Assistance of Coverage Counsel Deemed Not Privileged

Assistance of Coverage Counsel Deemed Not Privileged
by James L. Pattillo, Partner
February 5. 2020

Apparently, outside coverage counsel writing coverage opinions can be deposed in the Western District of Washington.  On Jan. 22, 2020, in Canyon Estates Condominium Association v. Atain Specialty Ins. Co., (2:18-CV-1761, W. Dist. Wash.,) the Court found that when coverage counsel sends a draft denial letter to the company, his work was is fair game for discovery and he may be deposed.

James L. Pattillo

"[A]ssisting an adjustor in writing a denial letter is not a privileged task." (internal citations omitted). Additionally, where the insurer's attorney is involved in both quasi-fiduciary and coverage or liability capacities, waiver of the attorney-client privilege is likely since "counsel's legal analysis and recommendations to the insurer regarding liability generally or coverage in particular will very likely implicate the work performed and information obtained in his or her quasi-fiduciary capacity." https://www.leagle.com/decision/infdco20200123g62

If this decision is affirmed, the implications for writing a coverage opinion are not easily understated.  Coverage counsel and their clients will need to take affirmative steps to protect the work product and the attorney-client privilege. It also illustrates a good practice tip for those lawyers who provide coverage advice: Always discuss the opinion and strategy by phone before starting even a first draft of an opinion. Be sure counsel and the carrier are on the same page about the course of action and whether a written opinion is necessary.

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