The attorney-client privilege is a foundational principle of the legal profession, yet too often lawyers take its protections for granted. “Dual-Purpose” communications— communications in which both legal and nonlegal advice is sought or provided—create a particularly thorny bramble that can easily ensnare the unwary into unintentional privilege waivers. A three-way circuit split on the proper legal test to apply to claims of attorney-client privilege for dual-purpose communications appeared to be at an end, when the U.S. Supreme Court granted certiorari in In re Grand Jury—a case out of the Ninth Circuit involving a criminal grand jury subpoena of a law firm’s client records—in its 2022-2023 Term. But on January 23, 2023, after hearing oral argument, the U.S. Supreme Court dismissed In re Grand Jury, stating the Court improvidently granted certiorari. Therefore, the tripartite status quo and its resulting confusion remains.
Dual-purpose communications are communications between attorney and client that involve both legal and nonlegal matters. As every first-year law student quickly learns, the attorney-client privilege protects communications made between attorneys and their clients when obtaining or providing legal advice. Conversely, communications between lawyers and their clients that do not seek or provide legal advice do not enjoy this privilege protection. For example, if a lawyer emails their client asking about the weather. And, even when “legal” issues are being discussed internally by a client, merely including (such as by “cc”) an attorney on a communication is no guarantee that the communication will be found to be privileged. Instead, courts typically examine each “FYI” or “cc” individually, to determine if there is an implicit request for (or provision of) legal advice. But what if a communication between a lawyer and their client involves both legal and nonlegal issues? Where the legal advice in a document can easily be isolated from nonlegal content, only the portion of the document that involves legal advice ordinarily would be privileged. But when the same content addresses mixed issues of law and business, then difficult questions often arise.
As the underlying facts of the In re Grand Jury case itself remind us, white-collar practitioners must carefully consider the scope of the attorney-client privilege relating to dual- purpose communications when responding on behalf of clients to government investigative demands and subpoenas. Yet, while dual purpose communications arise in many contexts, they (and the potential troubles they cause) are most common in situations involving in-house counsel, whether between outside and in-house counsel, or between in-house counsel and their business team. In either situation, most commonly a lawyer is providing advice that serves a business need as well as a legal need.
In an increasingly complex business landscape, attorneys often wear multiple hats and clients routinely seek advice from their in-house and outside attorneys with multiple goals in mind. In-house and outside counsel may be called upon to provide input on a host of daily business decisions, including those involving product development, tax, potential business deals, public relations, or human resources. Take, for example, a request from a company’s PR team that an in-house lawyer review a proposed press release. Is this a legal request to make sure the content satisfies any legal requirements (such as for a publicly traded company) and minimizes legal risk? Or is it seeking review to ensure the statement hits the intended tone, makes the intended message, is accurate, and/or is consistent with other company messaging? These latter purposes appear less like legal advice and more like marketing advice. What if both, or multiple, of these purposes motivated the request—are the communication and draft press release privileged? Attorneys who are fortunate to have strong relationships with their clients and business teams and are integrated with the business of their client may find themselves confronting scenarios like this one on a regular basis. The provision of legal advice can become so intertwined with business advice that the line between legal and nonlegal communications becomes hopelessly blurred. As the various tests in the federal circuit courts illustrate, this blurring of legal and nonlegal advice has resulted in the unpredictable application of the attorney-client privilege.
Federal circuits have articulated different tests for applying the attorney-client privilege to dual- purpose communications. There is a three-way circuit split regarding how courts assess these privilege claims: (1) the primary purpose test, (2) a primary purpose/significant purpose test, and
(3) a per se rule in the tax context. Federal district courts across circuits have employed a litany of tests for applying the attorney-client privilege to dual-purpose communications. At the circuit court level, the primary purpose test is the most widely adopted. The D.C. Circuit articulated that test differently in 2014, creating a new test and the current circuit split. While the Seventh Circuit has adopted a bright-line privilege rule in the tax context since 1999, other circuits have yet to expressly adopt any approach at all.
The primary purpose test extends the protection of the attorney-client privilege to a dual- purpose communication if the primary purpose of the communication is related to legal advice. Under this test, courts ask whether the primary purpose of the communication is to give or receive legal advice as opposed to business or tax advice. This test implies that a dual-purpose communication can have only one “primary” purpose. The court must engage in a balancing analysis to ascertain the legal and nonlegal purposes of a communication and then determine which predominates. This test is applied to dual-purpose communications in the Second, Fifth, Sixth, and Ninth Circuits.
Under a primary purpose test, courts ask, “Was obtaining or providing legal advice a primary purpose of the communication, meaning one of the significant purposes of the communication?” This test was first announced in, and continues to be recognized by, the D.C. Circuit. That court expressly stated that it agrees with and adopts “‘one of the significant
purposes’—as an accurate and appropriate description of the primary test.” So, while the D.C. Circuit purported to interpret the previously existing primary purpose test, it diverged from its sister circuits and, in fact, created a new test when it held, “It is thus not correct for a court to presume that a communication can have only one primary purpose. It is likewise not correct for a court to try to find the one primary purpose in cases where a given communication plainly has multiple purposes.” While this test on paper appears near-identical to the primary purpose test, its slight difference in wording—“one of” rather than “the”—is significant. Unlike “the primary purpose” test described above, “a primary purpose” test requires no balancing. Without a determination of which purpose (legal or nonlegal) predominates, the attorney-client privilege will apply to a dual-purpose communication if a significant purpose of the communication is the seeking or providing of legal advice. As the D.C. Circuit put it, “the test boils down to whether obtaining or providing legal advice was one of the significant purposes of the attorney-client communication.”
