In Schreib v. American Family Mutual Insurance Co., No. C14-0165JLR (W.D. Wash. Dec. 15, 2014), the district court held that individual case reserves set by the insurer after there was a threat of litigation by the policyholder were protected work product. Here, plaintiff gave the insurer formal notice that unless it paid plaintiff’s claim within 20 days, plaintiff would bring a suit against the insurer for bad faith refusal to pay the claim. In the subsequent litigation, plaintiff moved to compel discovery of the reserves that the insurer set on the claim after receiving this notice, arguing that setting the reserves was business in nature, because state law required the insurer to maintain reserves. The court denied the motion to compel. In circumstances where a document serves a dual purpose, that is, where it is not prepared exclusively for litigation, the Ninth Circuit applies the “because of” test. Under this test, dual purpose documents are deemed prepared because of litigation if “in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation.” The circumstances in this case satisfied that test. Because state law requires an insurer to maintain reserves in the ordinary course of business, the loss reserves were not prepared exclusively for litigation. However, the setting of reserves after the threat of litigation goes beyond the ordinary course of investigating and handling claims and is a financial evaluation of the claim from the standpoint of pending or anticipated litigation. Individual loss reserve documents created once an insurer anticipates litigation are not “created in substantially similar form” to those created in the absence of impending litigation. Once litigation is anticipated, loss reserve documents “by definition reflect the mental impressions, thoughts, and conclusions of attorneys or employees evaluating the merits and risk of a legal claim.” The work product doctrine, therefore, protected loss reserve documents created after the insurer received notice of the policyholder’s intent to file suit.