The specific context that this came up was for a legal email discussion group maintain by an attorney organization to discuss particular tax contexts and issues. The discussion group contains a large number of lawyers (I think it is limited to lawyers), and so far as I am aware, the list of lawyers (as it may change from time to time) is not made available to the members of the group. So participants invariably do not know some or even many in the group. There is a prohibition on Government attorneys being members. Of course, members may from time to time become Government attorneys and have the prior discussions available to them, but that’s a rabbit trail I won’t go down right now. Suffice it to say that there is the expectation that the discussions in the group are not available to the IRS or DOJ.
The clients' identities are not disclosed in the discussions. I have no way of knowing, but assume that the attorneys anonymize any facts that are disclosed in order to set up and move the discussion forward. For purposes of this discussion, let’s assume that the facts are so anonymized.
The issue I present is whether the discussions that, from each participating attorney’s perspective disclose anonymized facts and seek only legal discussion, thereby constitute a waiver of the work product privilege. Yesterday, there was a discussion on an attorney mail group regarding whether the discussions in emails to the group constituted a waiver of the work-product privilege.
The issue is whether the IRS or DOJ could in a tax investigation (including grand jury investigation) or tax litigation discover the group email discussions on the basis of waiver of the work product privilege and thereby prejudice the client (taxpayer). For example, the first interrogatory and/or request for production in tax litigation from the Government would be to identify all discussions by the attorney relating to the client’s facts and produce all documents relating to those discussions. Similarly, the Government could use its investigative compulsory process to demand access to the discussions and documents related to the discussions.
I had never thought about the issue before (that I can recall). In a more general sense, I had never thought that discussing anonymized facts with fellow practitioners was a waiver of the work product privilege as to the anonymized facts and the legal and practice discussions that the anonymized facts generate. The settings presenting the issues can be myriad, including a lunch with a fellow practitioner, a small discussion group of practitioners (many larger cities have such groups), or larger groups (such as at CLE events or, in the present case, an email discussion group). (I should note that perhaps, if the “waiver” were viable in this context, it might also apply to Government attorney discussions with fellow Government attorneys who are not involved in the particular litigation.)
Having now thought about the issue and done some poking around on the issue, I am just going to offer some non-definitive thoughts on the issue.
I first offer the generic discussion from the current working draft of my Federal Tax Procedure Book (for publication in August 2020) (footnotes omitted, but those wanting footnotes can get the pdf with footnotes here):
f. Work Product Doctrine.
The work product doctrine protects the work product and thought processes in preparing for litigation. The work product doctrine was originally blessed as to attorney work product in Hickman v. Taylor, 329 U.S. 495 (1947). The doctrine announced in Hickman is often called the attorney work product doctrine because Hickman approved its application for attorney work product. Rule 26(b)(3) of the Federal Rules of Civil Procedure setting the rules for discovery in civil cases in the district courts adopted the concept but in a slightly broader form. The Hickman attorney work product doctrine, at least facially, only applied to attorney work product. Rule 26(b)(3) applies to work product prepared by or for a person who would be a party in the litigation, whether or not that product is prepared by an attorney. Furthermore, the Hickman attorney work product doctrine applies generally to any compelled production (including e.g., IRS summonses, grand jury subpoenas and civil and criminal trial subpoenas), whereas Rule 26(b)(3) applies to discovery in civil cases in the Federal District Courts (including summons enforcement or quash proceedings). Caveat: the work product doctrine is not a privilege is the traditional meaning of the term. Nevertheless, it is commonly referred to as a privilege; I will do so sometimes because in a colloquial sense it functions like a privilege permitting the party asserting it to refuse to comply with compulsory production unless, of course, an exception applies.
Work product requires some nexus to litigation. Litigation need not be in progress at the time the work product is created but litigation must be more than a remote prospect. Within those broad parameters, the work product must be “prepared in anticipation of litigation”; “[i]t is difficult to pinpoint the moment when a hypothetical possibility of litigation in the future becomes "anticipation of litigation" for purposes of the work product doctrine. Courts apply one of two principal tests to determine whether documents are prepared in anticipation of litigation. Most circuits apply the “because of” test asking whether the document was created “because of” anticipated litigation and was the subjective anticipation of litigation objectively reasonable. The other, more restrictive, test is the “primary purpose” test asking if the “primary motivating purpose behind the creation of the document was to aid in possible future litigation.”
Under Rule 26(b)(3), work product subject to the privilege falls into two broad categories–(i) “opinion work product” such as the mental impressions, conclusions, etc. of the attorney or other representative in the litigation and (ii) other work product that relates to facts. All work product is subject to the required of showing substantial need and undue hardship, but opinion work product is discoverable only by (i) waiver by disclosure to the adverse party, (ii) if disclosed in a manner likely to become known to the adverse party, and (iii) by making an extraordinary showing of substantial need and undue hardship which, as to opinion work product would be almost impossible. The D.C. Circuit has said that opinion work product “is virtually undiscoverable.”
