What is vital to the privilege is that the communication be made in confidence for the purpose of obtaining legal advice from the lawyer. If what is sought is not legal advice but only accounting service, or if the advice sought is the accountant's rather than the lawyer's, no privilege exists.
Kovel (defendant), an accountant employed by a law firm that specialized in tax law, was called before a grand jury to testify against a client for whom defendant had done work. A grand jury in the Southern District of New York was investigating alleged Federal income tax violations by Hopps, a client of the law firm; Kovel was subpoenaed to appear on September 6, 1961, a few days before the date, September 8, when the Government feared the statute of limitations might run. The law firm advised the Assistant United States Attorney that since Kovel was an employee under the direct supervision of the partners, Kovel could not disclose any communications by the client of the result of any work done for the client, unless the latter consented; the Assistant answered that the attorney-client privilege did not apply to one who was not an attorney. Kovel appealed a sentence of the United States District Court for the Southern District of New York that was imposed upon him for criminal contempt after he refused to answer a question asked in the course of an inquiry by a grand jury.
May Kovel assert attorney-client privilege?
A judgment holding defendant in contempt for failing to answer questions was vacated and remanded because defendant may have had grounds to assert the attorney-client privilege. The presence of defendant while the client was relating a complicated tax story to a lawyer would not destroy the attorney-client privilege, as long as the communication was made in confidence for the purpose of obtaining legal advice. Although defendant did not offer any proof supporting the privilege claim, the uncertainty as to the applicable legal principles, the fixed view of the judge, and the haste with which the proceedings were conducted, extenuated failure of defendant's counsel to make a proper offer of proof. The case was remanded for a determination of facts.