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which the client seeks advice.” Hartz Mountain Indus.
v. Commissioner, 93 T.C. 521, 525 (1989) (citing Upjohn
Co. v. United States, 449 U.S. 383, 389 (1981)).
Disclosure of a privileged communication may
result in a waiver of the attorney-client privilege.
Id. The party asserting the attorney-client privilege
must prove that it has not waived the privilege. Id.
* * *
Would admission of the exhibits and the Kelly testimony disclose
a privileged communication between client and attorney?
We have examined the exhibits and have no doubt that they
disclose communications to an attorney (Kelly) for the purpose of
obtaining legal advice. That is apparent from the face of the
exhibits (each of which is a letter from Kelly) and is not
seriously challenged by petitioners. While nothing in the Cagle
affidavit declares that those communications were made in
confidence, Exhibit 103-P carries the legend: “Confidential[,]
Attorney-Client Communication”; and Exhibit 104-P carries the
legend: “Confidential[,] Attorney/Client Privilege”. We think it
a fair inference, and we find, that the communications underlying
each letter, and the letters themselves, were intended to be in
confidence.
Nevertheless, petitioners claim that the exhibits contain
references to Kelly’s understanding, as of the dates of the
exhibits, of the various ownership interests (percentages) in
Surgery Center. Petitioners argue: “The [attorney-client]
privilege simply does not apply to routine business transactions
disclosed to outsiders or business records necessary for the
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