Acting for insurer and insured – conflict? Cameron Oxley Partner Minter Ellison 27 February 2013

The problem An insured accidentally discloses to his insurer appointed lawyer that he is colluding with the plaintiff Can/must the lawyer tell the insurer?

The solicitor client relationship General principle: solicitor-client confidentiality What was the basis of appointment? Coverage counsel Defence counsel only Defend insured and advise insurer on coverage Who appointed lawyer? Policy – duty to defend? Right to associate?

General Principle Coverage counsel – straightforward Defence counsel - duty of confidentiality to insured. Commercial conflict? Defence and coverage - solicitor has two clients – insurer and insured Duty of confidentiality still exists between clients Generally: not acceptable to tell the insurer information prejudicial to insured once defending insured

Modification of relationship Insurance contract modifies relationship Insured consents

Privilege Careful not to waive the insured’s privilege without instructions Limited waiver Policy condition Condition of appointment Joint retainer Common interest privilege Obligation on insurer to maintain confidentiality

Third party information Information obtained from a third party, for example: Jointly commissioned expert report – Mercantile Mutual Insurance v Murray [2004] NSWCA 151

In Summary Default position: don’t tell insurer Possible to modify the relationship Needs to be managed very carefully from the very start and continually monitored

Best Practice Inform the insured that information may be passed on to the insurer Be clear about when information is and isn’t covered by privilege Understand the obligations in the insurance contracts. Is the insured compelled to give full disclosure to insurer Cease acting for both parties if a conflict does arise