The Justice Department's Office of Legal Counsel issued an opinion on Monday that gave legal cover to the decision to block McGahn from testifying.
That is still possible, since the justice department's legal opinion does not prevent McGahn testifying if he so chooses, although it would be potentially at risk to his own career.
That immunity, the memo insists, does not evaporate once the adviser in question leaves the government, because the topics of interest to Congress are discussions that occurred when the person worked for the president.
In the NY case, Trump, his business and family want to prevent Deutsche Bank and Capital One from complying with House subpoenas for banking and financial records.
McGahn was subpoenaed by Nadler last month and, under instruction by the White House, failed to meet an initial deadline to appear before the committee. "As a matter of firm policy and professional rules we do not comment on the work we conduct for our clients".
In a legal opinion released on Monday, the justice department said lawmakers on Capitol Hill can not compel McGahn, who was subpoenaed by the House judiciary committee, to answer their questions under oath.More news: Royals gather at chapel for Lady Gabriella Windsor wedding
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In a letter to the House of Representatives Judiciary Committee, White House Counsel Pat Cipollone said McGahn should not appear due to both "constitutional immunity" and "in order to protect the prerogatives of the Office of the Presidency". "Even more ridiculous is the extension of the privilege to cover events before and after Mr McGahn's service in the White House".
"No one is above the law, including the president of the United States and we expect Mr. McGahn to come before the committee and testify".
The decision comes at the beginning of what's expected to be a long legal slog between House Democrats and Mr. Trump - and the early victory is encouraging for Speaker Nancy Pelosi and her team.
Trump's lawyers have argued that Congress is on a quest to "turn up something that Democrats can use as a political tool against the president now and in the 2020 election".
House Democrats are trying to get their hands on Trump's tax returns - which he refuses to release - and other financial information about his business empire.
Trump's attorneys fire back that Democrats' true goal is not governance but political advantage, to expose the Trumps' "private financial information for the sake of exposure, with the hope that it will turn up something that Democrats can use as a political tool against the President". "The Mueller Report documents a shocking pattern of obstruction of justice", he said in a statement. Trump is returning from a trip to NY.
Lawyers for Trump and his company had argued that the House Oversight Committee's demand for financial records from his accounting firm exceeded Congress's constitutional limits, according to Reuters.