The Confidential Conundrum: Navigating The Privilege Of Insurance Adjuster Log Notes

The attorney-client privilege is a highly important concept in law, and its application to insurance adjusters is a complex issue. When an insured individual or business disputes an insurance claim, they often hire a licensed public adjuster or claim consultant to help them understand the facts of the claim investigation. This can include evaluating property loss and determining the dollar amount a claim should pay out.

The question of whether communications between insurance adjusters and attorneys are privileged has been the subject of court rulings. Some courts have held that documents created as part of a factual inquiry or evaluation of a claim are produced in the ordinary course of an insurer's business and are not protected by attorney-client privilege.

In the case of Olsen v. Owners Ins. Co., the United States District Court for the District of Colorado held that a claims adjuster's emails, claim notes, and interoffice memoranda are not privileged, even if they involved the carrier's in-house attorney. The court reiterated that the involvement of an attorney does not automatically render a communication subject to attorney-client privilege.

However, it is important to note that the application of attorney-client privilege may vary depending on the state's laws and the specific circumstances of each case. In some states, the attorney-client privilege has been codified in a statute, providing protection for communications between attorneys and third-party claim professionals.

The determination of whether insurance adjuster log notes are privileged depends on various factors, including the nature of the services rendered, the purpose of the communication, and whether the information was necessary for legal advice.

Courts refine attorney-client privilege scope in adjuster-counsel communications

The attorney-client privilege is a longstanding principle of Anglo-American jurisprudence, protecting communications between attorneys and clients from disclosure to third parties. This privilege encourages full and frank communication between attorneys and their clients, promoting broader public interests in the observance of the law and administration of justice.

However, the scope of this privilege is not absolute and has been refined by courts, particularly in the context of communications between insurance adjusters and counsel. For instance, in Olsen v. Owners Ins. Co., the United States District Court for the District of Colorado held that an insurer's claims adjuster's emails, claim notes, and interoffice memoranda were not privileged, even when involving in-house counsel. The court emphasised that the presence of an attorney does not automatically render a communication privileged. Instead, it outlined several factors to determine if the privilege applies:

• Information provided by agents of the corporate client to in-house counsel at the direction of supervisors.
• Information necessary for the provision of legal advice.
• Agents' awareness that their communications were made for legal advice to the corporate client.
• Treatment of communications as confidential.

Additionally, the courts have grappled with the issue of "dual-purpose" communications, which involve both legal and non-legal advice. Different circuit courts in the US have adopted either the "primary purpose" or "significant purpose" test to determine if attorney-client privilege applies in such cases. The US Supreme Court recently bypassed a case that could have provided clarity on this issue, leaving the status quo intact, with different jurisdictions applying different tests.

To maintain attorney-client privilege, it is crucial to limit non-lawyer recipients on legal discussions, educate clients about the privilege, carefully manage email distribution, and focus on the substance of the communication.

US District Court: adjuster emails, notes, and memos aren't privileged

The attorney-client privilege protects confidential communications between clients and their attorneys made for the purpose of obtaining or providing legal advice. In the corporate context, the privilege has been extended to cover communications between corporate employees and corporate counsel. This is because corporations often need to seek legal advice to ensure compliance with the vast and complicated array of regulatory legislation they face.

However, when clients communicate with their lawyers not merely to secure legal advice, but also to obtain business advice, the courts have historically applied a "primary purpose" test to determine whether the communication is privileged. This test asks whether obtaining or providing legal advice was one of the significant purposes of the attorney-client communication.

In the case of Guardiola v. Adams Cty. School District No. 14 et al., the defendants objected to the disclosure of three emails that they claimed were subject to the attorney-client privilege. The emails concerned the implementation of new security measures at school board meetings and included members of the Adams County School District No. 14 Board of Education and their counsel.

The court ruled that the emails were not privileged because they did not directly request or offer legal advice. Instead, the primary purpose of the emails was to address logistical issues, share concerns about managing public opinion, and announce and explain decisions that had been reached. The court noted that the defendants had cited no authority for the proposition that the court was precluded from assessing the emails at face value and based on the context in which they were sent.

