Is This Business Advice Or Legal Advice?

By David M. Majchrzak

Sometimes, the law provides a cruel tease. We think we finally may get an answer to something, perhaps filling a gap in authority that we see on a recurring basis. Such was the case for me last year when, after granting certiorari, reviewing briefing, and hearing oral argument, the Supreme Court of the United States declined to rule on In re Grand Jury. For those less familiar with the case, it involved how the privilege should apply to dual-purpose communications, those that may include some legal advice, but also serve another purpose, perhaps to discuss other practical objectives, whether personal, business, or otherwise. Whereas the dismissal of the case leaves uncertainty, that in and of itself provides something for lawyers to consider in such situations.

Like most ethical rules, the purpose of the attorney-client privilege—a small part of the broader duty of confidentiality—is for the protection of somebody else. That person, of course, is the client. As the Association of Professional Responsibility Lawyers (“APRL”) noted in its brief on the subject, the purposes of the privilege are undermined by uncertainty as to when the privilege will be applied, whether in federal courts or pursuant to the laws of the states or other jurisdictions.  Whereas adoption of a clear federal standard for application of the attorney-client privilege in the context of dual-purpose communications would not necessarily have resulted in uniformity throughout the country, it could have laid the groundwork for states to follow the course it laid out.

There are a few different approaches. Some circuits apply a “primary purpose” test. This requires an analysis of whether the primary (or dominant) purpose of the communication was to obtain or provide legal services or advice. If it was, then the communication is deemed privileged. If there is another, more dominant purpose such as a business reason or other non-legal purpose, then it is not protected by the privilege.

Another approach, one advocated in at least the DC Circuit, is the “substantial purpose” test. This does not require an analysis of which purpose predominated. Rather, it merely looks at whether legal services or advice were a substantial reason for the communication.

The Seventh Circuit takes what might be considered the most extreme approach in that it provides that there is no privilege for a communication that contains any information that does not have a legal purpose.

Each of these approaches potentially chills the attorney-client relationship. For example, the Ninth Circuit, which employs the “primary purpose” test, acknowledged that there is an assumption that a dual-purpose communication can have only one “primary purpose.” This of course ignores that (a) there may not have been a “primary” purpose (perhaps each purpose served by the communication was equally important), and (b) such a test can make it difficult to impossible for a lawyer or client to know when they are engaging in a dual-purpose communication what a court later will determine was the “primary purpose.” 

Related to this, such a test, which must look into a purpose, inherently requires a discussion about information that likely is not in the communication itself. The reasons why each communication is made are not always articulated, as they are often part of a series of communications, which provide context for one another. Accordingly, such an analysis may intrude on confidential communications that have a clear, single purpose. And it could even intrude on uncommunicated work product to discover what a lawyer’s purpose was in making such a communication. That such protected information may potentially need to be disclosed to a court can chill attorney-client communications. For these reasons and others, APRL had advocated that the Court adopt a rule that a communication that had legal services or advice as any purpose be protected.

With that not the current approach, however, lawyers have another issue to consider in determining how to protect communications with their clients. When it becomes apparent that lawyers will be engaging in communications with clients for reasons other than purely legal, they may wish to consider addressing the potential risks with the client and determining what would be the best path in protecting such communications. 

As with many things related to the practice, there are numerous ways to do this. One is to be careful to dissect communications where possible so that they are not dual-purpose. For example, if there are both legal and tax issues, the lawyer or client could send separate emails, letters, or other transmissions on the issues, rather than combining them into a single communication. Or, they could state at the beginning of the communication what the primary purpose of the communication is so that it provides guidance in determining whether it is protected.

These are not failsafe methods, of course. A court could still determine that a separated communication still has more of a business purpose than a legal one. And it could reject a statement of the purpose of a communication should it believe that it misrepresents what it believes is apparent from the communication’s contents. And these risks should be discussed with clients. They will help define the scope of engagement and provide grounds for considering what should be communicated and how it should be packaged. That, in turn, protects the client.