PROTECTION OF ATTORNEY PROVIDED CLAIMS
HANDLING ADVICE TO INSURERS AND EXERCISE OF PRIVILEGE
When attorneys provide training sessions on good faith claims handling, the practical
legal advice they provide is, in most jurisdictions, protected under attorney-client
privilege. Moreover, any documents they create may be protected under the work
product doctrine.
Training Materials:
There is little authority directly addressing the issue of the confidentiality of training
materials. However, there is some authority that these materials are covered by the
attorney-client privilege or are protected as work product.
For example, in State Farm Florida Ins. Co. v. Gallmon, 835 So.2d 389, 390
(Fla.Ct.App. 2003), the court, without providing an explanation, said the insurer was not
required to produce, inter alia, company policies and manuals, training materials, or
third-party programs because the materials were either irrelevant to the litigation or
were privileged work product. In Boales v. Brighton Builders, Inc., 29 S.W.3d 159, 168
(Tex.Ct.App. 2000), the court, in granting a protective order, found that the requested
deposition of the general counsel as to the advice he gave to the builder's sales
representatives during training sessions on buyer disclosure and the Deceptive Trade
Practices Act (DTPA) were likely protected by attorney-client privilege.
It should be noted, however, that in McCoo v. Denny's Inc., 192 F.R.D. 675, (D.Kan.
2000), the court overruled an objection based on attorney-client privilege and work
product to providing copies of “all Denny's policies, guidelines, training materials,
employee handbooks, supervisor's handbooks, and any other corporate policies
maintained at the Topeka Denny's facilities in February 1997" because Denny's
provided no support for these objections, and the court was at a loss to even imagine
how any of the requested documents would fall within the scope of those privileges.
The cases looking at the issue of the confidentiality of training materials do not provide
an analysis to their conclusions. Therefore, ordinary attorney-client privilege and work
product protection jurisprudence would be relevant to the protection of information
presented in good faith claims handling training.
Attorney-Client Privilege:
When Privilege Exists:
For the attorney-client privilege to exist, four basic requirements must be met. 1 First,
the asserted holder of the privilege is or is sought to become a client. In this context,
1
See, e.g., U.S. v. Lipshy, 492 F.Supp. 35 (N.D. Tex. 1979); Casson Const. Co., Inc. v. Armco Steel
Corp., 91 F.R.D. 376 (D.C.Kan. 1980); J.P. Foley & Co., Inc. v. Vanderbilt, 65 F.R.D. 523 (D.C.N.Y.
1974); Bird v. Penn Central Co., 61 F.R.D. 43 (D.C. Pa. 1973).
generally, attorneys who provide good faith handling seminars will already serve as
local counsel for the insurance company or the company and/or the attorney will be
seeking an attorney-client relationship in the future. Therefore, the insurance company
should be able to assert this privilege, thus satisfying the first requirement.
Second, the communication must be made with one who is a member of the bar of a
court and is acting as a lawyer. This requirement will also be met so long as a licensed
attorney, presenting in that capacity, provides the seminar. It is not necessary that
there exist a contractual or fiduciary relationship.2
Next, the communication must (1) relate to facts of which the attorney was informed by
his client, (2) without the presence of strangers, (3) for the purpose of securing an
opinion on law. In the context of presenting teaching adjusters about good faith claims
handling, relating the communication to facts of which the client informed his attorney
may prove to be the most difficult. However, the advice does not necessarily have to
directly incorporate confidential client information because the privilege extends to legal
advice that could arguably reveal client confidences.3 The Fifth Circuit found that the
privilege protects communications that are based on or may disclose confidential
information provided by the client or that contain the advice or opinions of the attorney.4
Therefore, by applying examples to the discussion of good faith handling or opening up
the training to a question and answer session, this requirement should be met.
The presence of strangers should not be an obstacle in the training of adjusters. Legal
advice or opinions extends to corporate clients,5 and the communication will be entitled
to attorney-client privilege if it is not disseminated beyond those persons who, because
of the corporate structure, need to know its contents.6 Consequently, providing good
faith handling advice to claims adjusters, at various, levels should not disturb the
attorney-client privilege as they are the ones who need to know how to handle claims.
Additionally, for the privilege to exist, the communication must involve providing legal
advice or opinions. The privilege is not necessarily lost when non-legal information is
part of the communication,7 but general business advice is not privileged.8
Finally, for the privilege to attach, the client must claim and not waive it. Adjusters
should be advised of this requirement to help ensure the advice lawyers provide is not
shared and, therefore, waived.
