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Presented by:

Lee M. Epstein, Esq.

Loose Lips Sink Ships: The Attorney-Client Privilege In a Sea of Insurance Coverage Disputes

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Overview

• Attorney-Client Privilege Protects Confidential Communications Between Attorneys and Clients

• Protection Over Otherwise Privileged Communications May Be Lost If Shared With Third-Parties

• Disclosure to Brokers and Insurers May Waive The Protection Afforded By The Attorney Client Privilege

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The Attorney-Client Privilege

• The Attorney-Client Privilege Protects:

1. “a communication

2. made between privileged persons

3. in confidence

4. for the purpose of obtaining or providing legal assistance for the client”

RESTATEMENT (THIRD) OF THE LAW GOVERNING

LAWYERS § 68 (2000)

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Communications With Third-Parties

• Privilege Extended Where Communication Necessary For Effective Consultation Between Attorney and Client

• No Privilege Extended If Business Advice, Not Legal Advice, Sought Or If The Advice Sought Is The Consultant’s, Not The Lawyer’s

• Communications With Third-Parties Cannot Be Imbued with Privilege By Simply Passing It Through Counsel

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Communications with Insurance Broker

• Courts Split as to Whether Attorney Client Privilege May Extend to Communications Shared with the Insured’s Broker

• Even if the Court Holds the Attorney Client Privilege has been Waived, a Work Product Argument May be Persuasive

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Communications With InsurersThe Tripartite Relationship

Defense Counsel Policyholder

Insurance Company

Duty of Loyalty

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The Tripartite Relationship

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Disclosure of Confidential Information

Model Rules 1.7(a), 1.8(f), 1.6(a) and 5.4(c)

• Defense Counsel May Not Disclose the Insured’s Confidential Information to the Insurer Without the Insured’s Consent if Such Disclosure will Adversely Affect the Insured

• Defense Counsel May Not Disclose the Insured’s Confidential Information to Third-Parties Without Insured’s Consent

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The Tripartite Relationship: Who Is The Client?

• The Policyholder is Always the Client• Duty of Loyalty Owed Always

• Depending on the Circumstances, the Insurer May Also be a Client and Entitled to otherwise Confidential Communications

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Attorney-Client Relationship Arises When:

(1) A person manifests to a lawyer the person’s intent that the lawyer provide legal services for the person; and either

a) The lawyer manifests to the person consent to do so; or

b) The lawyer fails to manifest lack of consent to do so, and the lawyer knows or reasonably should know that the person reasonably relies on the lawyer to provide the services . . .

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Consequences of Insurer Being Deemed a Client

• Co-Client (or Joint Client) Privilege– Default Rule in Some Jurisdictions: Insurer Pays for Defense, Co-Client

Relationship Exists

– If Not by Default, Relationship Still May Exist – Examine Parties’ Intent and Expectations

• Disclosure to Insurer May be Compelled

• Communications Disclosed to the Insurer are Protected from Compelled Disclosure to Outside Third-Parties

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Consequences of Insurer Being Deemed Not To Be a Client

• Compelled Disclosure Based on Policy’s Cooperation Clause or Other Factors

• Element of Confidentiality is Absent

• Disclosure to Non-Client Insurer May Waive Privilege and Require Disclosure of Communications to Other Third-Parties

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Workers’ Compensation Issues

• Insurers are Exclusively Liable for Workers’ Comp Claim

• Attorney Client Privilege Waived When Workers’ Compensation Insurers Share Information with Employer Insureds

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Conclusion

• Think Before You Speak

• Weigh Benefits Of Communications With Third-Parties Against The Costs Of Waiving The Attorney-Client Privilege