In re Grand Jury

THE PROPRIETY OF THE PRIMARY PURPOSE TEST

The law firm argues that the primary purpose test would impermissibly limit the attorney-client privilege’s availability. Brief for Petitioner at 13–14. The firm specifically maintains that dual-purpose communications are inevitable in today’s legal practice. Id. at 14. The firm notes that clients often seek out lawyers’ expertise not only to determine their legal obligations but also for advice on how to best act in light of those obligations, as well as advice on their other interests and needs. Id. This modern reality, the firm asserts, compels lawyers to advise their clients on what is desirable, in addition to merely discussing what is legally permissible. Id. at 15.

Due to dual-purpose communications’ asserted prevalence, the law firm argues that, consistent with past precedent, the Court should avoid a restrictive interpretation of the privilege. Id. at 17. Such an interpretation, the firm contends, would frustrate the privilege’s very purpose by discouraging clients and lawyers from communicating relevant information. Id. at 17. Moreover, the firm asserts that the primary purpose test insufficiently protects the privilege because it asks courts to determine whether communications are protected after such communications has already been made. Id. at 24. The firm maintains that subjecting communications to “unpredictable post hoc balancing” would burden communications with unpredictability and reduce the protection’s effectiveness. Id. at 27–28. Such unpredictability, the firm argues, would disincentivize the communications that the privilege is supposed to protect. Id. at 24–25.

Arguing in favor of affirming the Ninth Circuit’s decision, the United States contends that the primary purpose test best serves the interests underpinning and motivating the privilege. Brief for Respondent, United States at 22. Because the primary purpose is the one “driving the relevant portion of the communication,” the United States asserts, that purpose is the best one to use in determining whether a statement would have otherwise been made and whether the privilege should accordingly apply. Id. at 26. Essentially, the United States maintains, when the purpose of encouraging open communication with lawyers ends, so does the privilege’s application. Id. at 27–28.

The privilege, the United States asserts, ensures that legal advice is not deterred by the fear that it could be used against those who candidly and openly consult with their lawyers. Id. at 25. In these instances, the United States continues, infringement on truth-seeking is minimal because most of these statements would never be uttered if the privilege did not exist. Id. In the case of statements that will be made regardless, though, the United States argues that the same chilling effect and justification for the privilege do not exist. Id. at 25. This, the United States argues, is one of those cases. Id.

THE PROPRIETY OF THE SIGNIFICANT PURPOSE TEST

The law firm argues that the significant purpose test is appropriate because it “neither expands nor contracts” the scope of the privilege. Brief for Petitioner at 19. According to the law firm, a communication that serves a significant legal purpose meets the very definition of the attorney-client privilege, namely that the communication is made by the client for the purpose of seeking legal advice from a lawyer in their capacity as such. Id. at 18. The law firm asserts that this test will not allow the parties to shield their non-legal communications by merely copying or cc’ing a lawyer. Id. at 19. On the other hand, the firm continues, it does protect communications that serve a significant legal purpose even if they are later found to serve some other more significant purposes. Id.

The significant purpose test, according to the firm, safeguards communications that duly deserve protection while also ensuring predictability. Id. at 19–20. The firm explains that attempting to find a single primary purpose in dual-purpose communications is often difficult, if not inherently impossible. Id. at 20. The significant purpose test, the firm asserts, is “clearer, more precise, and more predictable” than the primary purpose test and helps reduce uncertainty. Id. Essentially, the firm emphasizes that any communication with a significant legal purpose should fall within the privilege, in light of how lawyers and clients communicate with each other in practice. Id. at 23–24.

The United States counters that adopting a significant purpose test would constitute a stark departure from the privilege’s primary purpose of encouraging the communication of legal advice. Brief for Respondent at 10. Because protections such as the privilege restrict access to probative information and “obstruct the search for truth,” the United States asserts that protections cannot be created lightly or construed expansively. Id. The United States stresses that public confidence in the judicial system and the system’s integrity itself depend on the “full disclosure of all facts,” particularly when a grand jury is vindicating its investigative function. Id. at 12. Accordingly, the United States maintains that the privilege should be applied narrowly, specifically only to communications that are “necessary to receive legal advice.” Id. at 14.

The United States also argues that allowing a secondary purpose to serve as the basis for the privilege would encourage individuals to simply include their counsel in communications in the hope that doing so will render the communications non-discoverable. Id. at 33. Such a rule, the United States maintains, amounts to “shepherding in a vast expansion” of the privilege. Id. at 34. Rather than providing clarity and predictability, the United States contends, a significant purpose test would force courts to rely on a vague term. Id. at 34–35. Such a test, the United States adds, does not avoid after-the-fact analysis at all, but would instead require the same backward-looking assessment that the primary purpose test does, analyzing the communication’s purpose at the time it was made. Id. at 36–37.

APPLICATION OF THE PRIVILEGE IN THE TAX CONTEXT

The law firm argues against a lesser privilege in tax cases. Brief for Petitioner at 29. The law firm notes that the Court has never embraced different rules of privilege “for different substantive areas of law” and argues that the Court should not do so here. Id. Such disparate rules, the firm maintains, would create the very uncertainty the Court has previously warned against introducing. Id. at 29–30. This would especially be the case, the firm asserts, because modern tax law practice inherently involves multiple areas of law, making clear distinctions between these practices impossible to draw. Id. at 30–31.

Considering the tax code’s “enormous complexity,” as well as tax law’s intersection with actual tax preparation, the firm asserts, legal advice about taxes often overlaps with more practical advice. Id. at 31–34. The firm contends that a strong privilege is particularly important in the tax context because tax law heavily relies on voluntary compliance, which necessarily precipitates a greater need for legal consultation. Id. at 31–32.

Accordingly, the firm maintains, legal advice on taxes cannot be “at risk of disclosure” whenever a lawyer assists someone with their legal tax obligations as well as the attendant execution of those obligations. Id. at 34. The firm argues that whether a non-lawyer could have performed the same task is irrelevant. Id. at 35–36. An attorney, the firm asserts, occupies a unique position, helping clients “navigate the complex legal requirements of modern society with specialized expertise.” Id. at 36.

In support of the Ninth Circuit’s decision, the United States argues that the privilege does not apply to tax advice “within the scope of an accountant’s services” merely because a lawyer is involved. Brief for Respondent at 10. Information that a non-lawyer could provide, the United States argues, is not privileged. Id. at 15. Because these sorts of communications, such as those rendered by accountants, are not privileged, the United States continues, they do not automatically become legal advice covered by the privilege merely because a lawyer provides them. Id. at 16. The United States argues that the Court’s past refusal to recognize an accountant-client privilege or work-product protection for accountants supports its argument. Id. at 12.

The United States further buttresses this point by noting that courts have generally found “tax return preparation” to be an accounting rather than a legal service. Id. at 16. Providing lawyers who render these services with a privilege unavailable to other practitioners in this area, the United States continues, would unfairly advantage affluent taxpayers and create the impression that “well-heeled taxpayers” are enabled by the privilege to conceal tax avoidance. Id. at 17.

Moreover, the United States notes that while Congress has given tax preparers and accountants a privilege, it is limited to situations where they are engaged in the practice of law and not acting in other capacities. Id. at 19. Expanding the privilege, the United States argues, would go beyond the limits that Congress imposed and would hamper the tax avoidance investigations “that Congress was careful to protect.” Id. at 20. Doing so, the United States contends, would create a form of impermissible “tax exceptionalism.” Id. at 21–22.