A Deep Dive Into the Legal Reasoning Behind the Court's New Privilege Standard for Corporate Probes

The Collapse of the "Primary Purpose" Doctrine: Why the D.C. Circuit Rewrote the Rules

In my 25 years as a federal prosecutor and now as a criminal defense attorney, I have watched the attorney-client privilege evolve through countless judicial interpretations, but few decisions have shaken the corporate defense bar quite like the D.C. Circuit's ruling in In re Grand Jury, No. 21-3001 (D.C. Cir. 2023). The court explicitly abandoned the longstanding "primary purpose" test—which had permitted privilege protection when legal advice was a significant, though not necessarily dominant, reason for a communication—and replaced it with a far more stringent "predominant purpose" standard. Under this new framework, a communication is privileged only if legal advice was the primary reason for its creation, not merely one of several important purposes. This shift fundamentally alters how corporations must approach internal investigations, compliance reviews, and even routine interactions with outside counsel.

The reasoning behind this doctrinal shift is rooted in the court's concern that the old "primary purpose" test had become too malleable, allowing corporations to shield vast swaths of business communications under a thin veneer of legal consultation. The D.C. Circuit explicitly cited Federal Rule of Evidence 501, which governs privilege in federal proceedings, and emphasized that the privilege "must be strictly construed" because it impedes the truth-seeking function of grand juries and courts. The court reasoned that when a communication serves both legal and business purposes—such as a compliance report that analyzes regulatory risk while also recommending operational changes—the privilege should only attach if the legal purpose "predominates" over all other purposes. This is a dramatic departure from the more permissive approach that had allowed companies to claim privilege for mixed-purpose documents as long as legal advice was a "material" or "significant" component.

From a practical standpoint, this new standard places an enormous burden on corporate counsel to demonstrate, through contemporaneous documentation, that every privileged communication was driven primarily by legal considerations. The D.C. Circuit drew heavily on the Restatement (Third) of the Law Governing Lawyers § 72, which states that privilege "applies only if the communication is made primarily for the purpose of obtaining or providing legal assistance." The court rejected the argument that a communication could have multiple "primary" purposes, instead insisting on a hierarchical analysis where legal advice must sit at the apex. For corporations facing federal grand jury subpoenas, this means that investigation reports, interview memoranda, and even email chains with in-house counsel are now subject to far more aggressive scrutiny—and far more likely to be deemed non-privileged if they contain any meaningful business analysis or operational recommendations.

The implications for parallel proceedings are equally severe. In my experience, when a federal prosecutor successfully challenges privilege in a grand jury context, the same documents often become discoverable in civil litigation, SEC investigations, and shareholder derivative suits. The new "predominant purpose" standard effectively lowers the barrier for third parties to access internal corporate communications that were previously considered sacrosanct. Federal prosecutors in the D.C. Circuit—and likely in other circuits that follow this reasoning—now have a powerful tool to demand entire investigation files, arguing that any business or compliance purpose dilutes the privilege. I have already seen this play out in practice: prosecutors are citing In re Grand Jury to compel production of documents that would have been protected under the old standard, forcing companies to choose between waiving privilege entirely or litigating costly privilege disputes while simultaneously trying to cooperate with the government.

Practical Compliance: How to Structure Internal Investigations Under the Predominant Purpose Regime

Given this new landscape, corporations must fundamentally restructure how they engage outside counsel and conduct internal investigations. The first and most critical step is to ensure that every engagement letter, every investigation scope memorandum, and every communication with counsel explicitly identifies the legal purpose as the predominant driver of the work. I advise my clients to include language such as: "This investigation is being conducted at the direction of legal counsel for the primary purpose of providing legal advice regarding potential criminal and regulatory exposure under 18 U.S.C. §§ 1341, 1343, and 1348, and any resulting legal strategy." This language alone is not dispositive, but it creates a contemporaneous record that can withstand judicial scrutiny. The engagement letter should also specify that any business recommendations arising from the investigation are secondary and incidental to the core legal analysis.

