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Litigation Journal

Spring 2022: Embracing Change

The Adversary System Succeeds Again, Sort Of

Robert E Shapiro


  • What the court of appeals really needed to do in In re Grand Jury was recognize that all privilege claims depend on a showing that there was a purpose of rendering legal advice.
  • Rather than a broad interpretation, a narrow construction of purpose was a sounder application of the rule.
  • In re Grand Jury falls so far short of these goals that it seems a wonder it got to the right outcome at all.
The Adversary System Succeeds Again, Sort Of
Jon Feingersh via Getty Images

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At first blush, nothing about In re Grand Jury, No. 21-55085 (9th Cir. Sept. 13, 2021), seems particularly cringe-worthy. Certainly not the result. Mercifully compact, the court of appeals decision resolved an open question in the Ninth Circuit that has bedeviled some of the other circuit courts of appeals as well. This is how to handle documents from (and, to some extent, to) lawyers who serve a dual function in providing both business and legal advice. The precise question in the case was whether a “primary purpose” test should determine the character of the documents or whether, instead, a broader “because of” test, familiar from work-product doctrine disputes, should determine what is, and is not, privileged. The court elected the former, deferring only the question of whether the communication had to have “a” primary purpose as legal advice or must meet an even higher standard in which “the” primary purpose was such.

An ordinary case, surely. But the prosaic, even pedestrian, character of its holding masks a story that is a bit more challenging. In fact, the opinion’s innards are loaded with peculiarities, not to say howlers. It may reach the right conclusion, or at least a defensible and definitive one; but it does so in spite, rather than because, of its internal arguments and conclusions, which are at times downright baffling. Should we care? It is now clear law in the Ninth Circuit that a (or the) primary purpose test applies. What trouble might questionable reasoning cause?

Plenty. It is not just that the case might be cited subsequently for quite a few questionable assertions. It is also a feature of the common law, and the adversary system, that new law depends on old reasoning. If the latter is defective, so may be the new. Then there is this question: How did this happen? How did the court, upon muddled thinking, reach that seemingly right result? Chance? That would be disconcerting. An implicit bias in the right direction? Not much better. Something else?

Perhaps by dissecting In re Grand Jury we may minister to some of these anxieties. First the facts, which were presented in a model of concision. At issue were grand jury subpoenas seeking, from a company and its law firm, documents and communications (presumably emails) that might bear on a criminal investigation. The owner of the company, which was a client of the law firm, was the investigation’s target. As you might expect, neither the company nor the law firm was enthusiastic about having to comply, and neither did. Each withheld some documents on the basis of the attorney-client privilege and work-product doctrine. The government sought to compel production of everything it asked for, and the district court granted the motion in part, finding that certain documents were not protected. Alternatively, it ruled that the materials were discoverable under the crime-fraud exception. Strikingly, the precise line of demarcation—what the district court deemed still privileged or why—is never stated by the court of appeals.

Despite their partial win, the company and the law firm followed the customary procedure for challenging the ruling further by continuing their defiance and accepting a contempt citation. This made the matter ripe for an appeal, which was immediately taken. At this point, the court of appeals was free to have its say.

The first curiosity in the court of appeals is what the three-judge panel chose not to do. It made no further mention of either the crime-fraud exception or the work-product doctrine. Perhaps it did not believe they applied, though it would be nice to know why, or at least on what basis the district court made its own decision. Each might have decided the matter, in whole or in part, either for the government (crime-fraud exception) or against (work-product doctrine). There is, of course, always a paradox in the former. If the point of an investigation is to determine whether a crime occurred, how can one know, until the inquiry concludes, whether the exception applies? In effect, the exception calls upon the court to prejudge the outcome, never a very comfortable undertaking for a judge. The case law provides a route around this dilemma. Whether for this reason or otherwise, the court of appeals chose not to go there at all. As for the work-product doctrine, its omission is even curiouser, given that the appellants proffered its standards for use in the privilege context.

