United States v. Kovel

United States Court of Appeals for the Second Circuit · 1961 · Evidence

EvidenceAttorney-client privilegeattorney-client privilegeaccountantslaw firm employeesgrand jurycriminal contemptconfidential communications

Facts

Kovel, a former Internal Revenue agent with accounting skills, worked for a law firm specializing in tax law. A grand jury investigating alleged tax violations by Hopps, a client of the firm, asked Kovel questions about communications from Hopps concerning financial statements and tax-related transactions. Kovel refused to answer on the ground of attorney-client privilege, and the law firm asserted that as a supervised employee he could not disclose client communications without consent. The district judge took the position that no privilege could ever extend to a nonlawyer and ordered Kovel to answer, then held him in contempt when he refused.

Issue

Can the attorney-client privilege ever protect communications between a client and a nonlawyer accountant employed by a law firm? If so, was the existing record sufficient to determine whether Kovel's refusals were privileged?

Rule

The attorney-client privilege is not limited to communications made directly to an attorney or to purely ministerial employees. Communications to a nonlawyer employed by or engaged by the lawyer are privileged when they are made in confidence for the purpose of obtaining legal advice from the lawyer and the nonlawyer's participation is necessary, or at least highly useful, to enable the lawyer to understand the client's communications and give legal advice. No privilege exists if the client seeks accounting services rather than legal advice, or seeks the accountant's advice rather than the lawyer's.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Chicago, tax attorney Lena Ortiz asks her client, Devin Marsh, to meet first with Omar Salim, a forensic accountant employed by her law office. Ortiz explains that Omar will sort through Devin's complex partnership ledgers and translate the figures so she can advise Devin about possible tax exposure. Devin privately gives Omar detailed financial information.

If a grand jury later questions Omar about what Devin told him, which is the best answer?

Explanation. The majority held that privilege may extend to a nonlawyer employed by a lawyer when the communication is made in confidence for the purpose of obtaining legal advice from the lawyer, and the nonlawyer's participation is necessary or at least highly useful to facilitate that advice. An accountant used to interpret complex financial information is analogous to an interpreter translating a foreign language.