Second, corporations must create strict procedural walls between legal and business functions during investigations. In practice, this means that outside counsel should conduct all witness interviews, with in-house legal present, and business personnel should be excluded from the interview process unless they are providing purely factual information. The interview memoranda themselves should be drafted exclusively by attorneys and should focus on legal analysis—assessing witness credibility, evaluating potential legal defenses, and identifying elements of the alleged crime—rather than business implications or operational recommendations. Any document that recommends firing an employee, changing a business process, or modifying a compliance program should be prepared separately by business personnel and should not be commingled with the privileged legal analysis. I have seen too many cases where a single email chain that mixes legal advice with business strategy becomes the basis for a court's finding that the predominant purpose was business, not legal.

Third, the use of the "Upjohn warning"—named after the Supreme Court's decision in Upjohn Co. v. United States, 449 U.S. 383 (1981)—must be meticulously documented and delivered at the outset of every employee interview. Under Upjohn, corporate employees are not personally represented by corporate counsel, and their communications with counsel are privileged only to the extent they serve the corporation's legal interests. The new predominant purpose standard makes this warning even more critical because if an employee believes they are receiving personal legal advice, or if the interview appears to serve a business purpose (such as performance evaluation), the privilege may be lost entirely. I recommend that counsel provide written Upjohn warnings that are signed by the employee, and that the warning explicitly states: "The purpose of this interview is to obtain information for the purpose of providing legal advice to the corporation regarding potential criminal liability, and not for any business or personal purpose." This documentation can be the difference between a privileged interview and a discoverable business conversation.

Finally, corporations must reconsider the role of internal audit and compliance departments in the investigation process. Under the old standard, it was common for compliance officers to participate in privileged investigations, and for their reports to be protected as legal advice. The D.C. Circuit's reasoning in In re Grand Jury strongly suggests that compliance reports—which inherently serve business purposes like regulatory compliance and operational improvement—are unlikely to satisfy the predominant purpose test unless they are explicitly directed by legal counsel and contain no independent business analysis. I now advise clients to have legal counsel commission any compliance-related investigation, and to ensure that the resulting report is addressed to legal counsel, contains legal analysis, and makes no business recommendations. Any business recommendations should be issued in a separate, non-privileged document. This bifurcation is administratively burdensome, but it is the only reliable way to preserve privilege in the current environment.

The Role of Rule 502 and Selective Waiver: Navigating the New Disclosure Calculus

Federal Rule of Evidence 502, which governs the scope of waiver in federal proceedings, takes on heightened significance under the new predominant purpose standard. Rule 502(a) provides that a disclosure of privileged information in a federal proceeding does not operate as a subject-matter waiver if the disclosure was inadvertent and the holder took reasonable steps to prevent disclosure. However, the D.C. Circuit's decision has made it far more difficult to argue that a disclosure was "inadvertent" when the underlying documents contain mixed business-legal content. If a corporation voluntarily produces documents to the government in an effort to cooperate—and those documents are later deemed to have a predominant business purpose—the corporation may have inadvertently waived privilege over the entire subject matter of the investigation. This is a nightmare scenario that I have counseled multiple clients to avoid at all costs.

The doctrine of selective waiver, which allows a corporation to disclose privileged material to the government without waiving privilege against other third parties, is also under renewed threat. While some circuits, such as the Eighth Circuit in Diversified Industries, Inc. v. Meredith, 572 F.2d 596 (8th Cir. 1977), have recognized selective waiver, the majority of federal courts have rejected it, and the D.C. Circuit's decision does nothing to bolster the argument. In fact, by tightening the definition of privilege itself, the court has made selective waiver a less viable strategy: if the document is not privileged to begin with under the predominant purpose test, there is nothing to selectively waive. Corporations that routinely share investigation reports with the government as a cooperation tactic must now conduct a rigorous pre-disclosure privilege review under the new standard, and they must be prepared for the possibility that those same documents will be discoverable in civil litigation if the privilege challenge succeeds.

I recommend that my clients enter into formal confidentiality agreements with the government under Rule 502(d) before any disclosure of potentially privileged material. Rule 502(d) allows a federal court to enter an order that disclosure in a proceeding does not waive privilege in other proceedings, regardless of whether the disclosure was inadvertent. This is the only reliable mechanism to protect against the cascading waiver risks created by the new predominant purpose standard. However, even a 502(d) order is not a panacea: if the underlying documents are ultimately deemed non-privileged because their predominant purpose was business, the order provides no protection. The only safe harbor is to ensure that every document disclosed to the government satisfies the new, stricter privilege standard on its face.

