Insured/Insurer Privilege:Can you Tell Your Insurer Your

Deepest Secrets?

Peter Laun, Jones Day

(pdlaun@joneday.com)

Ash Kilada, PepsiCo

(a.Kilada@pepsico.com)

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 PrivilegeHow 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 Privilegein 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 Privilegein 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 Privilegein 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 AConscious Decision About Sharing

Privileged Information

• What to share?• Can it share some but not all

information?

Risks of Sharing InformationA. 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 agreement1. Confidential/privileged information2. 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