The Fifth Circuit Court of Appeals has upheld an order enforcing an Internal Revenue Service summons directed at a law firm. (Attorney-Client Privilege) The case is styled as Taylor Lohmeyer Law Firm PLLC v. the United States, No. 19-50506 (5th Cir. 2020).
The case involves a law firm that provides tax and estate planning services to its clients. In October 2018, the IRS served a John Doe summons on the firm asking for, among other things, information regarding the identity of firm clients that used its services to create and maintain foreign bank accounts. The firm filed a petition in federal court to quash the summons, asserting–among other things that the documents were protected by the attorney-client privilege. The firm claimed that despite the general rule that a lawyer’s clients’ identities are not covered by the privilege, an exception to the general rule applies when “a client’s identity is protected by the attorney-client privilege if its disclosure would result in the disclosure of confidential communication.” The District Court dismissed the petition and supported the enforcement of the summons.
The firm appealed. The Fifth Circuit upheld the District Court’s enforcement of the subpoena, reasoning that the disclosure of the identities of the clients would inform the IRS that the clients participated in one of the numerous transactions described in the summons to the firm. The Fifth Circuit further found that of the identities of clients would not reveal confidential advice received from the attorneys and was therefore not protected by the attorney-client privilege.
This ruling can have serious implications in criminal investigations and the powers of law enforcement. It further forces attorneys to make the uncomfortable choice between protecting clients’ identities and not revealing the information or facing contempt.