Insured/Insurer Privilege: Can you Tell Your Insurer Your Deepest Secrets? Peter Laun, Jones Day Ash Kilada, PepsiCo

Presentation Goals Learn about different types of privileges Understand how privileges operate Understand risks surrounding disclosing privileged information Understand privilege issues raised by use of claim consultants and experts

Privilege Basics Long recognition of attorney-client privilege in US and most foreign courts Exception to general rule of discoverability of a broad range of information Widely accepted, but overly broad privilege claims disfavored by courts Cover all types of communications (written, oral, etc.)

Types of Privilege Attorney-Client Work Product/MPL/Litigation Privilege Common interest/joint defense (exception to waiver doctrine) Factual information vs. legal advice

Waiver of Privilege How does it occur? Disclosure to third parties Affirmative use by policyholder Who are third parties for waiver purpose? Broker? Insurer? Insurer’s counsel? What are the consequences of waiver? What is the possible scope of waiver?

Common Interest Privilege in the Insurance Context Basic situation: Policy holder discloses privileged information to insurer as part of defense effort Insurer requests and receives privileged information as part of defense effort Types of materials at issue: lawyer work- product such as factual summaries, legal memoranda, litigation risk analyses

Common Interest Privilege in the Insurance Context When does it apply? When may it not apply? – Denial of coverage – Reservation of rights What does it apply to? – Factual information? – Liability assessments by counsel – Settlement strategy?

Common Interest Privilege in the Insurance Context If it applies, what protection does if afford? As to third parties Between policyholder and insurer

Is a Policyholder Required to Share Privileged Information With Its Insurer? – Arguments for requirement – Arguments against requirement – Risks of sharing and not sharing information

Policyholder Must Make A Conscious Decision About Sharing Privileged Information What to share? Can it share some but not all information?

Risks of Sharing Information A.Use in later coverage litigation (e.g., Waste Management case) B.Throwing open company files in coverage litigation – scope may be broader than wished C.Can privileged information effectively be protected in coverage litigation?

Ways to Protect Privileged Information A.Written common interest agreement (required in some jurisdictions) B.Key elements to cover in agreement 1.Confidential/privileged information 2.Non-use

Common Privilege Conflicts and Problems A.Counsel writes positive analysis of claim; view changes over time B.Counsel advice conflicts with insured’s position C.Insurer disagrees with counsel’s position

Privilege/Expert Issues Variations between Federal Court and State Courts In some jurisdictions, entire file may be discoverable – think about file separation between consulting and testifying Need to think about sharing expert with insurer – advantages and perils

Questions & Answers