The Court’s Focus

The three-judge panel apparently had another matter in mind, going right to the heart of the dual-purpose privilege issue that the case now stands as having resolved. Its enthusiasm for this task by no means occasioned any greater care. The court began by announcing again the time-honored general rule of attorney-client privilege, which, it said, protects “confidential communications between attorneys and clients, which are made for the purpose of giving legal advice.” No one could quarrel with this pithy statement of the principle. But it presented at least this conundrum: Why, then, was more even needed? The very definition of privilege seems to provide the answer to the question posed. A communication must be for “the purpose of giving legal advice.” The problem, then, should be what to do when there is more than one purpose. Everything else seems persiflage.

The court’s next step, however, only complicated the matter further—and unnecessarily. The court noted that “communications related to an attorney’s preparation of tax returns are not covered by” the privilege. Doesn’t it depend on what the documents show the purpose was, why the attorney did what is ordinarily an accountant’s job? Nor did the court’s example help. It stressed that, if a client gives figures from his W-2 form to an attorney while litigation is in progress, they are not privileged. This is connected to the former sentence only by the fortuitous circumstance that a tax document serves as the example. The giving of mere information, whether about taxes or any other fact, for an uncertain purpose during litigation, is not the giving of advice no matter how you cut it. The court’s third statement assumes its conclusion and is best summarized as “If the purpose is to give legal advice, it may be privileged.” We seem to have taken a rather circuitous route to return to the original uncontroversial point of departure. It all depends on what the purpose of the communication is.

Is this analysis too captious? Perhaps. In re Grand Jury is not the first case, and certainly will not be the last, to contain unnecessary musings. But what is going on here? What comes next hardly sheds light on the subject, even as it finally gets to the meat of the matter. The court stressed that “communications about the propriety of a particular tax deduction . . . could have both a non-legal purpose (tax compliance considerations) as well as potentially a legal purpose (seeking advice on what to do if the IRS challenged the deduction).” A moment’s consideration shows that the court has gone from sloppy analysis to pure tendentiousness. It literally is just trying too hard, or not hard enough.

Consider the first example: an attorney commenting on the propriety of a particular tax deduction. What would fail to comprise legal advice here? If a lawyer were giving a client advice that a certain kind of tax deduction was not proper, in what sense would that not be legal advice? Because it concerned taxes? Because an accountant might, but didn’t, do so? The second example was equally flawed. Advice on what to do if the IRS challenges a deduction could be legal advice but might also serve a non-legal purpose. Getting advice on what to do about the IRS could comprise nothing more than a statement of the procedure to follow under the statute, information known to every good accountant, or in fact advice that one needed to consult a lawyer, rather than being legal advice itself. One can think of numerous other possibilities.

The “Dual-Purpose” and “Because of” Tests

If the court of appeals wanted to posit an example of a real dual purpose, it could surely do better than this. With this inauspicious lead-in, the appellate court next turned to the difference between the two tests being proposed: the “dual-purpose” test and the “because of” test. Under the former, the question is whether the (or “a”) primary purpose is to give or receive legal advice. But isn’t a legal purpose a sine qua non of any test? Must there not be a least some legal advice being given? Otherwise, where would the privilege lie? It is an old rule that privilege is an exception to the governing principle that the law is entitled to everyone’s evidence. We make a narrow exception for the attorney-client privilege because we want to specially protect communications between lawyer and client for the purpose of rendering legal advice. Where’s the need if there’s no legal advice being given?

What, then, is the sense of the “because of” test? As the court of appeals noted, it is ordinarily applied in the work-product context. It “considers the totality of the circumstances and affords protection when it can fairly be said that the document was created because of anticipated litigation and would not have been created in substantially similar form but for the prospect of litigation.” It is, as the court stressed, a “broader” test than the primary purpose test. But then in what sense could this ever be a test of the attorney-client privilege? Is it not what it purports to be, the test of the work-product doctrine, subject to its special rules?

Recall that in a work-product matter, the communication does not even need to be created by a lawyer. It could be a non-lawyer carrying out a litigation-related task that relates to the overall litigation strategy. It’s a wonder how this even made its way into the conversation about attorney-client privilege. It could have been waved aside by the court as the wrong test for these circumstances. Or shouldn’t it instead have been the basis of an analysis of the district court’s decision that the work-product doctrine did not protect the company and the law firm? Why not use the “because of” test where it belongs?

