Table of Contents
Inside and outside healthcare counsel should know that the way they guide clients through legal and business issues may need to change based on a recent Ninth Circuit case governing the protections afforded to attorney-client communications, In re Grand Jury.[1] The following update and insights will help you mitigate against the risk of attorney-client emails being produced in litigation:
-
Legal and Non-Legal (“Dual-Purpose”) Communications are Common Across Healthcare
-
There is a Circuit-Split on What Test Applies to Dual-Purpose Communications
-
The Supreme Court Balks and the Ninth Circuit Reinforces the Primary Purpose Test
-
Five Practical Tips
-
Closing Thoughts
(A) Dual-Purpose Communications with Legal and Non-Legal Elements are Common Across Healthcare
Communications between attorneys and clients must be for the purpose of giving or receiving legal advice for the attorney-client privilege to apply. A dual-purpose communication is one that has both a legal and a business purpose. For many healthcare attorneys, these types of dual-purpose communications are more common than communications involving only purely “legal” advice. For example, consider physician compensation. This topic always involves a legal angle, such as Stark Law or Anti-Kickback compliance, or state fraud and abuse law considerations. However, it almost always involves a business angle too. For example, what specific deal terms are the parties negotiating? Are bonuses involved? Will payments involve estimation and reconciliation? On what schedule? And so on. Healthcare attorneys in particular should consider if they need to adjust their approach on dual communications given recent caselaw in the Ninth Circuit (and SCOTUS’ subsequent decision not to clarify which standard applies).
(B) There is a Circuit-Split on What Test Applies to Dual-Purpose Communications
Before explaining what to consider in drafting dual purpose communications, we want to clarify that the test that applies to them varies by circuit. Specifically, there are three key tests:
-
“Primary Purpose” Test: Whether the primary purpose of the communication is to give or receive legal advice, as opposed to business or tax advice. This is the narrowest test, adopted in some form by the Second, Fifth, Sixth, and Ninth Circuits.[2]
-
“Because Of” Test: Whether it can fairly be said that the document was created because of anticipated litigation, and would not have been created in substantially similar form but for the prospect of that litigation, adopted by the Ninth Circuit with respect to “attorney work product” privilege.[3]
-
“Significant Purpose” Test: Whether obtaining or providing legal advice was a primary purpose of the communication, meaning one of the significant purposes of the communication. This is the broadest test, adopted by the D.C. Circuit and some district courts in at least the corporate internal investigation context.[4]
(C) The Supreme Court Balks on In re Grand Jury; Ninth Circuit Reinforces the Primary Purpose Test
The scenario presented by In re Grand Jury involved a law firm specializing in tax law that was held in contempt for refusing to comply with grand jury subpoenas targeting documents related to a client’s tax expatriation on the basis of such documents being subject to attorney-client privilege. The district court ruled that certain documents withheld by the subject law firm were not protected by the attorney-client privilege because the primary purpose of those dual purpose communications involved tax advice, not legal advice.
On appeal to the Ninth Circuit, the law firm argued for the application of the broader “because of” test, typically applied to work-product protection. In considering this test, the Ninth Circuit noted the separate policy goals of each doctrine, Specifically, work-product protection aims to preserve fairness in the adversarial process and the attorney-client privilege aims to promote open conversations between attorneys and clients. The Ninth Circuit declined to extend the broader “because of” test to attorney-client privilege and instead adopted the “primary purpose” test. The court reasoned that the “primary purpose” test is better aligned with the policy goals of the attorney-client privilege, as well as the common law understanding that the scope of the privilege is defined by the purpose of the communication.
While the Ninth Circuit adopted the “primary purpose” test where there is a clearly predominant purpose, it left open whether courts should ask if legal advice was the primary purpose or merely a primary purpose when dual privilege communications present potentially equal legal and non-legal purposes. For example, in In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014), the D.C. Circuit had adopted a “primary purpose” test to determine whether dual purpose communications related to a company’s internal investigation (and assessment of its compliance with regulatory requirements) were protected by the attorney-client privilege. In its In re Grand Jury decision, the Ninth Circuit acknowledged that it may be impossible to discern whether a communication was for legal or non-legal purposes, like the internal investigation in Kellogg that sought legal and business advice.[5] However, the court declined to reach that issue because the communications before the court involved tax advice – a non-legal purpose.