The work product privilege is often asserted along with the attorney-client privilege. Since the attorney-client privilege is absolute, it will be better to avoid disclosure on that grounds. Nevertheless where, for some reason, the attorney-client privilege is not available, the work product privilege is a good fall back.
The work product privilege can be waived. The courts are not consistent as to the circumstances that will waive the privilege. A court held that the privilege is waived if the work product is disclosed intentionally to an opposing party but not if the disclosure is under circumstances that there was no intention to disclose to the opposing party. And some courts hold that waiver of work product protection generally extends only to non-opinion work product, except in certain settings such as malpractice or reliance on counsel.
It is important to distinguish between the work product privilege recognized in the federal universe and the accountant client or accountant work product privilege which is not recognized. An accountant’s work product can qualify for the work product privilege if it meets the requirements of the attorney work product privilege in Hickman (e.g., via a Kovel arrangement) or the FRCP 26(b)(3) work product privilege. Both of course must have a principal nexus to litigation or anticipated litigation. But, where the work product is prepared for other non-litigation reasons (such as financial statements prepared for public company disclosures), they will not qualify for any work product privilege.With this background, I offer the follow musings:
1. Do we need to even be concerned about the Government use of compulsory process for this type of discussion among practitioners? In a case involving a client of the attorney, how would these discussions possibly be relevant. Even in a setting of reliance on counsel as a defense to a civil or criminal penalties, the issue is what opinions were communicated to the client, not what opinions or theories may have been discussed by the client’s lawyer with fellow practitioners. Thus, in my view, it would be an abuse of the compulsory process to require that these discussions be disclosed. Certainly for civil compulsory processes (including the IRS summons) relevancy is required. FRCP 26(b)(1); and United States v. Powell, 379 U.S. 48 (1964) (requiring relevance, although generously defined). And, I am confident that even grand jury subpoenas require relevance to the investigation. (I have not researched that, but think it is an obvious proposition.) In these cases, courts would, I think, not allow such a fishing expedition, just as they would not allow compulsory access to the attorneys’ research files.
2. I analogize these discussions to opinion work-product as discussed in the excerpt from my Federal Tax Procedure book. Assuming that the facts are properly anonymized, there is nothing but legal discussion going on, simply the working of practitioners’ minds on the subject. That would thus be classic work product for which compulsory discovery is prohibited except in exceedingly rare circumstances.
3. A subset consideration I ask is whether it matters as to the number of persons the attorney engages in the discussion (whether they respond or not)? Does it matter if it is a one-on-one conversation with a colleague over lunch? Is that a waiver of any information shared on either side of the conversation? What if the disclosure is made to a tax discussion group with perhaps 25 – 35 members, all of whom you know, whether in an actual meeting, a Zoom meeting or by email? Is the concern engaging in discussion with a broader group, some of whom the initiating attorney may not even know (such as at a CLE meeting or in a discussion group via email discussed in this blog). In terms of the purposes of the privilege, I am not sure I can articulate a meaningful distinction, so that whatever the rule is it should apply to discussions in each of these settings with anonymized facts.
4. Does the common interest privilege bear on this discussion? I picked this up in a quick search (Lance Cole, Revoking Our Privileges: Federal Law Enforcement's Multi-Front Assault on the Attorney-Client Privilege (and Why It Is Misquided), 48 Vill. L. Rev. 469, 510 n177 (2003).:
The "common interest privilege" is a broader concept that does not require a pending case and extends to cover parties with common interests in nonlitigated matters. See James M. Fischer, The Attorney-Client Privilege Meets the Common Interest Arrangement: Protecting Confidences While Exchanging Information for Mutual Gain, 16 Rev. Litig. 631, 640-44 (1997) (arguing that no reason exists to limit common interest privilege to litigation matters). The Restatement (Third) of the Law Governing Lawyers adopts the latter, broader definition. See Restatement (Third) of Law Governing Law. 76 cmt. c (2000) (stating that "exchanging communications" may involve matters other than litigation).The common interest privilege is not a perfect fit, but reasoning from the known to the unknown, I think it is probably the best analog to these circumstances.
5. As I said, I have not undertaken the detailed research necessary for anything approach a definitive conclusion, but I do offer my hunch: (1) the Government would not have the brass to attempt to obtain all discussions the attorney has had with other practitioners regarding the legal matters related to the client representation; and (2) if the Government did have the brass to attempt it, a court would swat the attempt down.
6. One other related issue raised was the potential violation of duty to the client from even discussing client related legal issues among practitioners. Should the attorney refrain or get some type of disclosure and permission from the client before participating in any setting whether even anonymized facts or discussions related to the client’s anonymized facts? Maybe that’s another paragraph to insert in client engagement documents, because, I suspect, it is the rare attorney who does have such discussions it in some engagements. Nevertheless, my suspicion is that anonymized discussions of legal issues related to clients is not a violation of this duty.
If any practitioners have thoughts on this subject, please post comments or email me at jack@tjtaxlaw.com.
This blog entry is cross-posted on my Federal Tax Procedure Blog.
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