California Lawyers Association, Taxation

CLA Goes to Washington

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By Adria Price

While not an episode of Schoolhouse Rock!, California Lawyers Association’s recent foray into the judicial process could be the premise for the catchy after-school cartoon.[1] The Ninth Circuit case of In re Grand Jury[2] provided an opportunity for the Taxation Section on behalf of CLA to draft three amicus briefs that eventually culminated in oral argument before the United States Supreme Court (the “Supreme Court”), truly a government lesson on how a case reaches the Marble Palace. For CLA, it proved to be an excellent vehicle to advocate for an issue of particular importance to its members and the clients they represent concerning one of the oldest legal tenants: the attorney-client privilege. 


CLA representatives at the U.S. Supreme Court

Petitioner before the Supreme Court is a law firm that both prepares tax forms for its clients and provides clients with tax advice. A federal grand jury conducting a criminal investigation of one of the law firm’s clients subpoenaed the law firm for the production of certain documents. The client, an early promoter of bitcoin, expatriated from the United States in 2014. The client had retained the law firm to provide advice on the expatriation process to prepare the client’s 2014 tax return. In addition to other documents, the grand jury subpoenas sought records related to the preparation of tax returns and forms for the client.

The law firm refused to produce certain documents citing the attorney-client and work-product privileges. The government moved to compel production of the withheld documents, which the district court, after in camera review of the disputed documents, granted in part the government’s motion to compel production and ordered the disclosure of some documents and portions of additional documents. The law firm did not comply with the court’s order, and the court held the firm in contempt. The law firm appealed the matter to the Ninth Circuit.

At the heart of the issue is the application of the attorney-client privilege to dual-purpose communications, communications that serve both legal and non-legal purposes. While the issue in this case was presented in the context of a tax attorney providing advice to a client, the same privilege issue confronts attorneys advising clients regarding countless other areas of the law. It is because of the universal implication of the issue to all practice areas that CLA fully supported the Tax Section’s efforts to advocate for clarification and a broader application of the attorney-client privilege to dual-purpose communications.


On September 13, 2021, the Ninth Circuit issued its first opinion in In re Grand Jury containing the infamous footnote five, which improperly excluded from the attorney-client privilege “normal tax advice” even when such communications come from a tax attorney.[3] In the amicus brief authored by Laura Buckley and Kevan McLaughlin, members of the Taxation Section’s Executive Committee, CLA advocated for the removal of the “normal tax advice” language from the opinion and for the court to adopt the D.C. Circuit’s “a primary purpose” test set forth in In re Kellogg Brown & Root, Inc[4] holding that the privilege applies if “obtaining or providing legal advice was one of the significant purposes of the attorney-client communication.” 

In response, the Ninth Circuit amended its opinion to change footnote five from “normal tax advice” to “normal tax return preparation assistance” but left the court’s version of the primary purpose test intact. The Ninth Circuit’s test to determine if the attorney-client privilege applies to dual-purpose communications requires the court to evaluate and balance all of the purposes for the communication. The Ninth Circuit determined that a communication that has a purpose in addition to providing legal advice is privileged only when the most significant purpose is legal; if the legal purpose is not the most significant purpose, the communication is not privileged.[5] Thus, the stage was set for the Taxation Section to focus its sights on the Supreme Court. 


As we are taught in law school, the Supreme Court is more apt to grant certiorari in cases where there is a split among the circuit courts, and that was the focus of the first amicus brief CLA filed with the Supreme Court. The disagreement arises among the Seventh, D.C., and Ninth Circuits, which have articulated irreconcilable tests for dual-purpose communications. In the D.C. Circuit, a dual-purpose communication is privileged if it has a significant legal purpose.[6] The test adopted in Kellogg requires courts to identify the legal purpose behind a communication and determine whether it is significant.[7] If the answer is yes, the privilege applies.[8] In the Seventh Circuit, a dual-purpose communication related to tax advice is never privileged.[9] 

It was argued that this split of authority creates uncertainty for CLA’s attorney members with multistate practices and for those who represent clients with national interests. Furthermore, the split in circuits on such a significant protection afforded to the legal profession warrants the court grant the Petition for a Writ of Certiorari. The brief foreshadowed CLA’s support of the Kellogg test, advocating that it strikes the appropriate balance for dual-purpose communications. 


