Insurers often rely upon coverage counsel to advise them of their duties and obligations with respect to claims for coverage by their insureds and then take that advice and communicate it in whole or in part to their insureds. The expectation is that the advice of counsel is privileged even if it is thereafter embraced by the insurer and communicated to the insured. But is it? No, said a trial court in West Virginia, where an insured sought from coverage counsel for the insurer opinion letters the counsel had written to the insurer on similar claims (i.e., claims not involved in the litigation between the insured and the insurer). Yes, said the West Virginia Supreme Court, in State ex re. Montpelier US Insurance Company v. Bloom 2014 W. Va. Lexis 345 (April 10, 2014), a decision which comprehensively examined and discussed the attorney client privilege in the context of coverage opinions and seminar materials provided by coverage counsel. As the West Virginia Supreme Court indicated in rejecting the contention that the attorney-client privilege was lost when the gist of the recommendation contained within the letters is later communicated to the insureds: where the insurer or the insurer's counsel informs the insured of the recommendations contained within coverage opinion letters submitted by outside counsel, the coverage opinion letters are protected by the attorney-client privilege and the privilege is not lost when the gist is communicated to third parties. Similarly, seminar and training materials prepared by outside counsel involving coverage interpretation or extra-contractual liability were privileged because the materials reflected outside counsel's legal opinions on specific topics and were prepared for the purpose of answering counsel's clients' questions.
The decision is helpful to insurers who seek analysis and opinions from their outside counsel and take that analysis, opinions and recommendations and communicate it to their insureds. The mere fact that the gist of the analysis, opinions and recommendations is ultimately communicated to a third party (the insured) does not eviscerate the privilege. Similarly, the decision provides some solace to outside counsel (and their insurer clients) with respect to seminar and training materials: where the seminar and training materials are prepared for existing clients and reflect outside counsel's legal opinion on specific topics requested by the client(s), a basis exists for asserting that the materials are protected by the attorney-client privilege.
While the decision is helpful, insurers and their outside counsel should be mindful that protections provided to communications by the attorney-client privilege can differ depending on the jurisdiction or court (federal or state). Care should be taken in considering whether a communication or materials supplied are in fact privileged. In this regard,
- Not all communications between an insurer and its counsel will be privileged (for example where the attorney is providing legal advice and analysis but is merely acting as an investigator or marshaller of facts), the communications of counsel may not be privileged.
- Not all courts will conclude that seminar and training materials are privileged. This will particularly be the case if the audience includes non-clients (such as an industry seminar) or, perhaps, where the attorney formulated the subject matter of the seminar on her own (rather than in response to specific requests by the client).
- Privileged communications can be waived (for example where an insurer relies upon advice of counsel as a defense to a bad faith case).