Ordinary Business Documents

Rule 26(b)(3)(A) bars discovery of documents and tangible things “prepared in anticipation of litigation or for trial,” and those words do the work.¹ A report an organization files to run its operations, a record it keeps for a regulator, and a schedule it assembles for its financial statements were each written for some other reason. None of them reaches the protection, whoever drafted it and however carefully it is stored. This is the most common reason a work-product claim fails, and it applies the third condition taught earlier. It holds even when litigation is already in prospect: a document prepared in the regular course of business rather than for purposes of the litigation earns no immunity.²

The doctrine's purpose explains where the line falls. It exists to stop adversaries from free-riding on the other side's preparation. When an attorney investigates, interviews witnesses, and reaches conclusions about the legal significance of the facts, it would be unfair to let the adversary swoop in and use all of it, and the worst intrusion would invade the zone of privacy around the attorney's mental impressions.³ A routine business record has no such claim. No lawyer built it for the case, so the opponent who asks for it takes nothing that case preparation produced.

Pointing out that commercial transactions often end up in court does not close the gap. Accepting that argument would let the bare prospect of a lawsuit turn every business record into trial preparation.⁴

Two questions organize everything below. Did the document exist for some reason other than the case? And if it did serve the case, does a second use by the business matter? The first three subsections show documents failing the first question. The last shows documents surviving the second.

Routine Reports and Test Results

Accident and incident reports are the standard test. After a collision, a patient's fall, or an equipment failure, an organization fills out a report and often runs a routine internal inquiry, and the injured person's first document request asks for both. The reply that serious accidents lead to lawsuits describes a general awareness of litigation risk, and that awareness does not convert a report written after every incident into trial preparation. Courts look instead to the nature and purpose of the report, and a report regularly prepared and distributed for future loss prevention is not treated as prepared in anticipation of litigation.⁵ Hospital incident reports show how the decisions divide. A report seen primarily as a business document, not prepared specifically for litigation, is unprotected, while a report seen as an investigation formulated for litigation defense is protected.⁶

Function decides, whatever the label. A form headed “incident report” that staff complete after every fall and send onward to help prevent future falls is a loss-prevention tool, and so a business document. An investigation that defense counsel directs after the family threatens suit, written for the hospital's defense, belongs on the protected side. Even there the immunity is qualified. An opponent who shows a special need or unique hardship, because the information is unavailable by other means, may still obtain it.⁷

Regulatory records fail for a simpler reason. When regulatory law requires a party to prepare a document, the party prepared it to conduct business in compliance with that law. The document therefore cannot be said to have been prepared primarily in anticipation of litigation, and absent some claim of privilege the party should produce it.⁸ Quality-control test results fail on the same logic. Made as part of normal quality control procedures, they were not prepared in anticipation of litigation and fall outside Rule 26(b)(3).⁹ In both cases a legal obligation or a production routine, not a lawsuit, explains why the document exists, and the routine would generate it whether or not anyone were ever hurt.

A product-liability fact pattern shows the rule at work.

The log's date and uniform format settle the question before any lawyer enters the story. The facts about the unit's condition stay discoverable either way, a limit taught in a later section.

Consultations Before Any Dispute

A lawyer's participation does not supply a litigation purpose that the advice lacks. In re Grand Jury Subpoena, the clients consulted an attorney in April 2008 in the ordinary course of a business transaction, and the investigation behind the grand jury subpoena began nearly two years later.¹¹ The court acknowledged that the attorney's legal theories, research, and gathered fact material could be considered intangible work product. It still held the attorney's recollections and research unprotected, because they were not made in preparation for possible litigation. When the clients consulted the attorney, no litigation was on the horizon, and the consultation belonged to a business transaction.¹² The court affirmed the order enforcing the subpoena.¹³

Hickman shows the opposite pattern. The tug sank on February 7, 1943, and three days later its owners retained a lawyer to defend them in whatever litigation might arise. His private interviews of the survivors and his signed statements followed.¹⁴ The Supreme Court framed the problem as how far a party may inquire into witness statements and other information secured by an adverse party's counsel in preparing for possible litigation after a claim has arisen.¹⁵ Counsel there was gathering material for a claim already in view. The grand jury clients wanted advice to carry out a transaction. Purpose is fixed when the lawyer does the work, so an investigation that opens two years later cannot reach back and change why the consultation took place.

