A federal appellate court decision resolves a split amongst its district courts over which test applies to determine whether to protect attorney-client privilege claims in dual-purpose communications. The ruling rejects the broader “because of” anticipated litigation test in favor of the “primary purpose” test. ABA Litigation Section leaders predict this may lead to a chilling effect on attorney-client communications.
Law Firm and Company Held in Contempt
The Court of Appeals for the Ninth Circuit held in In re Grand Jury (*update below) that the “primary purpose” test, and not the “because of” test, applies when determining the appropriate privilege standard to scrutinize dual-purpose attorney-client communications. In the case, the grand jury served a company and a law firm with subpoenas for documents and communications related to a criminal investigation. While the company and law firm produced some documents, both declined to produce other requested materials relying on the attorney-client privilege and the work-product doctrine.
The government moved to compel, and the U.S. District Court for the Central District of California ordered production on the grounds that “these documents were either not protected by any privilege or were discoverable under the crime-fraud exception.” The district court explained that “certain dual-purpose communications were not privileged because the ‘primary purpose’ of the documents was to obtain tax advice, not legal advice.” After the company and the law firm persisted in withholding the requested documents, the district court granted the government’s motion and held both in contempt.
“Primary Purpose” Test Applies to Dual-Purpose Communications
On appeal, the Ninth Circuit observed that its district courts had diverged over which test to apply for determining the scope of attorney-client privilege in dual-purpose communications, “where an attorney’s advice may integrally involve both legal and non-legal analyses.” Some lower courts had applied the “primary purpose” test, which asks whether “the primary purpose of the communication is to give or receive legal advice, as opposed to business or tax advice.” Others had applied the broader “because of” test, typically used in the context of the work-product doctrine, and which “looks only at causal connection, and not a ‘primary’ reason.” Under this standard, the privilege attaches where “the document was created because of anticipated litigation and would not have been created in substantially similar form but for the prospect of that litigation.”
In deciding which test was appropriate, the appellate court looked to the motivation behind the differing standards. It noted that the “because of” test typically applied to the work-product doctrine is broad because it is designed to “shield lawyers’ litigation strategies from their adversaries,” while the attorney-client privilege “is not necessarily tied to any adversarial process,” but instead “encourages full and frank communication between attorneys and their clients.”
The Ninth Circuit resolved the split amongst its district courts by concluding that “the primary-purpose test applies to attorney-client privilege claims for dual-purpose communications” and upholding the district court’s contempt orders. It expressed concern that the broader “because of” test might encourage parties to “withhold key documents as privileged by claiming they were created ‘because of’ litigation” and “might harm our adversarial system.”
The appellate court held open the question, however, of whether it should adopt “a primary purpose” test instead of “the primary purpose” test. The law firm and company argued that the court should follow the D.C. Circuit’s ruling in In re: Kellogg Brown & Root, Inc., which asked whether a primary purpose—rather than the primary purpose—of the communication at issue was “obtaining or providing legal advice.” Although the Ninth Circuit saw “the merits of the reasoning in Kellogg,” it did not apply the “a primary purpose” test. While some district courts have adopted Kellogg’s “significant purpose” analysis, the Ninth Circuit declined to do so, noting that none of its other sister circuits had embraced this approach. It also distinguished Kellogg on the grounds that that case dealt with “the very specific context of corporate internal investigations” with reasoning that did not apply equally to the present case.
Navigating the Road Ahead
Litigation Section leaders point out the difficulties that might follow from this ruling. “The holding seems like it will have a chilling effect on the free exchange of communications between attorney and client because of fear that such communications will be deemed to have a primary purpose other than the provision of legal advice,” predicts Joseph S. Simms, Cleveland, OH, cochair of the Section’s Securities Litigation Committee.
Other Section leaders agree. “It will likely not be enough that a lawyer’s name appears somewhere in the addressee or distribution list. Legends placed upon documents should include ‘Confidential Attorney-Client Communication’ where possible, although that will not be dispositive,” adds John H. Mathias, Jr., Chicago, IL, cochair of the Section’s International Litigation & Dispute Resolution Committee. Nevertheless, given the ruling, “lawyers should take care to isolate and separate communications that are business-oriented versus those that are for purposes of providing legal advice and ensure that communications for the latter purpose are marked as such,” advises Simms.
*Article updated July 18, 2022: The Ninth Circuit opinion was amended and superceded June 22, 2022.
Hashtags: #privilege #attorneyclientprivilege #dualpurpose
- David Atallah and Jessica Zilerberg, “Privileged and Protected Information: Tips and Lessons,” Young Advocates (May 17, 2018).
- Elissa Spencer, “Confidentiality, Privilege, or Both?” The Young Lawyer (May 15, 2017).
- Bradford S. Babbitt, “How to Avoid Attorney-Client Privilege Problems in Joint Representations,” Commercial & Bus. Litig. (July 11, 2018).
- In re Grand Jury, 23 F.4th 1088 (2021).
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