U.S. Supreme Court to Address Attorney-Client Privilege in Tax Case

Posted On Wednesday, October 5, 2022

Takeaway: The Supreme Court is expected to clarify the question of whether attorney-client privilege applies in “dual-purpose” communications in situations where law firms provide clients with both legal and non-legal advice.

On Monday, October 3, 2022, the U.S. Supreme Court announced it would review a law firm’s challenge to production of client communications pursuant to grand jury subpoenas in the case of In re Grand Jury, case number 21-1397, in the U.S. Supreme Court.

The unnamed law firm requested the Supreme Court to clarify the law concerning attorney-client privilege and when this privilege protects communications that involve both legal and non-legal advice. The firm’s petition to the Supreme Court came after the Ninth Circuit ordered the firm to comply with subpoenas that sought communications and other materials related to preparing the tax returns of one of its clients.

In response to grand jury subpoenas, the firm produced over 20,000 pages of records but withheld some documentation considered “dual-purpose” records, asserting both attorney-client privilege and work-product doctrine. Some of the withheld communications between the firm and its client involved legal advice concerning taxes, while other communications were solely related to taxes. The firm claimed the communications that did not provide legal advice were for the purpose of preparing the client’s tax returns and therefore protected by attorney-client privilege.

The Ninth Circuit held that, although some communications were indeed attorney-client privileged, other communications whose primary purpose was tax-related and not legal in nature were not. Appellate courts among the Ninth, Seventh, and D.C. Circuits were split in their analyses and conclusions of this issue, which necessitated the intervention of the Supreme Court. 

The Supreme Court’s ultimate decision on this issue will provide critical guidance to law firms when responding to grand jury subpoenas and clarify an as-yet undecided issue that has heretofore lacked uniformity: the impact of attorney-client privilege on communications that involve both legal and non-legal substance. Attorneys and law firms would be well-served to watch for the Supreme Court’s decision on this matter in the future.

Read the petition here.

The attorneys at Pietragallo Gordon Alfano Bosick & Raspanti, LLP are skilled at assisting corporations, firms, and individuals in responding to government inquiries and grand jury subpoenas. We assist clients in all 50 states, the District of Columbia, and abroad.