2
Westinghouse Electric Corp. v. Kerr-McGee Corp., 580 F.2d 1311 (7th Cir. 1978); U.S. v. Costanzo, 625
F.2d 465 (3rd Cir. 1980).
3 Santrade, Ltd. v. General Elec. Co., 150 F.R.D. 539 (E.D.N.C. 1993).
4 Wells v. Rushing, 755 F.2d 376 (5th Cir. 1985).
5 U.S. v. Amerada Hess Corp., 619 F.2d 980 (3rd Cir. 1980).
6 Southern Bell Tel. & Tel. Co. v. Deason, 632 So 2d 1377 (Fla. 1994).
7 Barr Marine Products, Co., Inc. v. Borg-Warner Corp., 84 F.R.D. 631 (E.D.Pa. 1979).
8 Matter of Walsh, 623 F.2d 489 (7th Cir. 1980). See also, U.S. v. Int’l Bus. Machines Corp., 66 F.R.D.
206, 210 (S.D.N.Y. 1974) (Generally, communications relating to company policy (i.e., those general
goals and considerations which guide an enterprise in the conduct of its affairs) do not meet requirements
of attorney-client privilege.
2
Extending Privilege to Documents:
The attorney-client privilege extends to those papers prepared by the attorney or at the
attorney’s request for the purpose of advising the client, providing the papers are based
on and would tend to reveal the client’s confidential communications.9 However, like
advice, documents that relate to business decisions, as opposed to legal advice based
upon confidential information, are not privileged.10 Accordingly, any training materials
that contain confidential information should also be covered by the attorney-client
privilege.
Work Product Doctrine:
The work product doctrine is a broader protection than the attorney-client privilege and
is designed to balance the needs of the adversary system to promote an attorney’s
preparation in representing a client against society’s general interest in reviewing all
true and material facts relevant to resolution of a dispute.11
Opinion Work Product:
There are two kinds of work product, "ordinary work product," which includes raw factual
information, and "opinion work product," which includes the attorney's mental
impressions, conclusions, opinions or legal theories.12 Unlike ordinary or fact work
product, opinion work product enjoys a nearly absolute immunity and can be discovered
only in very rare and extraordinary circumstances.13
The party seeking to discover opinion work product may be required to show
extraordinary justification.14 Exceptions to the protection of attorney’s opinion work
product have been made in cases where the documented information was directly at
issue and the need for its production was compelling. 15 However, other courts have
found that opinion work product was absolutely protected.16
9
Matter of Fischel, 557 F.2d 209 (9th Cir. 1977).
Barr Marine Products, Co., Inc. v. Borg-Warner Corp., 84 F.R.D. 631 (E.D.Pa. 1979).
11 In re Subpoenas Duces Tecum, 738 F.2d 1367 (D.C. Cir. 1984); In re Federal Copper of Tenn., Inc., 19
B.R. 177 (M.D. Tenn. 1982).
12 Baker v. General Motors Corp., 209 F.3d 1051 (8th Cir. 2000)
13 Fed. R. Civ. Proc. 26(b)(3); In re Chrysler Motors Corp. Overnight Evaluation Program Litigation, 860
F.2d 844 (8th Cir. 1988); Connecticut Indem. Co. v. Carrier Haulers, Inc., 197 F.R.D. 564 (W.D.N.C.
2000).
14 Strougo v. Bea Associates, 199 F.R.D. 515 (S.D.N.Y. 2001).
15 See, e.g., Bird v. Penn Cent. Co., 61 F.R.D. 43 (ED Pa. 1973) (For the insured to prepare its case, it
needed to know why the underwriters, directed by their attorneys, failed to bring a rescission action
sooner than they had; any communications regarding the rescission action were relevant to the insured’s
laches defense and discoverable).
16 See, e.g., Duplan Corp. v. Moulinage et Retorderie de Chavonoz, 509 F.2d 730 (4th Cir. 1974) (No
showing of relevance, substantial need, or undue hardship could justify the compelled disclosure of an
attorney’s opinion work product); Cacamo v. Liberty Mut. Fire Ins. Co., 798 So.2d 1210 (La.Ct..App.
