Attorneys often wear multiple hats. In addition to providing legal advice to clients, sometimes they might be serving in a business role, commenting on decisions that their corporate clients have to make. At times, the line can seem blurry: When is a lawyer acting as a lawyer, and when are they acting as a business adviser?

The U.S. Supreme Court took up this issue to review the scope of the attorney-client privilege when applied to communications that contain both protected legal advice and nonlegal advice – before suddenly dismissing the case two weeks after oral argument.

What was the Supreme Court Reviewing?

The case that was being considered by the Supreme Court—In re Grand Jury—centers on whether communications that contained both legal advice and nonlegal advice relating to the preparation of tax returns are privileged. An unnamed law firm challenged the U.S. Court of Appeals for the Ninth Circuit’s order that the firm must comply with subpoenas issued in relation to a criminal investigation of one of those firm’s clients.

The Ninth Circuit recognized that communications that primarily related to nonprivileged business or tax advice—and did not have as their primary purpose the sending or receiving of legal advice—were not protected and, thus, it affirmed the trial court’s holding the law firm in contempt. In its challenge to that finding, the law firm asked the Supreme Court to clarify the application of attorney-client privilege to communications that contain both legal and nonlegal advice.

The law firm argued that the communications are privileged because they contain legal advice to a client, at least in part. The firm has proposed that courts reviewing claims of privilege should apply a “bona fide purpose” test in lieu of the current “primary purpose” test. The “primary purpose” test asks whether the primary—or predominant—purpose of a document or communication was to give or request legal advice.

A proposed “bona fide purpose” test would instead consider whether there was a bona fide—or legitimate—purpose to seek or receive legal advice. Then, even if there was another simultaneous (nonprivileged) purpose for the communication, the communication would still be treated as privileged.

In contrast, the government argued that, under the primary purpose test, any privileged information within those communications could be redacted but that the documents should not be withheld in their entirety, because their “primary purpose” was not to provide or receive legal advice.

The government also argued that changing from the “primary purpose” test to the “bona fide purpose” test would broaden the scope of privilege so much that clients could seek to cloak substantial, otherwise nonprivileged information.

The legal community has had a lot to say on the privilege tests at issue here. Proponents of the bona fide purpose test argue that it would be easier to apply than the current test and would not require courts to ascertain motive (i.e., the “primary” purpose) behind a communication.

Opponents of the bona fide purpose test have noted concerns that, as long as a client claimed that its purpose at least partially pertained to legal advice, wealthy corporations could hide their business information behind an assertion of privilege.

Proponents of the primary purpose test have relied on the long-standing history of that test in courts everywhere. They also note that this test encourages lawyers to be careful and precise in their communications.

Conversely, critics of the primary purpose test argue that, as a matter of public policy, courts should err on the side of protecting potentially privileged information, given the confidences inherent in the attorney-client relationship.

Legal pundits expected that a decision from the Supreme Court would shed light on what test courts should use when reviewing communications that contain both privileged and non-privileged information.  However, two weeks after the Court heard oral argument, it dismissed the case in full, noting that the writ of certiorari had been “improvidently granted.”  So for now, the Supreme Court will not be weighing in on whether dual-purpose communications should be reviewed under the “primary purpose” test or the “bona fide purpose” test.

What Can Lawyers Do to Preserve Privilege?

Even though the Supreme Court has declined to weigh in on these issues at present, the case provides some important reminders for lawyers who sometimes serve in variant roles for their clients. Indeed, there are certain lessons that lawyers can keep in mind in working to preserve the attorney-client privilege.

Most lawyers appreciate that not everything they do is protected by privilege. For example, merely copying a lawyer on an otherwise nonprivileged communication does not automatically make it privileged. For that reason, it can be important for lawyers to think critically about what role they are serving with a client and document when they are acting with clients in a legal capacity.

This situation often arises for in-house lawyers. If an in-house attorney’s purview includes the company’s employment policies, for example, the lawyer may be called on to give legal advice about the laws and requirements for the hiring or firing of employees.

Such advice would typically be privileged. But if an in-house lawyer is merely serving in a pure human resources role by commenting on, for example, an employee’s performance in a review setting, those communications may not be privileged.

Even outside the in-house counsel context, the Rules of Professional Conduct recognize that lawyers sometimes act not only as legal experts but also as advisers. Comment [3] to Rule 2.1 of the ABA Model Rules of Professional Conduct recognizes that sometimes lawyers are asked for “purely technical advice” about an issue, but that “the lawyer’s responsibility as advisor may include indicating that more may be involved than strictly legal considerations.”

Thus, it is recognized that the scope of privileged advice can include guidance beyond just what the rules say; it can include discussions about the likely impact of certain decisions and legal strategy.

Even though courts may continue to see arguments from litigants regarding how to treat “mixed use” communications, it remains essential for attorneys to think critically about how best to maintain and preserve the privilege when communicating with clients.