Or, How to Be A Privileged Character

Judge Albert G. (“Scholar Al”) Lauber gives a nutshell version of client-attorney privilege in Robert Knudsen and Estate of Sharon Knudsen, Deceased, Charles W. Buchta, Executor, 18290-18, filed 10/27/23. This is another micro-captive offshore insurance blow-up, with both parties seeking communications from the Knudsens’ erstwhile attorney, whom I’ll call Arizona.

The Knudsens’ current trusty attorneys (as the late Sharon wanted innocent spousery, her estate quite rightly has separate counsel from Bob) and IRS jointly want a SDT, ordering Arizona to pony up engagement letters (what we State courtiers call “retainer agreements”), POAs, and anything else authorizing Arizona to represent either the late Sharon (before she became the late Sharon) and Bob.  Likewise, they want anything showing commission splits and consulting fees that Arizona or entities he controlled got out of the deals.

The Knudsens’ current trusty attorneys are a canny lot. “When issuing their subpoenas, petitioners did not waive the attorney-client or work product privileges, but retained the right to assert privilege with respect to any documents produced by Mr. [Arizona].” Order, at p. 1., footnote 2.

Arizona shows for a document production hearing, and claims client-attorney, so hands over nada.

Judge Scholar Al says that when a client (present or former) asks, the attorney must hand over everything. But this is a joint subpoena, and client-attorney is specifically invoked. So how does IRS get into the act?

Trust Judge Scholar Al.

“When Mr. [Arizona] produces the requested documents to petitioners, they shall immediately produce those documents to respondent’s counsel. If petitioners seek to withhold from respondent any documents produced by Mr. [Arizona], they shall supply a privilege log setting forth the justification for any and all claims of privilege.” Order, at p. 2. That’s document by document, specifying each element of the privilege invoked, and the facts supporting each thereof.

Remember guys, “…to the extent Mr. [Arizona] served petitioners as a business or financial advisor, as opposed to an attorney supplying legal advice, the attorney-client privilege is simply irrelevant.” Order, at p. 2. (Citation omitted).

If IRS thinks they’re being shortchanged, they can move to enforce their part of the joint SDT to get what isn’t privileged.

Practice tip: If you hand over a majority of, or all, files at client’s request, scan ’em, and keep on separate harddrive, off-campus and off-network (chain of custody, y’know). Harddrives are cheap, paper copies are wasteful. Maybe so might come in handy if you get The Phone Call.