Acting for insurer and insured – conflict?

2. Acting for insurer and insured – conflict? Cameron Oxley Partner Minter Ellison 27 February 2013

3. The problem • An insured accidentally discloses to his insurer appointed lawyer that he is colluding with the plaintiff • Can/must the lawyer tell the insurer?

4. The solicitor client relationship • General principle: solicitor-client confidentiality • What was the basis of appointment? • Coverage counsel • Defence counsel only • Defend insured and advise insurer on coverage • Who appointed lawyer? • Policy – duty to defend? Right to associate?

5. General Principle • Coverage counsel – straightforward • Defence counsel - duty of confidentiality to insured. Commercial conflict? • Defence and coverage - solicitor has two clients – insurer and insured • Duty of confidentiality still exists between clients • Generally: not acceptable to tell the insurer information prejudicial to insured once defending insured

6. Modification of relationship • Insurance contract modifies relationship • Insured consents

7. Privilege • Careful not to waive the insured’s privilege without instructions • Limited waiver • Policy condition • Condition of appointment • Joint retainer • Common interest privilege • Obligation on insurer to maintain confidentiality

8. Third party information • Information obtained from a third party, for example: • Jointly commissioned expert report – Mercantile Mutual Insurance v Murray [2004] NSWCA 151

9. In Summary • Default position: don’t tell insurer • Possible to modify the relationship • Needs to be managed very carefully from the very start and continually monitored

10. Best Practice • Inform the insured that information may be passed on to the insurer • Be clear about when information is and isn’t covered by privilege • Understand the obligations in the insurance contracts. Is the insured compelled to give full disclosure to insurer • Cease acting for both parties if a conflict does arise