## Facts

- The Massachusetts Department of Revenue audited Comcast’s corporate excise tax returns for November 1, 1996 through December 31, 1997.
- Comcast (through a predecessor) was required by an antitrust consent judgment to divest interests in Teleport Communications Group, Inc. (TCG) through a stock disposition that generated roughly $500 million in capital gains reported federally but not on a Massachusetts excise return.
- Comcast’s in-house tax attorney, asked to advise on tax consequences of the divestiture, retained outside accountants (Arthur Andersen LLP) for tax analysis regarding structuring the transaction.
- During the audit, the commissioner issued an administrative summons under G.L. c. 62C, § 70 seeking Andersen memoranda and related materials concerning the transaction’s tax treatment and structure.
- Comcast withheld some requested materials, asserting attorney–client privilege (accountants as agents assisting counsel) and the work-product doctrine (materials prepared in anticipation of litigation).
- The commissioner filed a Superior Court action to compel production; the court denied the motion to compel, and the commissioner appealed.

## Issues

1. Whether communications and documents involving outside accountants retained by in-house counsel were protected by the attorney–client privilege because the accountants’ participation was necessary for effective attorney–client consultation.
2. Whether the same materials were protected by the work-product doctrine as opinion work product prepared because of the prospect of litigation, and, if so, whether the commissioner showed an unusually strong need sufficient to obtain disclosure.
3. Whether the appellate court should reach an argument first raised in the trial court on a motion for reconsideration.

## Decision

- The court held the attorney–client privilege did not apply because the accountants’ communications were not necessary (or nearly indispensable) to facilitate effective attorney–client consultation.
- The court held the materials were protected as opinion work product because they were prepared or obtained because of the prospect of litigation and reflected strategic analysis.
- The court held the commissioner did not show “extremely unusual” circumstances or comparable necessity sufficient to overcome the heightened protection for opinion work product.
- The court declined to address an argument raised for the first time on a motion for reconsideration.
- The order denying the motion to compel was affirmed, on work-product grounds.

## Legal Principles

- Attorney–client privilege is narrowly construed and extends to third-party agents only when the agent’s involvement is necessary or nearly indispensable to enable attorney–client communication, not merely because the agent provides helpful specialized advice.
- Work-product protection applies to documents prepared because of the prospect of litigation, including materials created by non-lawyer agents when they reflect legal strategy or counsel’s mental impressions.
- Opinion work product receives heightened protection and is discoverable only in extremely unusual circumstances; a general governmental interest in enforcement, even involving significant potential revenue, is insufficient without a showing of comparable necessity and unavailability by other means.
- Appellate review generally excludes issues not preserved in the trial court and raised only on reconsideration absent exceptional justification.

## Conclusion

The court ruled that outside accountants’ tax-analysis materials retained by in-house counsel were not shielded by attorney–client privilege absent a showing the accountants were necessary to attorney–client consultation, but the materials remained protected as opinion work product prepared because litigation was reasonably anticipated, and the revenue authority failed to show extremely unusual circumstances warranting disclosure.


Comm'r of Revenue v. Comcast Corp., 901 N.E.2d 1185 (Mass. 2009)