Attorney-client privilege depends on nature of services, not events

Attorney-client privilege is a rule that protects the confidentiality of communications between lawyers and clients. It is one of the oldest privileges for confidential communications and is not limited to oral or written communications but also includes emails, text messages, and other forms. The privilege belongs to the client, and they can invoke or waive it.

The privilege is not absolute and has certain exceptions. For instance, it does not apply if a client seeks legal advice to commit a crime or fraud, or if a third party is present during the communication. It also does not protect communications that are solely related to non-legal business matters.

The attorney-client privilege is separate from the work-product doctrine, which relates to documents and records compiled or produced at the request of counsel in anticipation of possible legal proceedings.

The privilege only applies when the communication is intended to be confidential and is for the purpose of seeking or obtaining legal advice. It does not protect facts or information shared with the attorney but rather the content of the communications.

In the context of business transactions, it is important to maintain the privilege as conflicts may result in litigation where attorney-client communications become of interest to an opponent. Attorneys must, therefore, be diligent in maintaining the privilege and educating their clients about its scope.

Privilege applies when legal advice is requested or communicated

Privilege is a fundamental legal right that allows individuals and corporate entities to seek legal advice and investigate the merits of their case without being forced to disclose confidential and sensitive documents in legal proceedings or to third parties. There are two types of legal professional privilege: legal advice privilege and litigation privilege.

Legal advice privilege allows clients to discuss their legal position with their lawyers, knowing that their communications will remain confidential, even when there is no litigation in prospect. This privilege covers confidential communications between a lawyer and their client for the purpose of giving or receiving legal advice. It applies to both contentious and non-contentious communications and covers all advice relating to a client's legal rights and obligations. However, it is important to note that it does not apply to commercial or strategic advice. Only those at the client who are engaged in seeking and receiving advice from external lawyers are entitled to legal advice privilege.

Litigation privilege, on the other hand, is more limited in scope. It allows parties to investigate potential disputes without worrying that their investigations will be disclosed to the other side. Litigation privilege can exist outside the typical client/solicitor relationship and covers any document or communication produced for the purpose of obtaining information or advice in connection with existing or contemplated litigation. For litigation privilege to apply, certain conditions must be met:

• The document must be a communication between the lawyer and client, lawyer and third party, or client and third party.
• Litigation must be in progress or contemplation.
• The communications must be made for the sole or dominant purpose of conducting that litigation.
• The litigation must be adversarial.

It is important to note that privilege can be lost if confidential information is placed into the public domain or shared with third parties without adequate safeguards. Therefore, it is crucial to maintain confidentiality and carefully consider the distribution of privileged documents to preserve privilege.

Insurers can't withhold adjuster-counsel communications as privileged

The attorney-client privilege is a common-law doctrine that protects confidential communications between a lawyer and a client for legal purposes from disclosure. However, the presence of a third party in such communications typically breaks the privilege. This has implications for insurance companies, which often involve four critical parties in their communications: the insured, their attorney, the insurer, and the broker.

In the context of communications between an insurance company adjuster and the insurer's in-house counsel, courts have held that the attorney-client privilege and the attorney work-product doctrine do not automatically apply. In *Olsen v. Owners Ins. Co.*, the United States District Court for the District of Colorado ruled that a claims adjuster's emails, claim notes, and interoffice memoranda are not privileged, even if they involved the insurer's in-house attorney. The court clarified that the application of these protections is determined by various factors, including whether the information was necessary for legal advice and whether the communication was treated as confidential.

In another case, *Miller v. City of Plymouth*, the court granted leave to assert a "narrow extension" of the attorney-client privilege to communications between the policyholder and the insurance carrier before the carrier acknowledged its duty to defend.

To maintain confidentiality, insurers and insureds may enter into common interest agreements, which aim to keep their communications privileged and confidential. Additionally, some states, like California, follow the "tripartite" model, where the insurer, insured, and defense counsel are considered joint clients of the attorney, imposing ethical duties on counsel towards both parties.

While the inclusion of an in-house counsel in a communication does not automatically invoke privilege, careful attention should be paid to the nature of the services rendered and the content of the communication to determine if legal advice is being requested or provided.

Frequently asked questions