May 19, 2020

Fifth Circuit Reaffirms That Client Identity Is Privileged Only in Narrow Circumstances

Holland & Knight Alert
Peter R. Jarvis | Trisha Thompson

Highlights

  • As a general proposition, a client's identity is not protected by the attorney-client privilege and is therefore subject to subpoena. However, in cases where the disclosure of the client's identity necessarily discloses the substance of the legal advice provided to the client by the attorney, the privilege may apply.
  • The U.S. Court of Appeals for the Fifth Circuit recently addressed how specific the link between client identity and advice given must be in order to constitute a disclosure of the substance of the legal advice provided to clients by their attorneys in Taylor Lohmeyer Law Firm P.L.L.C. v. United States, in which the IRS used a "John Doe" summons that sought the identity of clients for whom the law firm had performed certain work.
  • Lawyers who receive subpoenas requiring the disclosure of client identities should carefully consider whether the clients' identities and the substance of the legal services are inextricably connected, and they should be prepared to document this position in camera.

As a general proposition, a client's identity is not protected by the attorney-client privilege and is therefore subject to subpoena. When, however, disclosure of the client's identity necessarily discloses the substance of the legal advice provided to the client by the attorney, the privilege may apply. See, e.g., In re Grand Jury Subpoena for Attorney Representing Criminal Defendant Reyes-Requena, 926 F.2d 1423 (5th Cir. 1991) (Reyes-Requena II) and United States v. Liebman, 742 F.2d 897 (3d Cir. 1984). But how specific must the link be between client identity and advice given to constitute a disclosure of the substance of the legal advice provided to the client by their attorney? The U.S. Court of Appeals for the Fifth Circuit recently addressed this question in Taylor Lohmeyer Law Firm P.L.L.C. v. United States, — F.3d —, 2020 WL 1966844 (5th Cir. April 24, 2020), in which the IRS summonsed documents from the Taylor Lohmeyer Law Firm (the Firm).

The case involved a "John Doe" summons1 seeking the identity of clients for whom the Firm had performed certain work. The Firm filed a petition to quash the summons on the grounds that, inter alia, the documents sought by the IRS were protected by the attorney-client privilege because disclosing its clients' identities "would result in the disclosure of a confidential communication." It did not submit any documents under seal for the court's review. The U.S. District Court for the Western District of Texas dismissed the Firm's petition and instructed the Firm to provide a privilege log identifying any individual documents that the Firm wished to assert privilege over. The Firm appealed.

Decision

The Fifth Circuit affirmed the District Court's decision after factually distinguishing the case before it from its decision in Reyes-Requena II, supra, and the Third Circuit's decision in Liebman, supra, to uphold the lawyer's or law firm's assertion of privilege over client identity.

First, unlike in Reyes-Requena II, the Firm did not submit responsive documents under seal for the court's review or otherwise make a specific showing that it could not reveal the identity of its clients without also revealing the clients' confidential motives for consulting the Firm.

Second, the language of the IRS summons was broader here than it was in Liebman. In Liebman, the government sought the identities of "persons who paid for specific advice" about questionable tax deductions. In other words, the IRS presumably knew everything about the privileged communication other than the name of the client.

Conversely, in the case at issue, it was not clear that the IRS knew the substantive content of the legal advice that the Firm gave to its clients. The summons requested documents related to "John Does":

who, [are U.S. taxpayers and] at any time during the years ended December 31, 1995, through December 31, 2017, used the services of the Firm to acquire, establish, maintain, operate, or control (1) any foreign financial account or other asset; (2) any foreign corporation, company, trust, foundation or other legal entity; or (3) any foreign or domestic financial account or other asset in the name of such foreign entity.

This request lacks the specificity of the request in Liebman, and the Fifth Circuit held that such a broad request does not inextricably connect the identity of the client to the substantive content of the legal advice sought from or provided by the Firm.

Takeaways and Considerations

The Fifth Circuit's decision reaffirms the general rule that client identity is not protected by the attorney-client privilege other than in very specific circumstances — and that a well-drafted subpoena can make the preservation of client identity even more difficult to accomplish. Lawyers who receive subpoenas requiring the disclosure of client identities should carefully consider whether the clients' identities and the substance of the legal services are inextricably connected, and they should be prepared to document this position in camera.

Notes

1 "A John Doe summons is any summons described in 26 U.S.C. § 7609(c)(1) (covered summons) which does not identify the person with respect to whose liability the summons is issued." Id. at *1. A John Doe summons may be issued only after an ex parte court proceeding in which the government establishes the criteria set forth by Congress in 26 U.S.C. § 7609(f). Id.


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.


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