AN ATTORNEY MAY NEED AN ACCOUNTANT’S HELP TO understand certain financial or tax problems that impact legal advice to a client. However, clients should be cautious when they seek the opinions of outside accounting experts if they hope to preserve the attorney-client privilege. Federal common law does not recognize an accountant-client privilege that protects communications disclosed between a client and an accountant. Thus, if counsel needs an accounting firm’s assistance in providing legal advice, they must follow the Kovel doctrine to protect the accountant’s work and communications among the attorney, accountant, and client as privileged and confidential. A. The Kovel Doctrine In United States v. Kovel, a defendant’s accountant refused to answer questions concerning his work for the clients of the law firm that employed him and was held in contempt.1 Because the accountant was frequently included in conversations between the firm’s lawyers 1 United States v. Kovel, 296 F.2d 918, 919 (2d Cir. 1961). and its clients, the court believed the accountant possessed relevant information to the grand jury regarding one of the firm’s clients. The accountant asserted the attorney-client privilege in refusing to answer questions for the grand jury and the district court ruled that the accountant had no right to assert privilege even though he was an employee of the law firm. However, the Second Circuit rejected the district court’s view asserting that the privilege must include all persons who act as the attorney’s agents, such as a foreign language translator. In describing an accountant as a translator who assists an attorney in understanding complex accounting and tax matters relating to the representation of the attorney’s client, the court emphasized that communications involving an accountant may be protected by the privilege so long as the purpose of the communication is for the client to receive legal advice from the lawyer rather than to obtain accounting or other advice from the accountant. The Kovel doctrine, while not recognized by all courts, has been acknowledged and adopted in the Eighth Circuit,2 and has been implicated in Nebraska statutory law.3 The doctrine applies when counsel—and not the client—retain the accountant to interpret and analyze information so that counsel can provide legal advice to the client. In considering whether the Kovel doctrine applies, courts will consider six factors. 1. WHETHER THE THIRD PARTY ASSISTED THE ATTORNEY IN PROVIDING LEGAL ADVICE. In determining whether the thirdparty accountant assisted an attorney in providing legal advice, the court will examine the specific facts of the case. For example, in United States v. Cote, the Eighth Circuit held that the attorney-client privilege protected an accountant’s work-product prepared at the behest of an attorney to assist in advising a taxpaying client in anticipation of an IRS investigation.4 The attorney hired the 2 In re Bieter Co., 16 F.3d 929, 940 (8th Cir. 1994). 3 Neb. Rev. Stat. Ann. § 27-503 (West). 4 United States v. Cote, 456 F.2d 142, 143 (8th Cir. 1972). BY HANNAH FISCHER FREY’ JESSE SITZ & MYCHAL MCADOO, BAIRD HOLM LLP THE USE OF KOVEL LETTERS IN NEBRASKA 14 Nebraska CPAs
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