Traditionally, only communications made for the purpose of giving or receiving legal advice have received the protections of the attorney-client privilege. Attorneys, however, often wear multiple hats and serve as both lawyers and business advisors for their clients. Questions about the applicability of the attorney-client privilege therefore often arise in so-called "dual-purpose" communications that include both legal and business matters.
Joining the United States Courts of Appeals for the Second, Fifth, Sixth, and D.C. Circuits, the United States Court of Appeals for the Ninth Circuit in In re Grand Jury, 23 F.4th 1088, 1091 (9th Cir. Jan. 27, 2022) held that, in evaluating whether dual-purpose communications that implicate both legal and business concerns are protected by the attorney-client privilege, courts should apply the "primary purpose" test, which looks at "whether the primary purpose of the communication is to give or receive legal advice, as opposed to business or tax advice." The Ninth Circuit expressly rejected application of the broader "because of" test, under which the privilege applies to dual-purpose communications that would not have been made but for the need to give or receive legal advice.
- Factual and Procedural Background
In connection with a criminal investigation into the owner of an unnamed company, a grand jury issued subpoenas to the company and the company's law firm, requesting documents and communications. In response, the company and law firm each produced some documents but withheld others on attorney-client privilege and work-product protection grounds.
The government moved to compel production of the withheld documents, and the United States District Court for the Central District of California granted the motion in part. The district court explained that the documents either were not protected or were discoverable under the crime-fraud exception, holding that certain documents identified as dual-purpose communications were not privileged because the "primary purpose" of the documents was to obtain tax advice, not legal advice.
In ordering the documents produced, the district court rejected the company's and law firm's request to apply a "because of" test that would protect dual-purpose communications made "because of" the need to give or receive legal advice.
The company and the law firm disagreed with the district court's ruling and continued to withhold the disputed documents. On the government's motion, the district court held the company and the law firm in contempt. The company and the law firm appealed the orders, arguing that the district court erred by relying on the "primary purpose" test, instead of the broader "because of" test for dual-purpose communications.
CGR Memo - Ninth Circuit Applies "Primary Purpose" Test to Dual-Purpose Communications in Determining Whether Attorney-Client Privilege Applies (pdf | 235.58 KB )
To subscribe to Cahill Publications Click Here
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
