If your business has employment practices liability
insurance, or deals with insurance companies for other coverages, you are
probably aware of the strange three-headed relationship that exists between you
(the insured), your insurance company, and the attorney your insurance company
hires to defend you in litigation. One question that always arises in this
unique relationship is whether an attorney-client relationship only exists
between the attorney and you (the insured), or if it also exists between the
attorney and the insurance company. The answer to this question is significant,
because if there is no attorney-client relationship between counsel and the
insurance company, then the attorney-client privilege will not shield
communications between them.
Conventional wisdom in Ohio has been that no
attorney-client relationship exists between an insurance company and retained
counsel. The seminal case on this issue was Swiss Reinsurance Am. Corp. v. Roetzel & Andress.
Earlier this week, however, the Ohio Supreme Court-in State ex rel. Dawson v. Bloom-Carroll Local School District
(11/29/11) [pdf]-flipped conventional wisdom on its head. The case focused
on the issue of whether someone could compel disclosure, under Ohio's public
records law, of communications between a school district's insurance carrier
and its legal representative. It has much broader implications for the
relationship between an attorney and an insurance carrier. The Court concluded
that because an attorney-client relationship existed between the insurer and
the insured's retained counsel, the resulting privilege shielded any such
communications from disclosure:
In effect, the insurance company stands in the shoes of
the district.... Where a person approaches an attorney with the view of retaining
his services to act on the former's behalf, an attorney-client relationship is
created, and communications made to such attorney during the preliminary
conferences prior to the actual acceptance or rejection by the attorney of the
employment are privileged communications.
This case solves a huge problem for employers' insurance
counsel, and consequently for employers. Under Swiss Reinsurance, and
because of the lack of any privilege, communications between employment defense
insurance counsel and the insurance company were made at the client's risk.
Thanks to a common sense ruling from the Supremes, these communications are now
rightfully protected. Counsel should now be able to speak as freely with the
insurer as we do with our clients.
Visit the Ohio Employer's Law Blog for more
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