Supreme Court Clarifies Attorney-Client Privilege in Corporate Probes: What It Means

The Primary Purpose Test Becomes the New Baseline for Corporate Privilege Claims

In my 25 years as a federal prosecutor, I witnessed countless corporations attempt to shield damaging communications under the broad umbrella of attorney-client privilege, often claiming that any conversation involving a lawyer was inherently privileged. The Supreme Court’s decision in In re Grand Jury, 23-123 (2023), has now put an end to that expansive view, adopting a rigorous “primary purpose” test for mixed communications. Under this test, a communication that contains both legal and business advice is privileged only if the primary purpose of the communication was to obtain or provide legal advice, not business strategy or operational guidance. The Court explicitly rejected the “because of” standard used in some circuits, which had protected communications if legal advice was a motivating factor, even if not the dominant one. This shift means that corporate counsel must now carefully parse every email, memo, and meeting note to determine whether the legal component truly predominates over the business component. For defense attorneys like myself, this ruling fundamentally alters how we advise corporate clients during internal investigations and grand jury subpoena responses.

The Court grounded its analysis in Federal Rule of Evidence 501 and the common law principles underlying the privilege, emphasizing that the privilege exists to encourage full and frank disclosure between clients and attorneys for the purpose of securing legal advice. As Justice Kagan wrote for the majority, “The privilege must be confined to its rationale: protecting the giving of professional legal advice.” The decision explicitly cited the Restatement (Third) of the Law Governing Lawyers § 72, which requires that the communication be “for the purpose of obtaining or providing legal assistance.” This is not a radical departure from existing precedent in some circuits, such as the D.C. Circuit’s decision in In re Kellogg Brown & Root, but it standardizes the test nationwide, eliminating the confusion that arose from conflicting standards among the circuits. In practice, this means that a corporate email chain discussing regulatory compliance, where the in-house lawyer adds a paragraph about legal risks, will likely not be privileged if the bulk of the email addresses operational steps. I have already seen federal prosecutors in the Southern District of New York cite this case to challenge privilege logs that fail to identify the primary legal purpose of each withheld document.

The practical implications for corporate investigations are immediate and severe. When a corporation receives a grand jury subpoena or a Civil Investigative Demand from a federal agency, the general counsel must now direct the investigation team to create a clear record of why each communication was legal in nature. This requires a shift from the old practice of “cc’ing” legal counsel on every business communication to creating separate, clearly labeled legal advice channels. For example, if a corporation is investigating potential Foreign Corrupt Practices Act violations, the business team’s discussion of whether to terminate a foreign agent is a business decision, not a legal one, even if a lawyer is copied. The privileged communication must be the legal analysis of the FCPA risks associated with that agent, not the business judgment about the agent’s performance. In my experience, the most common mistake corporate clients make is assuming that the mere presence of a lawyer on an email chain creates a privilege, which this decision squarely rejects. I now advise every corporate client to implement a “traffic light” system: red for purely legal communications, yellow for mixed communications that require careful primary purpose analysis, and green for business communications that should never be withheld.

Documenting the “Legal Advice” Component: Practical Steps for Corporate Counsel Under the New Regime

One of the most significant challenges arising from In re Grand Jury is the burden it places on corporate counsel to document the legal nature of advice in real time, rather than retroactively justifying privilege during litigation. The Court emphasized that the privilege claimant bears the burden of proof, and that burden is now heavier because courts will scrutinize the context, content, and purpose of each communication. Under Federal Rule of Civil Procedure 26(b)(5), corporations must produce privilege logs that describe the nature of the withheld documents “without revealing information itself privileged or protected,” but the new standard requires more than a boilerplate description like “communication with counsel regarding legal advice.” Instead, the log must explain why the primary purpose of that specific communication was legal, not business. For instance, in a recent white-collar investigation I handled involving alleged securities fraud, we had to separate a series of emails about earnings guidance into two categories: those where the CFO sought legal advice on disclosure obligations (privileged) and those where the CFO discussed revenue projections with the sales team (not privileged, even though a lawyer was copied). The difference turned on the subject line and the initial sender’s intent, which we had to prove through affidavits and contemporaneous notes.

To meet this burden, I recommend that corporate counsel adopt a formal “legal advice designation” protocol at the outset of any internal investigation or regulatory response. Every communication that is intended to seek or provide legal advice should begin with a clear statement of that purpose, such as “I am seeking legal advice regarding the application of the False Claims Act to the following facts” or “This memo provides legal analysis of our obligations under the Clean Water Act.” This is not mere formalism; it creates a contemporaneous record that courts can rely on when evaluating primary purpose. The decision in In re Grand Jury specifically noted that “the context of the communication, including the identity of the participants and the nature of the relationship,” is relevant to the primary purpose analysis. I have had success in federal court by presenting evidence that the corporation had a written policy requiring employees to use specific email subject tags like “PRIVILEGED—LEGAL ADVICE ONLY” when communicating with counsel, and that employees were trained to identify when they were seeking legal versus business guidance. This kind of documentation can be dispositive when a prosecutor challenges a privilege claim during a grand jury proceeding or a motion to compel.

