The U.S. Supreme Court (SCOTUS) has granted review of In re Grand Jury, 13 F.4th 710 (9th Cir. 2021), and will take up the scope of the attorney-client privilege in complex cases. The Attorney-client privilege works to keep confidential communications between an attorney and their client private and not discoverable in court. The question presented to the high court is "Whether a communication involving both legal and non-legal advice is protected by attorney-client privilege where obtaining or providing legal advice was one of the significant purposes behind the communication." The ruling will have profound consequences for attorneys who advise employers on complex issues with both legal and business implications.

History

In Grand Jury, the Ninth U.S. Circuit Court of Appeals held that the attorney-client privilege does not shield communications with the primary purpose of providing business advice, even if the communication also offers legal advice. The 9th Circuit declined in Grand Jury to adopt the D.C. Circuit’s more expansive privilege test from In re Kellogg Brown & Root Inc., 756 F.3d 754 (D.C. Cir. 2014), which held that attorney-client privilege does shield communications with a dual business and legal purpose as long as legal advice was one of the significant purposes of the communication between the attorney and client. It is interesting to note that Kellogg Brown was written by Justice Brett Kavanaugh when he was on the D.C. Circuit Court.

Arguments

The law firm in Grand Jury claimed that some of the protected documents and communications were dual-purpose -- the firm was providing both business advice (preparing the client’s tax returns) and legal advice. In the United States District Court for the Central District of California, the government moved to compel the company and the law firm to produce the withheld documents and communications. The court concluded that the documents and communications were not covered under the attorney-client privilege and granted the request in part. The company and the law firm appealed to the Ninth Circuit. On appeal, the Ninth Circuit affirmed the district court's ruling, ordering the parties to produce documents and communications that had the primary purpose of providing business advice.

Takeaway

Under the Ninth Circuit approach, plaintiff’s attorneys will always seek privileged documents and communications (arguing that the primary purpose was business advice) because the judge may grant the request, and there may be good information that may help the plaintiff’s case. To help prevent future legal surprises, Hawaii employers should operate under the assumption that the more stringent Ninth Circuit attorney-client privilege standard will control unless and until SCOTUS rules otherwise. SCOTUS is not expected to issue a decision in this case until the middle of next year.

Below are some tips/reminders for employers when they do engage counsel:

• Employers and counsel should explicitly identify in their written communications when legal advice is their primary purpose, so they can help preserve information that may otherwise lose the attorney-client protection.
• Employers and counsel should provide context contemporaneously because privilege determinations are usually done in litigation years after the fact.
• If employers are writing something they know must be shielded, employers should take caution and be careful of what you put in writing to attorneys.  Opposing counsel will seek production and challenge it as primarily business advice under Grand Jury.
• Communications made to and by an attorney in the presence of a third party may not be entitled to attorney-client privilege on grounds that they are not confidential.
• The attorney-client privilege only protects disclosure of communications; it does not protect disclosure of the underlying facts by employers who communicated with the attorney.

Employers should contact their attorney if they have any questions regarding the more stringent Ninth Circuit attorney-client privilege standard.