From automobile to employment practices liability, from data security to construction liability and everything in between, the reality of today’s business and legal landscape is that there is an insurance policy to fit most contingencies and risks. These insurance policies more often than not can provide for panel counsel to represent the insured. The tripartite relationship between the insurer, insured, and counsel creates unique challenges relative to defining the attorney-client relationship.
The attorney-client privilege, which results from an attorney-client relationship, is one of the hallmarks of our legal system: where legal advice of any kind is sought from an attorney, in that capacity, the confidential communications relating to that advice are permanently protected from disclosure, unless the protection is waived. If communication is not protected by the privilege, a person can be required to disclose the communication to others, including opposing parties in lawsuits, and in the case of public entities, the general public. The protection from disclosure makes the privilege vital because without it clients could not, and likely would not, seek comprehensive legal advice. In fact, the purpose of the privilege is to encourage full and frank communication between attorneys and their clients.
Historically, many courts have held that counsel for the insured does not have an attorney-client relationship with the insurance company. As a result, counsel’s communication with the insurance company was not protected by the attorney-client privilege, was subject to discovery, and for public employers, was subject to disclosure under Ohio’s public records law. Without the privilege, communication between an insurance company and insured’s counsel was necessarily delicate, as all parties were concerned about the possibility of future disclosures.
On November 29, 2011, however, the Ohio Supreme Court, in deciding The State ex rel. Dawson v. Bloom-Carroll Local School District, held the attorney-client privilege extends to communications between an insurance company and counsel for the insured. The Court also extended the privilege to legal bills which contain descriptive, itemized invoices for legal services. While seemingly mundane, Bloom-Carroll may have far reaching implications for businesses and attorneys in Ohio.
The facts and reasoning underlying Bloom-Carroll
In Bloom-Carroll, the Court was faced with two issues relating to records requested by Angela Dawson from the Bloom-Carroll School District. Specifically, Dawson moved to compel:
- Itemized invoices of law firms providing services to the District in matters pertaining to Dawson and her children; and
- Communications from the District’s insurance carrier identifying an attorney as the District’s legal representative and describing the District’s potential liability related to a case filed by Dawson against the District.
Dawson claimed that the records should have been produced by the District under Ohio’s public records law. The District rejected Dawson's requests and asserted that the requested records were protected by the attorney-client privilege.
In short, the Court agreed with the District, denied the motions to compel, and held both sets of records were exempt from disclosure under Ohio’s Public Records Act because they were privileged documents. With respect to the requests for the itemized legal bills, the Court ruled the District had no duty to provide access to privileged records relating to attorney fees. The Court explained that, while simple invoices are not protected from disclosure, billing records which describe the services performed, the time spent on those services, and other correspondence may reveal a person’s motivation for seeking legal services, legal strategies, and other confidential information. As a result, detailed legal bills should be protected by the attorney-client relationship.
Relative to the letter from the District’s insurance company to the District, the Court held that the insurance company stood in the shoes of the “client” (here, the District) and, thus, the letter was protected by the attorney-client privilege. The letter from the insurance company to the District, which copied counsel for the District, evaluated Dawson’s claim and the extent to which the claim could be covered by the insurance policy. It also instructed the District to cooperate with the insurance company and counsel selected to represent the District in order to preserve coverage.
Implications of the decision
At first blush, the implications of Bloom-Carroll seem straightforward: detailed legal bills and communications with insurance companies are protected by the attorney-client privilege. The decision, however, may also have an impact upon insurance-related litigation. With communications between an insurer and its insured’s counsel deemed protected by the privilege, it is arguable counsel can communicate with the insurance company (as generally required by insurance policies) without fear of jeopardizing the attorney-client privilege or risking future disclosure of the communications.
If you would like to discuss how Bloom-Carroll may impact your business and/or any potential litigation, please contact:
James J. Boutrous II248.220.1355
Brendan J. Fitzgerald216.430.2009
or any of our Labor and Employment Practice attorneys by clicking on the link below.
Labor and Employment Practice
We have an impressive team of labor and employment attorneys who specialize in representing management in all aspects of labor and employment law at both the state and federal level. They have significant expertise in counseling clients on labor, employment and human resources issues and representing employers in state and federal courts and administrative agencies in all aspects of labor and employment-related litigation.
For more important legal and business information relating to employers, please visit our blog, the Employer Legal Advocate.