The party asserting work product bears the burden of proving that the protection applies.¹⁶ A claimant in the clients' position therefore needs evidence that litigation was on the horizon when the lawyer worked, and a later investigation supplies none. Whether the attorney-client privilege covers the same consultation is a separate question, which a later section sets beside work product.

Audit and Tax Workpapers

The Supreme Court drew the hard line for audit materials in United States v. Arthur Young & Co. Reversing the Second Circuit, the Court held the tax-accrual workpapers subject to disclosure under the Code and found no justification for judicially creating a work-product doctrine for tax-accrual workpapers.¹⁸ A later First Circuit decision, United States v. Textron (2009), reflects the same instinct. The majority said that the work-product privilege “is aimed at protecting work done for litigation, not in preparing financial statements.” The dissenting judges argued that the proper test asks whether the materials were prepared because of the prospect of litigation, not for litigation, and that the test had been met. The Supreme Court denied certiorari in 2010, leaving a conflict among the circuits.¹⁹

Tax practice still protects work that responds to an actual threat. The doctrine applies when litigation is reasonably anticipated, though it need not be pending, and in a tax controversy protection generally arises when an administrative dispute with the IRS is reasonably anticipated.²⁰ A workpaper filed with the audit file does not qualify on that account. Protection depends on whether the particular material was prepared because of such a dispute or for the company's financial reporting.

Wells Fargo shows the result splitting inside one set of workpapers. The court applied the work-product privilege to tax-accrual workpapers to the extent they related to legal analysis and related material needed to comply with the FASB ASC 740-10 “recognition step.” The source adds that the law on tax-accrual workpapers is far from settled.²¹ Students should therefore answer these questions portion by portion, asking of each part whether it is legal analysis of expected litigation or ordinary financial-reporting work.

Dual-Purpose Documents

The ordinary-course rule has a counterpart that keeps it from overreaching: a document prepared in anticipation of litigation does not lose protection because it also serves a business purpose. The rule's text asks why the document was prepared and says nothing about what else it may later do.²³ Tax practice states the consequence plainly. The fact that such information may serve other purposes as well does not affect its status as work product.²⁴

United States v. Adlman applied the because-of standard. In contemplation of a challenge by the Service, the taxpayer's tax advisor prepared a memorandum evaluating the merits of the tax issues raised by the taxpayer's proposed merger.²⁵ When the Service summoned the memorandum, the court held that “work-product protection should not be denied to a document that analyzes expected litigation merely because it is prepared to assist in a business decision [the proposed merger].”²⁶ The court's own example of a protected document makes the point concrete: a memorandum by the company's attorneys estimating the likelihood of success in litigation, with an analysis of the company's legal strategies and options, prepared to help estimate what to reserve for litigation losses and requested by the company's auditors.²⁷ The auditors' request did not drain that memorandum of protection. Wells Fargo likewise protected the portions of its tax-accrual workpapers that were legal analysis.

Two opposite mistakes tempt students here. One treats a document as unprotected because it sits in a tax-accrual or audit file. The other treats it as unprotected because the business used it too. Arthur Young answers the first mistake, since a workpaper prepared for financial reporting has no special claim. Adlman answers the second, since a litigation analysis keeps its status when a business decision or an auditor's request also draws on it. The question that resolves both is why the document exists. A memorandum assessing an expected IRS dispute, with strengths, weaknesses, and likely outcomes, exists because of that dispute. A routine schedule exists because financial reporting calls for one. Accounting-firm litigation such as Cucinotta v. Deloitte & Touche, LLP is a setting where students should expect to meet both mistakes.