Many had hoped the Supreme Court would resolve the circuit split and provide clarity on the test that applies for dual-purpose communications when it agreed to review the Ninth Circuit’s decision in In re Grand Jury.[6] However, on January 23, 2023— just two weeks after oral arguments—SCOTUS dismissed the writ of certiorari as improvidently granted. For now, attorneys should be aware of the test that applies in the jurisdictions where they practice when they give dual purpose communications.
(D) Five Practical Tips on Dual-Purpose Communications Given Current Law
-
Be Mindful in Structuring and Delivering Dual-Purpose Communications: Attorneys should consider whether to separate legal advice and non-legal advice in giving client guidance. This could mean sending two separate communications or clearly dividing the communication into parts with clear headings indicating each section’s purpose.
-
Label Your Emails and Documents if Appropriate: Include “Attorney-Client Privilege” headlines on your communications providing legal advice, but avoid the label when communicating non-legal advice. If there is any basis to believe litigation may be forthcoming, also include a “Work-Product Protection” label. The foregoing labels should be used only when appropriate – simply blanketing all guidance with these labels will not increase application of any privileges in litigation.
-
Consider the Purpose of the Communication: Begin communications with “for the purposes of legal advice” or explain to your client the value in beginning their communications with the same characterization. Be mindful that you may need to later justify how at least a primary purpose of the communication was to get legal advice, if not the primary purpose.
-
Set Up Work-Product Protection: Include references to and/or the basis for any belief of potential litigation in your communications to justify work-product protection.
-
Consider a Phone Call: While phone conversations may seem old-school, they remain well-suited to communicating guidance on sensitive issues.
(E) Closing Thoughts
Many are disappointed that SCOTUS failed to provide clarity on the tests surrounding the application of attorney-client privilege protections to dual purpose communications. The Ninth Circuit opinion leaves open the possibility that Kellogg’s significant purpose test might apply in some instances but offers little additional guidance on the specifics of that potential application.
A trial court’s dilemma in deciding the scope of the attorney-client privilege in dual purpose communications was made clear during oral argument. During oral argument before SCOTUS, the Justices appeared to be concerned with the potential for abuse under the significant purpose test. This makes sense considering the circumstances of In re Grand Jury: normal tax return preparation advice (which generally is not privileged even when it comes from an attorney) was mixed with legal advice on how to navigate certain tax laws.
For example, Chief Justice John Roberts asked about an accountant who completes a complicated return. His work would not be privileged. But then the form is shown to a lawyer who identifies items that are “kind of iffy.” Would the return then be privileged? Counsel for the law firm replied in the affirmative, prompting Justice Clarence Thomas to ask: “Is there any non-trivial role that a lawyer plays in the example the chief gave that doesn’t meet your test?” Justice Ketanji Brown Jackson described a hypothetical meeting that everyone agrees is over “a business decision … but the lawyer [in the room] adds a point. And you say, as long as it’s a legitimate point, that is good enough to require that the entire thing be privileged.… Why shouldn’t I worry that using your test now, we are going from one extreme to the other?”
Gamesmanship appeared to be a major concern for both SCOTUS and the Ninth Circuit. To the extent any legal advice is provided with clearly non-legal advice, and the greater the amount or importance of the non-legal advice, the more a court will have no problem applying the primary purpose test to avoid abuse of the privilege. However, in instances like Kellogg where the two purposes are harder to untangle or fairly rank, a court may take the opportunity left open by In re Grand Jury to apply the significant purpose test.
Siena Sylvester also contributed to this article.
FOOTNOTES
[1] This analysis addresses federal privilege and evidentiary considerations; state laws vary widely.
[2] In re Grand Jury, 23 F.4th 1088 (9th Cir. 2021); Pritchard v. Cty. of Erie (In re Cty. of Erie), 473 F.3d 413 (2d Cir. 2007).
[3] United States v. Torf (In re Grand Jury Subpoena), 357 F.3d 900 (9th Cir. 2003); Visa U.S.A., Inc. v. First Data Corp., Nos. C-02-1786 JSW (EMC), 245, 248, 2004 U.S. Dist. LEXIS 17117 (N.D. Cal. Aug. 23, 2004).
[4] In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014).
[5] In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014).
[6] In re Grand Jury, 23 F.4th 1088 (9th Cir. 2021).
Copyright © 2023, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XIII, Number 44
You may also like
-
The Clinical Social Worker’s Role in Child Welfare Services
-
Strategies for addressing Columbus health-related personal debt
-
Melancholy risk doubles in the course of menopause psychological wellbeing recommendations women of all ages really should stick to | Overall health
-
Exploring the Vital Role of Nannies
-
Panic not! Open enrollment can be a breeze, if you adhere to these tips