Attorney Client Privilege
The concept of attorney client privilege as we know it could be shifting in the Ninth Circuit. The 1981 case Upjohn Co. v. United States determined the purpose of attorney client privilege is to “encourage full and frank communication between attorneys and their clients.”1 However, when it comes to legal tax professionals in the United States, courts in different circuits have handled attorney client privilege differently. In breaking down the attorney client privilege break down, one of the main points of contention among the circuit courts continues to be whether written communication from an attorney that involves both legal and non-legal advice is protected by attorney client privilege.
In the United States district courts for the District of Columbia, courts use the significant purpose test. This test asks whether one of the significant purposes of the communication is to convey legal advice or discuss legal issues. If this is so, the communication is privileged. If the communication does not have a significant legal purpose, it is not privileged.
In the Seventh Circuit, Illinois, Indiana, and Wisconsin courts can easily determine whether a communication is privileged. If it is purely legal in nature, it is privileged. If the communication has a dual purpose that includes legal and non-legal issues, it is not privileged.
The recent decision out of the Ninth Circuit courts which include the districts of Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, Northern Mariana Islands, Oregon, and Washington is much more unpredictable and arbitrary than its counterparts. These courts must weigh the relative significance of both the legal issues and non-legal issues contained in a communication and ask which issue is the more significant driving force behind the communication.
Ninth Circuit Ruling: More Questions Than Answers
The Ninth Circuit Court of Appeals recently affirmed a district court decision regarding the case In re Grand Jury which deemed that written advice from international tax lawyers is not protected by attorney client privilege.2 Borne of this decision was the more significant purpose test, which dictates if a legal purpose is the more significant motivator behind a written communication, then the communication is privileged. The cloudiness around this decision is triggered in cases where legal and non-legal purposes are equal in their significance.
Drafters of a petition to the Supreme Court demonstrate how this might apply by providing the following example: a tax attorney might email their client discussing the considerations involved in whether to amend their income tax returns.3 Inherent in that communication is both basic tax advice and legal strategy, arguably in equal measures. Under the D.C. test, this communication would clearly be privileged because a significant purpose of the communication is to discuss legal strategy. Under the Ninth Circuit test, the grant of protection for this common type of communication remains unclear.
Herein lies the problem. Because of the lack of clarity, opponents of the Ninth Circuit’s decision have petitioned the Supreme Court of the United States to grant a writ of certiorari, which asks the Court to review a lower court’s decision.
The Push for a Petition to Grant a Writ of Certiorari
The fundamental question the petition asks of the Supreme Court is whether a communication involving both legal and non-legal advice is protected by attorney client privilege when obtaining or providing legal advice is one of the significant purposes behind the communication.3
The petition drafters highlight three essential reasons why the Supreme Court’s grant of a writ of certiorari is vitally important. They begin by asserting that split circuit courts are problematic and lead to nonuniformity and confusion. As referenced above, each circuit court’s test for whether a communication is privileged is vastly different. This may become an issue for attorneys from different circuits who collaborate or co-counsel on client issues.
At the heart of the petition is the argument that the Ninth Circuit simply got it wrong by undermining the goal and purpose of attorney client privilege, which is to seek proper counsel. The petition writers argue the purpose of attorney client privilege is frustrated because the Ninth Circuit decision creates utter unpredictability in deciding privilege cases. They forewarn this decision will reduce and trivialize communications between clients and their attorneys as clients may be less likely to confide crucial details to their lawyers rendering the lawyers less thoroughly informed as a result. The Ninth Circuit’s decision puts the onus of distinguishing legal communications from business communications on the client instead of the attorney. The petition highlights how it is the attorney’s role to apply their professional judgment to separate the important legal facts from the irrelevant other facts.
Those who support the Ninth Circuit’s approach claim any other interpretation of privilege would spur the practice of including attorneys on non-legal emails to create a privilege claim. The originators of the petition argue that simply adding an attorney to an email does not suddenly make a non-legal communication legal. Furthermore, the petition writers oppose the argument that tax issues should be judged differently than other legal issues. They assert that tax issues and corporate issues usually have common threads and are not completely separate; thus, applying different standards in tax circumstances and other legal circumstances would yield ever more uncertain privilege findings.
Finally, the petition closes with the argument that granting the writ of certiorari provides an excellent opportunity to address a recurring issue. Attorneys, especially tax attorneys, wear many hats; they handle mergers and acquisitions, human resources, and licensing agreements, among other things. They effectively serve their clients as advisors of both legal issues and non-legal issues. Thus, the writers of the petition posit that attorneys are better advocates when they are fully informed, and the Supreme Court should grant their petition for a writ of certiorari to preserve the purpose of attorney client privilege and create uniformity in such determinations.
RJS LAW Is Here for You
The attorneys at RJS LAW are closely monitoring the progress of the petition and are here to help guide you through the process of seeking legal counsel. Schedule a free consultation today by calling us at (619)-595-1655 or visiting our website at https://irssolution.com.
If you are interested in reading the petition in its entirety, please find the link to the public PDF copy HERE
REFERENCE:
1Upjohn Co. v. United States, 449 U.S. 383, 389.
2In re Grand Jury, 23 F.4th 1088 (9th Cir. 2022).
3In re Grand Jury, 23 F.4th 1088 (9th Cir. 2022), cert. petition filed.
Written by Remy Hogan
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