3. Per Se Rule
In the tax context, the Seventh Circuit has adopted a bright-line rule holding that dual- purpose communications are never privileged, regardless of how significant a communication’s legal purpose may be. The Seventh Circuit reasoned that a taxpayer must not be allowed to obtain greater protection from government investigators by hiring a lawyer to do the work of an accountant. This rule, at least for communications that seek or give tax advice, expels dual- purpose communications from the protection of the attorney-client privilege. Unlike the the
primary purpose and a primary purpose tests articulated above, in the Seventh Circuit there is no balancing of purposes and no analysis to determine if a significant legal purpose exists. The Seventh Circuit has not formally adopted a test for dual-purpose communications outside the tax context.
III. In re Grand Jury
The In re Grand Jury case, which originated in the U.S. District Court for the Central District of California, involved a dispute over documents that contained both legal advice and tax advice. In that case, each of the appellants, referred to as “Law Firm” and “Company” (presumably unnamed to preserve grand jury secrecy), was served with a federal grand jury subpoena for documents and communications relating to a criminal investigation. The target of the criminal investigation was both the owner of Company and a client of Law Firm, which did tax work for the owner. Law Firm and Company produced some documents but withheld others as protected by the attorney-client privilege. The district court applied the primary purpose test and ruled that certain dual-purpose communications were not privileged. Company and Law Firm disagreed with the district court’s privilege rulings and continued to withhold disputed documents. The federal prosecutors filed a motion seeking to hold Law Firm and Company in contempt of court for refusing to turn over the allegedly privileged documents. The district court granted the contempt motions, ultimately requiring the dual-purpose communications to be produced, and Law Firm and Company appealed. On appeal, the Ninth Circuit expressly affirmed and adopted the district court’s use of the primary purpose test, which held that the communications were not privileged because the primary purpose of the documents was to obtain tax advice, not legal advice. Law Firm petitioned the U.S. Supreme Court, which granted certiorari.
Petitioner Law Firm asked the Supreme Court to adopt “a significant purpose” test—the
D.C. Circuit test—with the following question presented:
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.
In the petition seeking certiorari, petitioner Law Firm noted that “[t]hree circuits have announced different and incompatible tests for these co-called ‘dual-purpose’ communications.” It went on to explain that the Supreme Court should grant its petition to resolve this conflict among circuits “to allow lawyers and their clients throughout the country to predict with a high degree of certainty whether their communications are privileged.” The government opposed the petitioner’s writ for certiorari, arguing that the district court correctly determined that documents and portions thereof were not subject to the attorney-client privilege and that the outcome of this particular case would not have been different in other circuits.
After the Supreme Court granted certiorari, many in the legal profession looked forward to one nationwide standard on this issue of central importance to the practice of law, especially where clients, their counsel, and their communications cross state—and federal circuit court—lines. However, after oral argument, the Supreme Court dismissed In re Grand Jury in a one-line order stating, “The writ of certiorari is dismissed as improvidently granted.”
The one-line opinion and order may not provide any explanation of the Court’s reasoning, but several insights can be gained from the certiorari filings and oral argument. Of note, each of the sixteen amicus briefs filed supported the petitioner Law Firm’s position—reflecting the desire among a wide variety of stakeholders for uniformity across the country and for a standard that makes attorney-client privilege more predictable. It is possible that the Supreme Court agreed that in this specific case (which, notably, is a tax case), the outcome would not have varied if a different test were applied. Certainly, questioning at oral argument by Justices Jackson and Kavanaugh indicated that the Court had a difficult time understanding whether and how the two tests would actually result in different outcomes in most cases.
For now, legal practitioners have lost the opportunity for these subtly but meaningfully different standards to be harmonized and for a uniform standard for applying the attorney-client privilege to dual-purpose communications. Perhaps as the remaining federal circuit courts have the opportunity to address the issue, the differences between these tests will crystallize more concretely and the Supreme Court may once again decide to rehear the issue with a different set of facts.
With the dismissal of In re Grand Jury, the status quo remains. Currently, there are three different legal tests applied in the federal courts to ascertain whether the attorney-client privilege attaches to communications with multiple purposes. In-house and outside counsel with practices or clients that span state lines should carefully consider the differences in attorney-client privilege protection in each of the federal circuits. Various approaches have been adopted by courts
throughout the country for determining the choice of law rules applicable to privilege issues, meaning lawyers and clients located in Washington, D.C. (or other jurisdictions that ultimately adopt the D.C. Circuit test) might still be subject to the stricter a primary purpose test in some circumstances. Full stop, parties should treat dual-purpose communications with care. Attorneys would be prudent to assume that their communications may be subject to the narrower the primary purpose test (and that communications regarding tax issues might be subject to the Seventh Circuit’s bright-line rule of no privilege).
Counsel and clients should consider whether changes to how they communicate with each other might help better protect the privilege. Possibilities include clearly labeling and/or segregating legal advice from nonlegal advice where possible, either within a document to permit redactions or in separate documents entirely, to ensure true legal advice is not diluted by other considerations. Or, just as attorneys and their clients are familiar with “ATTORNEY CLIENT PRIVILEGED” labels on emails and documents, perhaps creative attorneys could conceive of similar labels and headers for more complicated situations in order to make a record of the parties’ intent that the primary (or only) purpose of a communication or document is giving or seeking legal advice (even though labels are no guarantee of protection).
Lawyers would be well served to watch this still-developing area of law carefully. While the Supreme Court’s dismissal of In re Grand Jury is unfortunate, it provides a teaching moment for attorneys to educate their clients about the importance of protecting the attorney-client privilege and creates an opportunity to have an open discussion about how to best accomplish that goal.
