Don’t Count on Privilege For Dual-Purpose Communications

A dual-purpose communication contains both legal and non-legal advice. It is typically written by an attorney, usually an in-house attorney. Frequent exchange of these communications makes it easy to inadvertently waive the attorney/client privilege.

The 12 federal circuits have different rules regarding attorney/client privilege and the application of dual purpose. In some the privilege applies provided the primary purpose is to request or receive legal advice, even if there is also a non-legal purpose.

Other districts may require the communication to be exclusively for the purpose of requesting or receiving legal advice for the privilege to apply. If the primary purpose of the communication is non-legal, the attorney-client privilege may be deemed inapplicable.

The Ninth Circuit weighs both purposes. If the legal advice purpose is prevalent, the entire communication is privileged. In the D.C. Circuit, privilege applies only if seeking or conveying legal advice is a main purpose of the communication. In the Seventh Circuit, dual-purpose communications per se cannot be privileged.

Distinguishing the legal from the business portion of dual-purpose communications can be difficult. Most courts employ either the “primary purpose” test, where such a communication is privileged if it is primarily to provide legal advice, or the “significant purpose” test, under which a communication is privileged if one of the primary purposes is to receive legal advice.

SUPREME COURT WEIGHS IN

In early 2023 the U.S. Supreme Court dismissed a petition for writ of certiorari to review a decision of the U.S. Court of Appeals for the Ninth Circuit.

In In re Grand Jury the U.S. District Court for the Central District of California held an anonymous company and law firm in contempt for refusal to comply with subpoenas in a criminal investigation. The company and law firm withheld certain communications, claiming that they involved both tax and legal advice.

The court ruled that such dual-purpose communications were not protected by the privilege. The court reasoned that the “primary purpose” of those communications was to obtain non-legal advice.

The company and law firm appealed to the Ninth Circuit, arguing that the district court should have applied a broader “because of” test, instead of the “primary purpose” test, to the communications at issue.

Under the more restrictive “primary purpose” test, courts evaluate whether the primary motive for the communication was to provide or request legal advice. If it was primarily related to something else, then the communication is not protected.

The “because-of” test does not balance the primary or secondary purposes of the communications. Rather, it protects documents that were created “because of” expected litigation, and that would not exist in substantially similar form “but for” the expected litigation.

The Ninth Circuit ultimately affirmed the district court and decided that the “primary-purpose” test applies when evaluating the applicability of the attorney-client privilege to dual-purpose communications.

The company and the law firm filed for writ of certiorari with the U.S Supreme Court. The question was whether the “primary purpose” test or a “significant purpose” test should govern when evaluating dual-purpose communications.

After oral arguments, the Supreme Court dismissed the petition “as improvidently granted,” leaving in place the Ninth Circuit’s holding. Therefore the “primary-purpose” test applies in the Ninth Circuit when determining the applicability of the attorney-client privilege to dual-purpose communications.

BEST PRACTICES FOR PROTECTING PRIVILEGE:

• To preserve the attorney/client privilege, label your communication as privileged and confidential. This emphasizes protected status, but it isn’t a guarantee of privilege. Using it too often dilutes its significance.

• Address requests for legal advice directly to your attorney. This reinforces the confidential nature of the exchange.

• Requests for legal advice should clearly state their purpose.

• Communications that include both legal and business advice should make the legal purpose evident on the face of the document. Better yet, separate legal and business advice if feasible.

• Be careful who receives a dual-purpose communication. Broad distribution could undercut the “primary” purpose, and result in the communication being deemed non-privileged.

• Consider retaining outside counsel to conduct internal investigations. This makes attorney-client privilege less complicated.

Remember that the privilege is frequently waived by unintentionally sending privileged communications to a non-privileged third party. Just discussing privileged information with third parties is risky.

Being cautious in making requests for legal advice, and responding to such requests, can make a real difference in the event of discovery in future litigation.