Indeed, the court then concluded that the company and its lawyers had provided “no persuasive reason” to abandon the so-called common-law rule of privilege, in favor of a work-product rule that would swallow both principles. As far as we are told, however, there is not just no “persuasive” reason; there is no reason given at all. What the appellants provided as their grounds is just nowhere to be found. Essentially, what was an argument of questionable merit has been converted into pure straw man. To take the newly proffered “because of” rule seriously in the privilege context, one would need to know what its sense was or was said to be in the first place.

One could imagine various answers. One would be that the purpose (there it is again!) of a communication arising out of a legal dispute needs to be construed broadly. Even non-lawyer communications could in this broad sense be “for the purpose of giving legal advice.” One can undermine the rendering of legal advice by not seeing the trees as part of the forest. We should want to encourage lawyers and their clients to communicate openly with each other, and they will do so only if the privilege is construed in the broadest possible, or at least a very broad, manner. The “because of” test—a rule that the legal purpose need not be proximate, but rather a “cause” in a broader sense—has the virtue, at least, of ensuring that lawyers can give advice with greater comfort that it will not later come to light.

None of this was offered for consideration by the court of appeals, nor were the obvious objections. One is that this is exactly what the work-product doctrine is for, at least in the context of a dispute. But exactly because it provides a broader protection, it is chock-a-block full of exceptions, not present in privilege law. Not least of these is the hierarchy of information that the doctrine relies on as a predicate for a system in which it is easier (ordinary work product) or harder (attorney strategy) to set the doctrine aside. A privilege is, among other things, a more absolute thing.

Second, and relatedly, privilege obtains its more impressive armature because of both its greater significance and its narrowed focus. Its stricter exception to the rule that the law is entitled to every person’s evidence demands an application that is more tailored and precise, making it narrower in scope even while less subject to exception. Indeed, this presumably is the reason there is controversy about whether the primary purpose rather than merely “a” primary purpose should be required, the very question the court of appeals chose not to decide.

What the Court Should Have Done

What the court of appeals really needed to do in this case was recognize, first, that all privilege claims depend on a showing that there was a purpose of rendering legal advice; and, second, that rather than a broad interpretation, a narrow construction of purpose was a sounder application of the rule, more consistent with the exceptional circumstances the privilege question depends on. It could (perhaps, should) have spoken at least briefly about the crime-fraud exception, as an example of how narrow the privilege rule is, and it might have deflected the claim of a work product doctrine–style test by stressing the difference in purposes of the two rules (perhaps also reminding that work product is not really “privilege” in the precise sense). Maybe also it might have explained how the work-product doctrine failed to protect the appellants in this case, which undoubtedly would have emphasized the different objectives of the two principles even more.

In re Grand Jury falls so far short of these goals that it seems a wonder it got to the right outcome at all. The opinion is what we usually call result-oriented. The court knew exactly where it wanted to end up. The company and its lawyers never stood a chance, not that they necessarily deserved one, a matter we cannot decide without all the facts the court of appeals chose not to discuss. The Ninth Circuit had a legal lacuna to fill, and it was determined to get there. And so it did.

That it seems to have gotten to the right place, even upon dodgy logic, should offer some comfort, however. This was likely not an accident. Probably, the company and the law firm had sealed their own fate by making the arguments they had, which did not hold up in the crucible supplied by the adversary system. What that system does is give the neutral decision-maker the opportunity to see from a clash of viewpoints what seems the right or at least more persuasive outcome. This underlying cause, the reason the court of appeals was oriented toward a single result, cannot be underestimated, nor should its efficacy in achieving good ends be ignored. Imagine if, as in other systems, the court were the sole inquisitor and principal reasoner, left to just decide the matter itself without the sometimes furious interplay of opposing viewpoints from the parties themselves. In re Grand Jury hardly provides much reassurance that it would have achieved the right result. For that reason, what to us seems “result-oriented” may actually be a reason for celebration rather than alarm. The case seems to have been decided almost beforehand, by the weight of the arguments in an adversary system, rather than the sometimes less than careful musings of the court. And thank goodness for that.