Client, attorney, and preparer emails were protected from disclosure

Editor: Mark G. Cook, CPA, CGMA

Emails between client, attorney, and return preparer may be protected from disclosure under certain circumstances. In IQL-Riggig, LLC v. Kingsbridge Technologies, No. 19 CV 6155 (N.D. Ill. 3/29/21), the court examined whether the attorney-client privilege and the work product doctrine applied to emails and tax preparation documents.

Case history

IQL-Riggig LLC, also known as Riveria LLC, and its principal owners, Edward Gibson and Tarang Gupta, sued Kingsbridge Holdings Inc., seeking to protect confidential information and trade secrets for their majority ownership interest of Got Docs LLC. Kingsbridge contested Riveria’s ownership interest in Got Docs based on Riveria’s 2017 tax returns as well as other documents and related emails.

Kingsbridge argued that Riveria’s accounting firm, Meilinger, improperly withheld responsive information under the attorney-client privilege. The court elaborated that “[c]ommunications between attorneys at the same firm may qualify for the attorney-client privilege only if they reflect privileged information relating to communications to or from the client.” The court also stated that “preparation of tax returns qualifies as an accounting service, not a legal service. . . . Likewise, documents used both to prepare tax returns and to advance a party’s interests during litigation are not privileged.” Because the engagement letter stated that Meilinger was to provide tax preparation, the court concluded that the attorney-client privilege did not apply to the engagement letter.

Kingsbridge also argued that Meilinger improperly withheld responsive documents under the work product doctrine. Meilinger established that emails between Meilinger and Nelson Mullins, a law firm representing Riveria, Gupta, and Gibson in the case, were exchanged in anticipation of litigation, as both parties agreed that Riveria hired Meilinger to prepare amended tax returns for purposes of litigating the case. Having reviewed all the emails, the court found that the work product doctrine applied.

Definition and rules

The attorney-client privilege protects a communication (1) between a client and attorney, (2) made in confidence, (3) for the purpose of obtaining legal advice. The attorney-client privilege only applies to communications between a client and an attorney or the attorney’s agent (Judson Atkinson Candies, Inc., 529 F.3d 371 (7th Cir. 2008); In re Grand Jury Proceedings, 220 F.3d 568 (7th Cir. 2000)).

The work product doctrine, as the Seventh Circuit has explained, “protects documents prepared by an attorney or the attorney’s agent to analyze and prepare the client’s case” (Smith, 502 F.3d 680, 689 (7th Cir. 2007)). Both the Second Circuit and the Sixth Circuit have confirmed that tax memoranda from a tax firm that contain legal analysis of current tax law are potentially protected under the work product doctrine. Therefore, the work product doctrine protects documents not just limited to those created by or for an attorney. In general, the work product doctrine’s protection of documents and tangible things is broader than attorney-client privilege. Also, the protection is not limited to communications or confidential matters, as long as the documents were produced in anticipation of litigation.

Takeaway

The attorney-client privilege and work product doctrine are not absolute. The determination may require a document-by-document analysis for the primary purpose of the communication. A tax accountant may not benefit from the attorney-client privilege unless he or she is assisting the attorney to provide legal services to a client. However, a tax memorandum that provides legal analysis of tax law to a client may qualify for protection under the work product doctrine.

EditorNotes

Mark G. Cook, CPA, CGMA, MBA, is the lead tax partner with SingerLewak LLP in Irvine, Calif.

For additional information about these items, contact Mr. Cook at 949-623-0478 or mcook@singerlewak.com.

Contributors are members of SingerLewak LLP.