Fight over scope of attorney-client privilege reaches US Supreme Court

The US Supreme Court heard oral arguments over the scope of so-called attorney-client privilege on Monday, as the centuries-old principle faces a challenge that campaigners claim 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 a client over tax issues were not legal in nature, and ordered them to be handed over as part of a criminal investigation.

A Ninth US Circuit Court of Appeals panel wrote in September 2021 that there was “no reason to tinker with the privilege’s scope”.

Justices were asked to consider if “dual purpose” communications — which contain discussions about legal matters as well as other topics — could 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”.

Asking parties and courts to “disentangle competing purposes” was “an inherently impossible exercise”, Daniel Levin, a lawyer for the plaintiffs, told the court.

When challenged to provide examples of interactions with “insignificant” legal purpose, Levin responded: “You call a lawyer to sit in a meeting, to sit in the corner while you talk about business . . . you copy a lawyer in on a communication.”

Justice Elena Kagan, who was nominated by former president Barack Obama, asked why the court should not adhere to “the ancient legal principle” of “‘if it ain’t broke, don’t fix it’”, while Ketanji Brown Jackson, who was put forward by President Joe Biden, asked if ruling in favour of the law firm would not be “going from one extreme to the other”.

Arguing for the US government, Masha Hansford said that ruling for the law firm “would create an accountant-client privilege, whenever a taxpayer can afford to hire an attorney to prepare his taxes”.

She later confirmed that of the documents in question, “the overwhelming majority were communications with the accountant”, who was employed by a law firm.

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 advance of the oral arguments on Monday, the legal profession warned that allowing judges to determine which communications fall under privilege would effect 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 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”.