A feat achieved by an extremely small percentage of petitions for certiorari that are filed, the Supreme Court agreed to hear In re Grand Jury. For the third time, the Taxation Section, with the aid of the Amicus Committee of the Business Law Section, authored a more comprehensive brief on the merits. This brief analyzed the three tests and warned of the potential risks to the sacrosanct privilege under the Ninth and Seventh Circuit tests. CLA urged the Supreme Court to adopt the D.C. Circuit’s test for determining when the attorney-client privilege attaches to dual-purpose communications because it both provides a high degree of predictability and fosters the open and candid communications between attorneys and clients that is needed to ensure the proper administration of justice.

CLA’s amicus brief was one of 13 amicus briefs filed with the Supreme Court in In re Grand Jury. All 13 advocated for the D.C. Circuit’s test. Oral argument was scheduled for January 9, 2023.


CLA representatives at the U.S. Supreme Court

Laura Buckley, the Outgoing Chair of the Taxation Section, Betty Williams, Vice President and Immediate Past Chair of CLA, Jeremy Evans, President of CLA and myself, the Incoming Chair of the Taxation Section, were able to attend the oral arguments on In re Grand Jury. Arguments were compelling from both sides, although both sides wavered from the positions articulated in their briefing. The Justices were engaged, sometimes entertaining, and frequently directed pointed and difficult questions to counsel seeking the best answer to the challenging issue presented. An audio replay of the oral argument and the written transcript are available from the Supreme Court.


On January 23, 2023, with the simple sentence, “The writ of certiorari is dismissed as improvidently granted,” the Supreme Court ended CLA’s hopes at effectuating a new standard for the attorney-client privilege in the Ninth Circuit and providing uniformity for the standard as it applies to dual-purpose communications across the country. While no reason was given, and legal scholars have provided a variety of theories as to the motivation behind the decision, the fact remains that the determination means that the test articulated in In re Grand Jury is the standard for the Ninth Circuit. 

It also means that for those practitioners with multijurisdictional practices or clients with nationwide interests, one must proceed with caution in communicating with clients on both legal and non-legal matters and be mindful of what rule may apply. For those with purely Ninth Circuit practices, it bodes us all well to read In re Grand Jury and do our best to ensure client communications, both to and from the client, maintain a legal primary purpose in order to withstand an affront on its privilege status. 

Despite the outcome, CLA and the Taxation Section should be extremely proud of the work that was done as amicus in In re Grand Jury. It brought together members of multiple sections, with the constant and unwavering support of CLA, to further the work of importance to CLA members. A special thank you to the following individuals who were principally involved in the process: Saul Bercovitch, Associate Executive Director, Governmental Affairs, CLA; Laura Buckley, Buckley Tax Law APC and Outgoing Chair of the Taxation Section; Adria Price, Price & Associates, LLC and Incoming Chair of the Taxation Section; and H. Thomas Watson, Horwitz & Levy, LLP, Amicus Committee of the Business Law Section.

Adria Price is the Incoming Chair of the California Lawyers Association’s Taxation Section. As an attorney with Price & Associates LLC, she focuses her practice in the areas of tax planning and controversy and is a recognized expert on the subject of the tax treatment of welfare benefit and defined benefit plans.

[1] For those of you now singing “Conjunction Junction” or “I’m Just a Bill,” you are welcome.

[2] In re Grand Jury, 23 F.4th 1088 (9th Cir. 2022).

[3] In re Grand Jury, 23 F.4th at 1095, fn. 5. (9th Cir. 2021)

[4] In re Kellogg Brown & Root, Inc., 756 F.3d 754, 760 (D.C. Cir. 2014)

[5] In re Grand Jury, 23 F.4th at 1091-92 (Emphasis added).

[6] In re Kellogg Brown & Root, Inc., 756 F3rd. 754, 760 (D.C. Cir. 2014) (Emphasis added).

[7]  Id. at 759.

[8] Id. at 760.

[9] United States v. Frederick, 182 F.3d 496, 501 (7th Cir. 1999) (Emphasis added).

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