by Dennis Crouch
The NY IP Law Association (NYIPLA) recently filed an amicus brief in the pending anonymous Supreme Court case captioned In re Grand Jury, 21-1397 (2022). The case focuses on the scope of attorney client privilege, especially with regard to dual-purpose communications.
Petitioner is a law firm specializing in international tax and had provided tax law advice to an expatriation client and also prepared individual tax returns for the client. Later, the US Gov’t began a criminal tax investigation of the client and subpoenaed the law firm to provide Grand Jury testimony and evidence. The law firm resisted, but both the district court and Ninth Circuit Court of Appeals ordered compliance. In prior precedent, the courts have ruled that preparation of a tax return is a non-legal function, and thus, communications for that purpose are not privileged. However, advice regarding tax planning and tax controversies is legal advice and thus communications are privileged. The attorney-client communications in this case thus fall under the category of dual-purpose communications where some aspect of the communications are privileged and other aspects are not privileged.
The lower court approach was two-fold. First, the court concluded that dual-purpose communications are entirely protected only when the primary purpose of the communication involved seeking legal advice. Using that test, the court found that some of the communications were not privileged because they were primarily associated with tax return prep. Thus, the law firm was ordered to deliver the documents. Still, the court did not run entirely roughshod over attorney-client privilege. Rather, the second part of the lower court approach that any portions of the communications that contain attorney-client privileged material can be redacted. Still, the law firm doesn’t want to disclose the communications at all and suggests that communications should entirely protected when the legal advice was “one of [its] significant purposes.” The Supreme Court recently agreed to hear the case with oral arguments set for January 2023.
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
[Petition]. In its responsive briefing, the U.S. Government reframed the question as follows:
Whether the district court permissibly denied petitioner’s general claim of attorney-client privilege over communications, related to the preparation of a tax return, that did not have obtaining legal advice as their primary purpose, while instructing that all legal advice contained in the communications be redacted
[Gov’t Opposition]. The “significant purpose” test comes from a 2014 D.C. Circuit decision by Judge Kavanaugh, who is now a member of the Supreme Court. In re Kellogg Brown & Root, 756 F.3d 754 (D.C. Cir. 2014).
In their Amicus Brief, NYIPLA argues that the situation faced by the tax lawyers here is also prevalent for IP attorneys because IP lawyers are often experts in both the law and in the relevant field of the IP. For example, many patent attorneys also hold advanced degrees in a particular technical field and regularly use that knowledge in providing advice. Likewise, many patent attorneys (especially in-house counsel) develop extensive knowledge of the firm’s business activities and goals and integrates those into their analysis. According to the briefs, the 9th circuit rule “which requires courts to balance the legal and nonlegal aspects of a communication to determine its predominant purpose, hamstrings IP attorneys and clients.” Irena Royzman (Kramer Levin) is counsel of record for the NYIPLA brief.