Minnesota Lawyer and Finance & Commerce – Partner Content
Author: William Paterson
There is officially now another wrinkle to the attorney-client privilege doctrine under Minnesota law. The Minnesota Supreme Court recently issued decision in In re Polaris, Inc. 2021 WL 5913633 (Minn. Dec. 15, 2021) and in doing so both provided clarity and uncertainty to the privilege doctrine. In short, the Court was deciding whether the attorney-client privilege protected an audit report in its entirety from disclosure. The Court held that the report was not protected in its entirety because although the report did include legal advice, the predominant purpose of the report was to provide business advice rather than legal advice. The headline takeaway, and one certainty, from the Court’s decision may therefore be that Minnesota has officially adopted the predominant purpose test—i.e. if the predominant purpose of a lawyer’s advice to its client is legal advice, compared to business advice, then the advice (e.g. document) is protected from disclosure. While itself a monumental decision, especially for business litigators, it will be interesting to see (and currently almost impossible to predict) how this decision will be applied moving forward. For lower courts, there are at least two uncertainties that come to mind.
The first uncertainty is highlighted by Justice Anderson in his dissent – what is the distinction between business advice and legal advice? Although the Court clearly adopted the predominant purpose test, the Court failed to “meaningfully articulate what ‘business advice’ and ‘legal advice’ mean.” Id. at *12. To state the obvious, analyzing whether a lawyer’s advice to a client is predominantly legal advice versus business advice is impracticable without first establishing what constitutes, as a legal matter, legal advice versus business advice. Justice Anderson, for the benefit of courts, clients, and attorneys, took the laboring oar in articulating the difference between business advice and legal advice. But as Justice Anderson acknowledged, his analysis only provided “some contours to the concepts of business and legal advice.” Id. at *14 (emphasis in original). If lower courts are unclear or disagree as to what constitutes legal advice versus business advice, then the very foundation of this now official legal doctrine is uncertain.
The second uncertainty is maybe more subtle but may also carry more weight moving forward – what if the special master (and subsequently district court) had decided the other way? Before analyzing whether the primary purpose of the audit report was to provide legal advice and was therefore protected by the attorney-client privilege, the Court reiterated that whether the privilege exists is a question of fact. More specifically, the Court held that “determining the predominant purpose of a document is a question of fact.” Id. at *7. Because the issue is a question of fact, the Court then emphasized the standard of review to apply—clear error. In applying this standard, the Court was merely tasked with determining whether it had a definite and firm conviction that a mistake at the district court level had been made. Stated differently, if the district court’s decision regarding the predominant purpose of the audit report was reasonably supported, then the Court had to affirm. It did just that. Id. at *9 (“In sum, we are not left with a definite and firm conviction that the special master erred in finding that Polaris did not establish that the predominant purpose of the audit report was legal advice.”). So, while providing certain legal precedent, this decision may not provide as much guidance as originally expected. Whether the predominant purpose of the specific advice in a future case was legal or business advice is still a question of fact that must be analyzed independently. Had the special master found that the primary purpose of the audit report was to provide legal advice; would the Supreme Court still have affirmed? What would it take to have a definite and firm conviction that the lower court had decided the predominant purpose issue in error? The answer is unclear. All we know is that as we saw here, how the district court rules and thus how an appellate court must review that decision is very important.
Minnesota has now officially adopted the predominant purpose test. But as we can see, in settling one legal issue, the Minnesota Supreme Court may have created plenty more. It will be important for business litigators to consider both these certainties and uncertainties when addressing privilege issues moving forward.