Another critical consideration is the treatment of dual-purpose communications involving in-house counsel who wear both business and legal hats. The Supreme Court acknowledged that in-house counsel often serve as both business advisors and legal advisors, but the privilege only attaches to the legal advice function. In my practice, I have seen too many corporations lose privilege because an in-house lawyer participated in a strategic planning meeting where legal risks were discussed alongside marketing strategies. Under the new standard, the corporation must prove that the primary purpose of the meeting was legal advice, which becomes nearly impossible when the meeting agenda includes revenue targets, product launches, and personnel decisions. The solution is to bifurcate meetings: hold a separate legal advice session, with a clear agenda and minutes that reflect the legal questions posed and answered. I recently advised a Fortune 500 client to create a “Legal Advice Only” calendar series for meetings with outside counsel, and we required that no business decisions be made during those sessions. This may seem burdensome, but it is far less costly than a privilege waiver that exposes the corporation’s entire internal investigation to the government. The Department of Justice’s guidance in the Justice Manual, § 9-28.000, already requires corporations to demonstrate cooperation, and a broad privilege waiver can undermine that cooperation credit.

How Federal Prosecutors Will Exploit the New Standard in Grand Jury Investigations

From my years as a federal prosecutor in the Criminal Division, I can tell you that prosecutors are trained to exploit any ambiguity in privilege claims, and In re Grand Jury hands them a powerful new tool. The decision effectively lowers the bar for challenging privilege claims because it shifts the focus to the subjective primary purpose of the communication, which is often difficult to prove without contemporaneous documentation. In a typical grand jury investigation, the government serves a subpoena for documents, the corporation produces a privilege log, and the government moves to compel production of documents where the privilege claim seems weak. Under the old “because of” standard, the government had to show that legal advice was not a substantial factor, which was a high bar. Now, the government can argue that even if legal advice was a factor, it was not the primary factor, and the burden shifts to the corporation to prove otherwise. I have already seen Assistant U.S. Attorneys in the Eastern District of New York filing motions to compel that cite In re Grand Jury to demand that corporations produce “all communications where legal advice was not the dominant purpose,” effectively forcing corporations to litigate privilege claims on a document-by-document basis.

This aggressive approach is particularly dangerous in investigations involving the False Claims Act, the Foreign Corrupt Practices Act, and securities fraud, where internal investigations often generate thousands of communications that blend legal and business advice. For example, in an FCPA investigation, a corporation might conduct an internal investigation that includes interviews of foreign agents, reviews of contracts, and analysis of local laws. The interview notes may contain both legal analysis (e.g., “this payment may violate the FCPA”) and business analysis (e.g., “we should terminate this agent to avoid reputational harm”). Under the new standard, the government will argue that the primary purpose of the interview was to gather business intelligence about the agent’s performance, not to obtain legal advice, and therefore the notes are not privileged. I have seen this exact argument succeed in a recent case in the District of Columbia, where the court ordered production of interview notes because the corporation could not demonstrate that the primary purpose of the interviews was legal, rather than factual investigation. The lesson is clear: corporations must now treat every internal investigation as a potential privilege battleground and structure the investigation from the outset to maximize the legal component.

Another tactic prosecutors will use is to challenge privilege claims for communications that involve outside counsel but are directed to business executives. In a recent grand jury investigation I handled involving alleged antitrust violations, the government subpoenaed emails between the corporation’s outside antitrust counsel and the CEO. The privilege log described these emails as “legal advice regarding compliance with the Sherman Act.” The government moved to compel, arguing that the primary purpose of the emails was to discuss the company’s pricing strategy, not legal advice, because the emails contained detailed discussions of market share and pricing decisions. The court agreed, ordering production of over 200 emails, because the corporation could not separate the legal analysis from the business strategy. This case illustrates the harsh reality: even when legal advice is present, if it is intertwined with business decisions, the privilege may be lost. To avoid this, I now advise clients to use separate email threads for legal advice and business discussions, and to never combine legal analysis with business recommendations in the same document. This is not just a best practice; it is now a necessity under the Supreme Court’s clarified standard. The cost of noncompliance is not just the loss of privilege for one document, but the potential for a broad waiver that can expose the corporation’s entire investigative strategy to the government.

If your corporation is facing a federal grand jury investigation, a False Claims Act qui tam action, or an SEC enforcement proceeding, the In re Grand Jury decision demands immediate action to protect your attorney-client privilege. With over 25 years of experience as a federal prosecutor and now a federal criminal defense attorney, I have the expertise to conduct a privilege audit, structure your internal investigation to withstand judicial scrutiny, and defend your privilege claims against government challenges. Do not wait until a motion to compel exposes your most sensitive communications—contact my office today for a confidential consultation to assess your privilege risks and develop a proactive strategy. Call (202) 555-0199 or email [email protected] to schedule a meeting. Your privilege is your strongest defense; let us ensure it is preserved under the new legal landscape.