The Scope and Application of the Work Product Doctrine As Applied to Dual-Purpose Documents‪.‬

I. INTRODUCTION The work product doctrine, established by the Supreme Court in Hickman v. Taylor (1) and subsequently codified in substantial part in Federal Rule of Civil Procedure 26(b)(3) ("Rule 26(b)(3)"), (2) has played an important role in limiting the scope of discovery for publicly traded corporations that are required under federal securities laws to have the corporation's financial statements certified by an independent auditor. Disclosure to a third party waives the attorney-client privilege and the section 7525 tax practitioner-client privilege. (3) Work product protection, however, is waived upon disclosure only if such disclosure is made to an adversary or third party that is a conduit to an adversary. (4) Thus, for many corporations, the work product doctrine may provide the only line of defense to an adversary's discovery request. This issue is acute in the tax context because the Internal Revenue Service (Service) has broad summons power and corporations consistently create tax accrual workpapers to evaluate contingent tax liabilities and litigation hazards related to the positions, and then provide the documents to an independent auditor. Because these workpapers pinpoint the "soft spots" on a corporation's tax return, corporations annually produce documents the Service would like to attain. (5) Tax accrual workpapers and other documents generally requiring disclosure to third parties are dual-purpose documents because they are functionally used for business or regulatory purposes, but also contain legal analyses prepared because litigation is anticipated. Whether these dual-purpose documents may be protected from discovery under the work product doctrine is currently uncertain.