## Facts

- A federal grand jury investigated potential criminal tax offenses involving an individual associated with a business entity (“Company”).
- The grand jury issued subpoenas to Company and its specialized tax counsel (“Law Firm”) seeking documents and communications relevant to the investigation.
- Company and Law Firm produced some materials but withheld others, asserting attorney-client privilege and work-product protection.
- The withheld materials included “dual-purpose” communications mixing legal advice about tax exposure and strategy with non-legal tax return preparation or accounting functions.
- The district court granted the government’s motion to compel in part, concluding certain communications were not privileged because their primary purpose was non-legal, and found some materials discoverable under the crime-fraud exception.
- After Company and Law Firm continued to withhold the disputed materials, the district court entered civil contempt orders for noncompliance.
- Company and Law Firm appealed the contempt orders.

## Issues

1. What test governs whether attorney-client privilege protects dual-purpose communications that contain both legal advice and non-legal tax or business advice in response to a grand jury subpoena.
2. Whether the work-product “because of” test should be used to evaluate attorney-client privilege claims for dual-purpose communications.

## Decision

- The Ninth Circuit affirmed the civil contempt orders.
- The court held that the attorney-client privilege for dual-purpose communications is governed by a primary-purpose test: the communication is privileged only if its primary purpose is to give or receive legal advice.
- The court rejected importing the work-product “because of” test into attorney-client privilege analysis.
- The court noted, without deciding as a controlling rule, that wording differences between “the primary purpose” and “a primary purpose” did not affect the outcome on the record before it.

## Legal Principles

- Attorney-client privilege protects confidential communications made for the purpose of obtaining or providing legal advice; dual-purpose communications are privileged only when legal advice is the primary purpose.
- Work-product doctrine and attorney-client privilege serve distinct functions and are analyzed under different standards; the work-product “because of” test does not control privilege determinations.
- Routine tax return preparation or accounting work is generally non-legal and not privileged merely because it is performed by or communicated with attorneys.
- Courts may limit privilege claims that would otherwise expand confidentiality to predominantly non-legal business or compliance communications.

## Conclusion

The Ninth Circuit required courts evaluating dual-purpose tax-related communications to apply a primary-purpose test for attorney-client privilege, declined to extend the work-product “because of” standard to privilege, and upheld contempt sanctions for refusing to produce materials deemed predominantly non-legal.


In re Grand Jury, 13 F.4th 710 (9th Cir. 2021)