Attorney-Client Privilege


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IRS, Dealing With

Attorney-Client Privilege

By: A.J. Cook

The issue of attorney-client privilege is in the news lately, thanks to the White House and Independent Counsel Kenneth Starr.

Starr wanted attorney James Hamilton to turn over his notes about conversations with Hamilton’s client Vince Foster, now deceased. Hamilton refused, claiming attorney-client privilege. The Supreme Court ruled the privilege survives death. The privilege issue in another case, pending in the appeals court, involves Bruce Lindsey, a lawyer. He was asked to testify in the Monica Lewinsky investigation.

The purpose of this recent highly litigious privilege, recognized in the U.S. since 1888, is to encourage clients to make full disclosures to their attorneys, knowing what they say will be kept secret. Sound legal advice depends on the lawyer being fully informed.

Use of the privilege is not limited to country-shaking issues like travelgate and Monica Lewinsky, it also applies to tax issues involving ordinary citizens. Tax information obtained by an attorney from a client may be protected from the prying eyes of the Internal Revenue Service. This protection can even extend to people working for the lawyer.

Attorney Robert Vogel of Mandan, N.D., hired accountant Lloyd Orser to go over records of two of Vogel’s clients. The couple wanted to know if they needed to amend their returns. After Orser’s review, Vogel decided the returns should be amended.

Later the IRS demanded work papers from the accountant. He refused, claiming attorney-client privilege.

A U.S. District Court ruled for the accountant. Even though he wasn’t an attorney, he worked for the attorney.

The Moral: Sticks and stones may break my bones, but words spoken to my lawyer will never hurt me.

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Like other legal advantages, the attorney-client privilege can be lost. Clients and their attorneys must be careful with whom they discuss privileged information. The shield of privacy is lost when the information is disclosed to someone other than the attorney or someone working for the attorney.

The IRS requested papers prepared by Joseph J. Golden, attorney for Robert Martocci. The papers involved a contract signed by Robert and his brother. The brothers had signed the contract settling their dispute over corporate stock. The IRS wanted to see the contract and work papers relating to it.

The court ordered Golden to hand over the papers to the IRS. Golden and Robert had discussed these private matters in front of the brother.

The Moral: Loose lips can sink a shipload of legal privileges.

A.J. Cook is a lawyer and CPA. His tax column appears weekly in numerous newspapers. Why isn't it published in your hometown newspaper? Ask its Business Editor to subscribe.

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