On November 23, 2022, the American Bar Association filed an amicus brief with the U.S. Supreme Court regarding the case In re Grand Jury. (Documents filed in case to date available here.) The Tax Section initiated the brief submission process because the case stems from a criminal tax investigation arising in the Ninth Circuit, although the analysis extends to a broader determination of when privilege applies in any dual-purpose context. The key issue whether the attorney-client privilege applies to communications that are made in part for obtaining legal advice and in part for some other purpose, such as for business purposes or regulatory compliance. The Ninth Circuit ruled that the privilege only applies if the “primary purpose” of the communication relates to legal advice. The Ninth Circuit’s opinion conflicts with the D.C. Circuit’s decision in In re Kellogg Brown & that held that the privilege applies so long as a “significant purpose” of the communication relates to legal advice.
The privilege exists to protect and facilitate candid communications between clients and their lawyers. Because candid communications improve the quality of the advice that lawyers provide to their clients, the privilege also benefits our adversarial legal system. The amicus brief argues that the uncertainty of determining the relative significance of underlying purposes of a communication could inhibit the free flow of information from clients to lawyers, to the detriment of clients and society.
The Ninth Circuit had noted that “tax return preparation services” were not ordinarily privileged, but the amicus brief pointed out that virtually all advice provided by tax lawyers to clients impacts their tax returns, resulting in frequent situations in which tax lawyers and clients engage in “dual purpose communications.” The brief argues that subjecting these communications to a “primary purpose” test would be unmanageable and unnecessary and would potentially undermine the attorney-client relationship, at a significant cost to both clients and the legal system. Finally, the brief notes that existing law already treats disclosure on a tax return of information provided by a client as a waiver of privilege (i.e., the lawyer is functioning more like a scrivener than a legal advisor). Thus, there is no need to expand the longstanding exceptions to the privilege.
John Colvin, a member of the Tax Section’s leadership Council and Committee on Government Submissions, and his associate, Jason Harn, provided an initial draft of the ABA brief in consultation with Lisa Zarlenga, the Section’s Vice Chair for Government Relations. Section members helped to finalize the brief, subject to substantive review and editing by members of the ABA’s Amicus Committee. The ABA’s Executive Committee ultimately approved the brief for filing. The Supreme Court has scheduled oral argument for the In re Grand Jury case on January 9, 2023.
The ABA press release with more information can be found here.