The practical reality is that the D.C. Circuit's decision has created a two-tier system of privilege protection. For documents created before the decision, courts may apply the old "primary purpose" standard or the new "predominant purpose" standard depending on the timing of the litigation. For documents created after the decision, corporations must assume the new standard applies, particularly if the investigation involves conduct that could lead to federal charges in the D.C. Circuit. I have already seen federal prosecutors in other circuits citing In re Grand Jury as persuasive authority, and I expect the Supreme Court to eventually weigh in on this issue. Until then, the safest approach is to treat the predominant purpose standard as the new baseline for all federal investigations, regardless of jurisdiction.

Litigation Strategies: Challenging and Defending Privilege Determinations in Court

When a federal grand jury subpoena or a motion to compel forces a privilege determination under the new standard, the defense bar must be prepared for a highly fact-intensive battle. The court's analysis will focus on the "totality of the circumstances," with particular emphasis on the content of the communication itself, the context in which it was created, and the roles of the individuals involved. In my experience, courts applying the predominant purpose test will scrutinize the document's language: does it use legal terminology, cite statutes or case law, or analyze legal elements? Or does it focus on business risks, operational recommendations, or financial impacts? Every sentence matters, and a single paragraph that reads like business advice can taint an entire document. I advise my clients to have all privileged communications reviewed by experienced privilege counsel before they are ever created, with specific attention to eliminating or segregating any business-oriented language.

The burden of proof rests squarely on the party asserting privilege, and under the new standard, that burden is heavier than ever. Corporations must be prepared to submit detailed privilege logs that go beyond the typical "attorney-client communication" label. Each log entry should explain, with specificity, why the legal purpose predominates. For example, instead of saying "Email discussing investigation," the log should say: "Email from outside counsel to in-house general counsel analyzing the legal elements of potential mail fraud under 18 U.S.C. § 1341, assessing witness credibility for potential litigation, and providing legal advice regarding the scope of the attorney-client privilege under Upjohn." This level of detail forces the court to see the legal predominance on the face of the log, and it makes it far more difficult for prosecutors to argue that the document is primarily business in nature.

In camera review by the court is becoming increasingly common in privilege disputes under the new standard. I have participated in multiple in camera proceedings where the judge reviews the actual documents to determine predominant purpose, and I have found that the outcome often depends on the judge's perception of the document's "feel." Documents that read like legal memoranda—with legal analysis, citations, and attorney recommendations—fare well. Documents that read like business reports—with operational recommendations, cost-benefit analyses, or compliance checklists—are almost always deemed non-privileged. This is a subjective standard that can vary dramatically from judge to judge, which is why I strongly recommend that corporations avoid creating any document that could be characterized as a "business report" during a legal investigation. If a business report is needed, it should be created by business personnel without attorney involvement, and it should be explicitly labeled as non-privileged.

Finally, the defense bar must be prepared to argue that the predominant purpose test itself violates the spirit of the attorney-client privilege, which is designed to encourage full and frank communication between clients and counsel. The Supreme Court has repeatedly held, most notably in Upjohn and Swidler & Berlin v. United States, 524 U.S. 399 (1998), that the privilege must be applied in a manner that promotes its core purpose. The D.C. Circuit's new standard, by requiring a hierarchical analysis of mixed-purpose communications, may chill the very communication the privilege is meant to protect. If corporate employees and counsel cannot freely discuss both legal and business implications of a situation without risking privilege loss, the quality of legal advice will necessarily suffer. This argument is not likely to succeed in the D.C. Circuit in the short term, but it provides a powerful basis for certiorari to the Supreme Court, and it may resonate with courts in other circuits that are considering whether to adopt the new standard.

If your corporation is facing a federal grand jury subpoena, an SEC investigation, or an internal inquiry that could trigger criminal liability, you cannot afford to rely on outdated privilege assumptions. The new predominant purpose standard demands immediate action to protect your communications and your legal strategy. I have spent decades navigating the intersection of corporate investigations and federal criminal defense, and I can help you structure your investigation protocols, prepare for privilege disputes, and defend your rights in court. Contact my office today to schedule a confidential consultation—your privilege is too important to leave to chance.