partly non-legal and the two parts cannot be entangled? In such dual-purpose situations, does the privilege protect all the advice or none of it?
On Monday, the Supreme Court will hear opposing answers to that question in a case known as In re Grand Jury. A law firm will argue that the privileged should protect all client communications “where obtaining or providing legal advice is one of the significant purposes behind the communication,” even if non-legal advice is predominated. The United States will argue that unless legal advice is the client’s “primary” purpose, none of the dual-purpose communications should be privileged.
The difference between “significant” and “primary” may seem trivial, a question for a thesaurus, not a court. But much will turn on the Supreme Court’s decision. A significant-purpose test will expand the reach of the privilege and therefore secrecy, which may explain why lawyers and business groups, including the American Bar Association and the Chamber of Commerce, filed 13 amicus briefs favoring the law firm. Victory for the law firm, it should be noted, will give lawyers a competitive advantage over nonlawyers who offer the same advice.
A person, whose identity is not publicly known, wished to expatriate, apparently for tax reasons. It’s not easy to expatriate. Legal issues, including over tax liabilities, must be resolved before the United States will agree. So the person or a company he owned hired a law firm, whose identity is also not publicly known, for advice.
The United States suspected criminal activity by the owner of the company. It convened a grand jury, which subpoenaed records related to the law firm’s work. The law firm produced more than 1,700 documents but claimed that others were privileged. The district court applied the primary-purpose test and ordered the law firm to produce “fewer than 54 documents.” When it refused, the court held it in contempt. The US Court of Appeals for the 9th Circuit affirmed and the firm appealed to the Supreme Court.
Two public policies clash in the law firm’s appeal. On one hand, a broad privilege can be used to conceal information that, if known, would prevent or correct an injustice or protect the public from harm. Some industries – the government names tobacco and pharmaceuticals as examples – have sought to use the privilege to conceal dangers of their products or their operations. A significant-purpose test, the government fears, will only encourage that strategy. Companies will regularly copy lawyers on sensitive communications “in hopes of gaining a privileged protection for communications that would otherwise not be privileged.”
For its part, the law firm correctly points out that the privilege does not protect the information in a communication between a lawyer and client. It only protects the communication itself. The government remains free to seek the same information from other sources. But this assumes that the information is available elsewhere.
The law firm reminds the court of the reason for the privilege in the first place. “By assuring confidentiality,” the court wrote in 2009, “the privilege encourages clients to make ‘full and frank’ disclosures to their attorneys, who are then better able to provide candid advice and effective representation. This, in turn, serves ‘broader public interest in the observance of law and administration of justice.’” In the absence of empirical studies either way, American courts accept these predictions as intuitively likely.
Building on that intuition, the law firm argues that for the privilege to do its work it must be predictable. Clients will not, it says, be forthcoming with their lawyers if they lack confidence that their communications will be protected. The primary-purpose test, the law firm argues, cannot provide that confidence because a court will determine a client’s primary purpose retrospectively, after the client has already given his lawyer the information he wants to protect, at which time it may be too late. By rejecting a privileged claim “when ever a court later makes an ad hoc judgment that the nonlegal purpose outweighs the legal purpose,” the firm says, the primary-purpose test “undermines” the privilege. By contrast, if a client’s significant purpose in consulting a lawyer is to get legal advice, it can be assured that all of its communications will be privileged, including non-legal advice that cannot be segregated.
That, however, is precisely what most troubles the government, whose primary-purpose test avoids “sweeping in communications predominantly about a non-legal matter, such as business development, accounting, or filling out a tax form.” In this very case, the government says, the “vast majority of the documents in dispute are communications” between the client and a non-lawyer accountant employed by the law firm to prepare tax returns. Tax-return preparation is a non-legal service that by itself carries no privileges even if performed by a lawyer.
The government also questions the law firm’s claim that a significant-purpose test offers greater predictability. It cites two dictionaries to argue that the word “significant” is “amorphous” and points out that the law firm’s “own amici offers a panoply of definitions.” By contrast, it adds, the “overwhelming majority of lower courts and other legal authorities” apply the primary-purpose test, which has proved workable for decades.
The law firm says correctly that the court has regularly refused to “balance” interests served by the privileged against other interests. The privilege always wins. The law firm argues that the primary-purpose test is a balancing test and that the balance here should protect the privilege. But the law firm may have misread the precedent. The court has refused to balance interests once the communications at issue are found to be privileged. The antecedent question now before the court, however, is whether the communications are privileged at all.
Complicating the question of predictability is how a judge would go about identifying whether legal advice was in fact a client’s significant purpose. Is the client’s claim conclusive? Or is there some objective test that a judge will later apply if and when an issue arises, and if so, what is it? The law firm does not say. An objective test would seem to be necessary so clients do not get to rule on their own claims. But then, says the government, the court will need “to discern a purely historical fact” retrospectively anyway, which weakens the law firm’s argument that its test offers superior predictability.
Each party argues that its rules will be easier to administer. It may be that neither will be easier across the run of cases or that the differences will be marginal. Or it may be that ease of administration should be subordinated to the importance of choosing a test that best protects the goals and limits the privileges.
The law firm’s strongest argument may be that a client should not have to sacrifice admittedly privileged communications simply because, as it happens, these get “inextricably intertwined” with some nonlegal advice. For its part, the government would reject the words “as it happened” and “some. ” If the firm prevails, clients and lawyers will be able to use the presence of legal advice to protect unlimited non-legal communications. Educated by counsel, some clients may adopt strategies to do just that.
Clients can also respond strategically to protect their interests under the primary-purpose test. They can take care to segregate legal advice from a law firm’s other advice or they can at least keep the legal advice primary. The court might ask counsel to explain why the client did not take that precaution in this very case.
The question at the heart of this appeal has long confronted American law: Does recognition of a particular privilege and its scope outweigh the social costs of secrecy? The significant-purpose test would certainly increase secrecy, including in this case. In return, the firm insists, it will also increase client disclosures, observance of law, and the administration of justice. The government disagrees. It anticipates that the increased secrecy will cause harm with no compensating benefits. Although each party is making an empirical prediction, the court, lacking empirical proof, must rely instead on “reason and experience,” which is what the federal evidence rules instruct.
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