The US Supreme Court will hear oral arguments over the scope of so-called attorney-client privilege on Monday, as the centuries-old principle faces a challenge from the government that could upend the legal profession.
The case was brought to the high court by an unnamed law firm, after an appellate court ruled that the “primary purpose” of some of its communications with an unidentified client over tax issues were not legal in nature, and ordered them to be handed over as part of a criminal investigation.
Justices will be asked to consider whether “dual purpose” communications — which contain discussions about legal matters as well as other topics — can be parsed to determine whether the protection afforded by attorney-client privilege applies, or whether it should be enough to establish that the communication had “a significant legal purpose”.
A Ninth US Circuit Court of Appeals panel wrote in September 2021 that while “attorneys often wear dual hats, serving as both a lawyer and a trusted business adviser”, there was “no reason to tinker with the privilege’s scope”.
In its petition to the Supreme Court, the law firm argued that the Ninth Circuit’s opinion was at odds with decisions from two other appellate courts — one of which was written by Brett Kavanaugh, now a Supreme Court justice, while he was on the DC Circuit Court of Appeals — leading to “clear and significant conflict among the circuits”.
The concept of attorney-client privilege has roots in ancient Rome and has been recognised in English common law for centuries. It has also entered US common law, and broadly upheld by the Supreme Court.
However, the high court has not heard a challenge to the principle for decades, and several courts have found that the privilege is not absolute.
In one recent ruling, Donald Trump’s emails with lawyer John Eastman over the events leading up to the storming of the US Capitol on January 6 2021 were handed over to Congress under the so-called crime-fraud exception, which applies to communications made in furtherance of a crime.
In a brief submitted to the Supreme Court, the government argued that privilege should not extend to communications not directly about the law.
“Although federal law recognises an attorney-client privilege, it does not recognise an accountant-client privilege,” it said.
The government claimed that “it is well established that the preparation of tax returns and other tax filings does not constitute legal advice within the scope of the attorney-client privilege, even when done by an attorney”.
However, the legal profession has warned that allowing individual judges to determine which communications fall under privilege would have a detrimental effect on lawyers’ ability to provide proper advice.
“This is not a tax case — it has much, much broader implications,” said Irena Royzman, a partner at Kramer Levin who filed an amicus brief in the case.
Royzman, who advises biotechnology and pharmaceutical companies on intellectual property matters, said the Supreme Court was “addressing a fundamental issue that is really of enormous importance” to her clients and businesses across the US.
“Every fundamental decision in which we are involved . . . in terms of launching products, in terms of acquiring IP, in terms of settling litigation, or whether to file a patent . . . are mixed decisions and you need to understand both the legal and kind of non-legal aspects,” she said.
Several organisations have filed briefs supporting the law firm that brought the case.
The American Bar Association argued that attorney-client privilege was “fundamental to the fair operation of our adversarial system of justice”.
It is common for legal discussions with clients to “substantially overlap with business, regulatory compliance, and other not-exclusively-law-related purposes”, the body, which represents legal professionals, added in its brief. “Such discussions should be protected as a whole.”
The US Chamber of Commerce, which represents 300,000 companies, wrote in its amicus brief that the uncertainty caused by the divergent decisions of the appellate courts on the matter of privilege “hinders the business community’s ability to operate effectively and efficiently”.