Judges Weigh Scope of Attorney-Client Privilege in Crypto Tax Investigation

[ad_1]

U.S. Supreme Court Considers Attorney-Client Privilege Issue in Cryptocurrency-Related Tax Investigation

(Reuters) – The U.S. Supreme Court debated on Monday the extent to which attorney-client privilege protects lawyers’ communications with their clients from disclosure when the documents contain more than mere legal advice and deal with other issues.

Judges heard arguments from a law firm appealing court orders finding it in contempt after it refused to comply with a federal grand jury subpoena in a criminal tax investigation into one of its clients and to deliver certain communications.

The firm, whose name is sealed, specializes in international tax matters and advised a client who the government says was an early bitcoin promoter who moved from the United States in 2014.

The law firm says it prepared the client’s tax returns and also provided legal advice on how to determine ownership of cryptocurrency assets and how to value them.

In response to a grand jury subpoena requesting documents related to the preparation of the client’s tax returns, the firm produced more than 20,000 pages of documents but withheld others citing attorney-client privilege. lawyer.

When a court ordered him to hand over around 54 other people, he resisted. These documents, the firm said, were dual-use communications containing legal advice as well as non-legal advice regarding the preparation of his tax returns.

But the San Francisco-based 9th Circuit Court of Appeals upheld the lower court judge, saying legal advice had to be the “primary” purpose of the communication to benefit from solicitor-client privilege.

This decision was at odds with what some other federal appeals courts have ruled in similar cases. The law firm’s appeal against the 9th Circuit’s decision is being closely watched by attorney groups like the American Bar Association, which has filed a supporting brief.

Daniel Levin, an attorney with the law firm Munger, Tolles & Olson, argued that the 9th Circuit took an “inherently impossible” approach for judges to apply in determining whether a communication is privileged.

Rather, he argued, it was enough to show that legal advice was an “important purpose”, a standard that “protects the ability of clients to seek good faith legal advice from lawyers in situations where the legal purposes and non-legal cannot be separated”.

Deputy Solicitor General Masha Hansford countered that the expansive standard advocated by Levin would mean “any non-pretext legal purpose, no matter how minor, will do.”

But Chief Justice John Roberts said the Justice Department’s narrow approach “really puts a lot of work on the judge” by asking him to “analyze” the records to determine whether their primary purpose was legal advice or not. .

Conservative Justice Clarence Thomas, on the other hand, raised concerns that legal advice is an “important but very minor subsidiary point” of a corporate communication, a point that the three liberal Justices of the court resumed.

“I don’t know why advice from a lawyer that is primarily business should be protected just because you are sneaking in on a minor legal consideration,” Judge Sonia Sotomayor said.

Liberal Justice Elena Kagan noted that no federal appeals court until 2014 had suggested a different standard should apply. She jokingly asked Levin to comment on “the old legal principle, if it ain’t broke, don’t fix it.”

The case is In re Grand Jury, United States Supreme Court, No. 21-1397.

For the law firm: Daniel Levin of Munger, Tolles & Olson

For the United States: Masha Hansford of the United States Department of Justice

Read more:

ABA calls on Supreme Court to protect client privilege beyond what business groups want

U.S. Supreme Court grants review in landmark solicitor-client privilege case

Our standards: The Thomson Reuters Trust Principles.

Nathalie Raymond

Thomson Reuters

Nate Raymond reports on federal judiciary and litigation. He can be reached at [email protected].

[ad_2]