When coverage disputes arise between a policyholder and its insurer, the policyholder’s broker can become an invaluable resource. Typically, the broker will have knowledge of the placement of the insurance program, but the broker may also have extensive knowledge about the claims being discussed. Because of these factors, policyholders often believe that their communications with the broker on issues related to the claim are protected by both the attorney-client privilege and the work-product doctrine. However, policyholders should tread carefully because some courts have disagreed with that notion. Other courts have correctly determined that policyholder-broker communications should be protected from disclosure in a lawsuit or arbitration between the policyholder and the insurer.
The case law suggests that if the parties intend that the broker share in the attorney-client privilege or work-product protection, the broker’s participation must be necessary to the legal representation. That is, the privilege or protection will be maintained where the broker is present in an effort to assist the lawyer (whether in-house counsel or outside counsel) in gathering factual information, preparing for litigation, or otherwise formulating confidential legal advice to the client.
Courts have been far from consistent in their treatment of this issue. Instead, depending on the specific factual circumstances, courts have come down squarely on both sides of the question. Indeed, courts within the same jurisdiction have reached different results.[1] A review of some of the more recent decisions is instructive and can provide guidance to policyholders who intend to use brokers as a resource in claims handling or claims litigation.