Opinion ID: 433796
Heading Depth: 2
Heading Rank: 1

Heading: Legal vs. Business Advice

Text: 9 We consider first whether the documents at issue on this appeal reflect communications with respect to legal advice that are ordinarily within the ambit of the privilege for attorney-client communications. The privilege attaches 10 (1) where legal advice of any kind is sought (2) from a professional legal advisor in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal advisor, (8) except the protection be waived .... 11 United States v. Bein, 728 F.2d 107 at 112 (2d Cir.1984) (quoting United States v. Kovel, 296 F.2d 918, 921 (2d Cir.1961)); accord In re Horowitz, 482 F.2d 72, 80-81 n. 7 (2d Cir.), cert. denied, 414 U.S. 867, 94 S.Ct. 64, 38 L.Ed.2d 86 (1973). The grant of protection for such communications is designed to encourage clients to make full disclosure to their attorneys, Fisher v. United States, 425 U.S. 391, 403, 96 S.Ct. 1569, 1577, 48 L.Ed.2d 39 (1976), in order to enable the attorneys to provide sound legal advice. The availability of sound legal advice inures to the benefit not only of the client who wishes to know his options and responsibilities in given circumstances, but also of the public which is entitled to compliance with the ever growing and increasingly complex body of public law. See Upjohn Co. v. United States, 449 U.S. 383, 389, 392, 101 S.Ct. 677, 682, 684, 66 L.Ed.2d 584 (1981); Fisher v. United States, supra, 425 U.S. at 403, 96 S.Ct. at 1577; Hunt v. Blackburn, 128 U.S. 464, 470, 9 S.Ct. 125, 127, 32 L.Ed. 488 (1888). 12 As the district court recognized, the privilege is triggered only by a client's request for legal, as contrasted with business, advice. See In re John Doe Corp., 675 F.2d 482, 488 (2d Cir.1982) (The Upjohn privilege is clearly limited to communications made to attorneys solely for the purpose of the corporation seeking legal advice and its counsel rendering it.); see In re Grand Jury Subpoena, 599 F.2d 504, 510 (2d Cir.1979). We disagree, however, with the district court's application of this limitation to the documents before us. These documents reflect AG's requests for advice from Proskauer relating to three transactions, and as to each our review convinces us that the advice sought was legal rather than commercial in character. 13 Documents 0001-0076, 0091-0094, 0098, 0126-0142, 0148-0163, and 0187-0188 relate to AG's request for tax advice under Swiss and American law with respect to alternative forms of employee compensation plans for key AG employees. Tax advice rendered by an attorney is legal advice within the ambit of the privilege. Colton v. United States, 306 F.2d 633, 637 (2d Cir.), cert. denied, 371 U.S. 951, 83 S.Ct. 505, 9 L.Ed.2d 499 (1963); see United States v. El Paso Co., 682 F.2d 530, 539 (5th Cir.1982) (dictum); United States v. Cote, 456 F.2d 142, 144 (8th Cir.1972) (accountant's work papers used by attorney in advising client privileged; attorney's decision as to whether the taxpayers should file an amended return undoubtedly involved legal considerations which mathematical calculations alone would not provide). 14 The possibility that some of the information contained in these documents may ultimately be given to AG employees does not vitiate the privilege. First, it is important to bear in mind that the attorney-client privilege protects communications rather than information; the privilege does not impede disclosure of information except to the extent that that disclosure would reveal confidential communications. See United States v. Cunningham, 672 F.2d 1064, 1073 n. 8 (2d Cir.1982). Thus, the fact that certain information in the documents might ultimately be disclosed to AG employees did not mean that the communications to Proskauer were foreclosed from protection by the privilege as a matter of law. Nor did the fact that certain information might later be disclosed to others create the factual inference that the communications were not intended to be confidential at the time they were made. If confidentiality were not intended, of course, the privilege would not attach, see In re John Doe Corp., supra; but we see no indication that confidentiality was not intended. For example, although some of the documents appear to be drafts of communications the final version of which might eventually be sent to other persons, and as distributed would not be privileged, we see no basis in the record for inferring that AG did not intend that the drafts--which reflect its confidential requests for legal advice and were not distributed--to be confidential. Confidentiality may also, of course be waived; but we see no indication that a waiver has yet occurred. 15 The second matter reflected in the documents at issue (documents 0077-0090, 0099-0100, and 0184) is a proposed reorganization of the Marc Rich companies. While the reorganization was apparently being considered by AG for various business purposes, the documents reflect that Proskauer was not consulted for advice on whether the reorganization would in fact secure these business objectives. Rather it was consulted as to the tax consequences of a reorganization and whether those consequences should affect the structure of the corporate realignment, and as to corporate law considerations in structuring the reorganization. Like the documents relating to employee compensation, these documents memorialize client confidences obtained in the pursuit of legal advice concerning the mechanics and consequences of alternative business strategies. Such material is protected by the privilege. 16 The final transaction, as reflected in documents 0095-0097, 0101-0125, 0143-0147, 0164-0183, and 0189-0196, is the sale of International. AG evidently sought Proskauer's advice concerning the legality of the sale. Whatever else it may be (see part B, infra, discussing the crime or fraud exception to the privilege), an attorney's opinion as to the lawfulness of a transaction is certainly legal advice. 4 17 There are two documents that our review persuades us are not privileged. The first is document 0185-0186, which is a status report that mentions the reorganization but contains nothing reflecting any communication of the client or advice by the attorneys. The bare fact that AG consulted Proskauer with respect to a reorganization does not appear to have been treated as confidential either here or in the district court. Accordingly, we do not consider document 0185-0186 privileged. The second document we consider unprivileged is document 0197, which is apparently a blank buck slip. 5 18