10
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Therefore, in the context of materials provided in good faith claims handling training,
those materials should be protected so long as they reflect the attorney’s mental
impressions, conclusions, opinions, or legal theories. As noted by one court, the less
the work product becomes a matter of creative thought and the more it becomes a
recognition of observed fact, it becomes increasingly susceptible to discovery. 17 To
ensure protection, any materials should clearly represent the legal opinions on ensuring
good faith claims handling.
Prepared in Anticipation of Litigation:
Work product protection against disclosure applies to documents created by either the
client or the attorney prepared in anticipation of litigation or trial.18 Documents prepared
in anticipation of litigation are those prepared because the preparer faces an actual
claim or potential claim followed by an actual event or series of events that reasonably
could result in litigation.19
States hold differing views as to the determination of whether a document was prepared
in anticipation of litigation. Several states hold that the trial court should consider the
nature of the requested documents, the reason for preparation of documents, the
relationship between the preparer of documents and the party seeking the protection
from discovery, the relationship between litigating parties, and any other facts relevant
to the issue.20 Under Florida law, a document is considered prepared in anticipation of
litigation if it was created after the insured tendered its claim for coverage, if it begins to
appear that the insurer might deny coverage or reserve rights, if the insurer denies
coverage, if the coverage litigation appears imminent, or if the coverage litigation is
commenced.21 Oklahoma takes one of the broadest approaches and finds that the
anticipation of litigation threshold is met if the primary motivating purpose behind
creation of the document is to aid possible future litigation, although litigation need not
be imminent at the time of the document’s creation.22
Protection for Cases Not Pending:
Mental processes, conclusions, and legal theories developed by the attorney enjoy
continuing protection under the work product privilege and are not discoverable in
another case.23 The attorney work product privilege survives the termination of the
2001) (Insureds were not entitled to discovery of an insurance company’s legal opinions protected as
work product in documents dating from the 1940s in spite of any undue prejudice or hardship).
17 Duplan Corp. v. Moulinage et Retorderie de Chavonoz, 509 F.2d 730 (4th Cir. 1974)
18 Abbott Laboratories v. alpha Therapeutic Corp., 200 F.R.D. 401 (N.D. Ill. 2001).
19 Coffman v. Metropolitan Life Ins. Co., 204 F.R.D. 296 (S.D. W.Va. 2001).
20 See, e.g., Askew v. Hardman, 918 P.2d. 469 (Utah 1996); Mordesovitch v. Westfield Ins. Co., 244
F.Supp.2d 636 (S.D. W.Va. 2003)
21 Liberty Mut. Fire Ins. Co. v. Kaufman, 885 So.2d 905 (Fla.Ct.App. 2004).
22 Heffron v. District Court of Okla County, 77 P.3d 1069 (Okla. 2003).
23 Owens-Corning Fiberglas Corp. v. Caldwell, 818 S.W.2d 749 (Tex. 1991).
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litigation or the matter for which the work product is prepared, and it may be claimed in
subsequent litigation, whether related or unrelated to the prior matter. 24
Because the good faith training materials will contain legal advice and should be
protected as opinion work product, the materials should not be discoverable in cases
that may occur years after the training session. The cases seem clear that once the
document meets the requirements for protection, they will not be discoverable in
subsequent cases, even if the claim was not pending at the time of the training.
Conclusion:
Sedler & Simeone in "Privileges in the Law of Evidence: The Realities of Attorney-Client
Confidences," 24 Ohio St.L.J. 1 (1963), p. 3 said:
As long as our society recognizes that advice as to matters relating to
the law should be given by persons trained in the law that is, by lawyers
anything that materially interferes with that relationship must be
restricted or eliminated, and anything that fosters the success of that
relationship must be retained and strengthened. The relationship and the
continued existence of the giving of legal advice by persons accurately
and effectively trained in the law is of greater societal value, it is
submitted, than the admissibility of a given piece of evidence in a
particular lawsuit. Contrary to the implied assertions of the evidence
authorities, the heavens will not fall if all relevant and competent
evidence cannot be admitted.
Insurance companies are wise to have attorneys teach their adjusters about good faith
claims handling. The companies should not be punished for their decision to employ
the advice of those trained in the law by having information provided in those training
sessions used in bad faith cases. The information should be excluded on the grounds
of attorney-client privilege and work product protection.
24
Fellows v. Superior Court of Los Angeles County, 166 Cal.Rptr. 274 (Cal.Ct.App. 1980).
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