Supreme Court Dismissal of In re Grand Jury What This Means for (Potentially) Privileged Communications Going Forward

“If it ain’t broke, don’t fix it.” – Justice Kagan

The Supreme Court decided to dismiss In re Grand Jury as “improvidently granted” in its January 23, 2023 Order after hearing oral argument on the case earlier this month. In other words, after agreeing to hear the case, and instead of establishing clear law on what business communications are protected by the attorney-client privilege, the Supreme Court ducked the question and let the answer be determined by . . . geography.

The Court hinted at its hesitation in taking on this case at oral argument, suggesting that federal courts are already applying the proper standard for de tangling dual-purpose communications. But what standard is “proper” remains an ongoing dispute between different appellate courts located in different parts of the country.

What is In re Grand Jury, and what is a dual purpose communication? In re Grand Jury, ¹  the Court was supposed to determine whether a corporate communication was protected by attorney-client privilege. A company and its law firm received subpoenas relating to a criminal investigation of the owner of the company, who also was a client of the law firm. The company and the law firm withheld documents claiming privilege; however, the trial court disagreed and ordered the company and the law firm to produce the documents. The documents in question involved both legal and non-legal (general business) matters. The courts refer to these as “dual purpose” communications. But, as every business knows, business issues can be entwined into many conversations that attorneys have with their clients. So, the question of whether a conversation is “dual- purposed” gets tricky rather quickly.

If you work for a corporation and are speaking with your attorney (whether in-house or outside counsel) about a business deal, is that communication privileged? Well, it depends. If the main purpose of that conversation is to give or receive legal advice, then the entire conversation likely is privileged. However, if the main purpose of the conversation is not about giving or receiving legal advice, it is likely that the conversation is not privileged. But what if the conversation contains both legal advice and business strategy? Is the conversation privileged or not? As of right now, that answer depends on what jurisdiction you are in.

The Second, Fifth, Sixth and Ninth Circuits follow the “the primary purpose” test, meaning the primary purpose of the conversation must be to receive legal advice. ²  The D.C. Circuit follows the broader “a primary purpose” test, meaning legal advice must be a primary purpose, but not necessary the primary purpose. ³  The Seventh Circuit follows the “per se” test, which means that if the communication contains any non-legal purposes (even if it contains a legal purpose), the conversation is per se not privileged. ⁴  Although the per se test is the most restrictive, its current applicability appears to be limited to the tax world(i.e., hiring an attorney to prepare your tax documents does not make the documents privileged). In re Grand Jury is a Ninth Circuit case, where the primary purpose of the communication must be a legal purpose in order for the communication to be privileged. Considering that during oral argument several Supreme Court Justices indicated that federal courts are already deciding these cases properly, ⁵  is it reasonable to assume that the Court considers “the primary purpose” test as the “proper” standard, rather than the “a primary purpose” or “per se” tests? The Court did not provide us with an answer, so what do lawyers tell their clients? The questions surrounding privilege apply to both in-house and outside counsel. There is this mistaken belief that if you are speaking with your attorney, your entire conversation is privileged. It is easy for business executives and employees to think that their conversations with their in-house counsel are privileged simply because they are talking to an attorney. It is easy for in-house counsel to think that their conversations with outside counsel are privileged simply because they are talking to another attorney. This is where the tricky privilege question we are discussing here comes into play. What matters is the nature of the conversation. Is it a legal matter? Is it a business matter? Is it both? Regardless, both in-house counsel and outside counsel need to be aware of the Supreme Court’s continued silence and proceed cautiously. Until this mess is resolved, companies should expect that any legal communication that truly needs to be protected must satisfy the narrowest version of the test – the “the primary purpose” test, and that including additional potentially non-legal discussions in the same communication can strip the company of the protection it seeks. If you have any questions regarding privilege or would like some guidance on how best to preserve the attorney client privilege, please contact Ward & Berry.

¹  In re Grand Jury, 23 F.4th 1088 (9th Cir. 2021).

²  See, e.g., In re Grand Jury, 23 F.4th 1088 (9th Cir. 2021); Alomari v. Ohio Dep’t of Pub. Safety, 626 F. App’x 558, 570 (6th Cir. 2015); In re County of Erie, 473 F.3d 413 (2d Cir. 2007); United States v. Robinson, 121 F.3d 971 (5th Cir. 1997).

³  See, e.g., In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014).

⁴  See, e.g., United States v. Frederick, 182 F.3d 496 (7th Cir. 1999).

⁵  Transcript of Oral Argument at 17, In re Grand Jury, 598 U.S. ___ (2023) (No. 21-1397) (Sotomayor, J.), https://www.supremecourt.gov/oral_arguments/argument_transcripts/2022/21-1397_c0nd.pdf (“You make this claim that it’s so difficult, but I really haven’t seen much to say that it’s difficult to administer. I don’t see a rounding number of courts in states or even federal courts saying, I can’t figure this out.”); Id. at 18–19 (Kagan, J.) (“I mean, we’ve had the attorney-client privilege for a long time, and until 2014, nobody ever suggested that the test that you’re proposing is the right one. Everybody instead used the primary purpose test . . . So this is a big ask, and it’s an ask that’s not particularly consistent with the underlying nature of what the attorney-client privilege is supposed to be protecting.”); Id. at 33 (Kagan, J.) (“I’m wondering if you would just comment on, you know, the ancient legal principle, if it ain’t broke, don’t fix it.”); Id. at 69–70 (Barrett, J.) (“So do you think that, in terms of what an opinion would look like if we rule in your favor, it might say something like, just to be clear, it is primary purpose, it’s not significant purpose, we’re not going to say really anything about what it means because we’re just going to let courts continue to do what they do?”).