What does porn star Stormy Daniels, a/k/a Stephanie Clifford, and her battle with President Donald Trump have to do with insurance litigation?  More than you may think.

The connection stems, not from the steamy and sordid allegations of adultery against a candidate and now President of the United States.  Rather it arises from the Department of Justice and its quest to review the files (emails, correspondence, bank records, etc.) of Attorney Michael Cohen who, purportedly, acted as president Trump’s firebrand “fixer” for many years.

What is at issue? It is the sanctity and scope of attorney-client privilege–an important concept in first party insurance litigation.  The attorney-client privilege is ancient.  Its roots may be traced back to the Romans.  But it was firmly established in Anglo-American jurisprudence before the dawn of our Republic.

The privilege ensures that one who seeks advice from a lawyer should be free of any fear that secrets shared with counsel will ever be revealed. With the protection of that privilege, the client may speak freely and openly to counsel, disclosing all relevant facts behind a private door that may be broken down only under exceptional circumstances.

To sustain the attorney-client privilege, four basic requirements must be met: (1) A communication; (2) made between client and lawyer; (3) in confidence; and, (4) for the purpose of obtaining legal assistance in a controversy, whether civil or criminal.

Shortly after the search warrant was executed on Cohen’s residence and law office, President Trump tweeted: “Attorney-client Privilege is now a thing of the past.” But that bold statement is now being litigated before S.D.N.Y. Judge Kimba Wood who is tasked with how best to decide what documents may qualify as privileged and what documents fall outside the zone of that privilege.  At the moment, it looks as if Judge Woods herself will undertake a review with the assistance of an appointed Special Master.  The stakes are high because much of Cohen’s activities on behalf of his best client may not qualify as confidential communications between attorney and client, and thus may be revealed.

And now back to insurance. I do not have enough space in this post to delve into the many cases across the country where the attorney-client privilege has been attacked in an insurance context.  So, I take my cue from Shakespeare’s Polonius who gave his son Laertes a few “precepts” to hold close as he embarked on his journey back to France:

• Remember that claim information flowing through an attorney’s hands does not become cloaked in privilege simply because counsel has touched it.  Every fact that forms the basis for a disclaimer is discoverable.
• Remember that any discussions with counsel seeking advice or claim guidance should be clearly denominated as such in claim notes.
• Remember that counsel’s role is to give advice and guidance in respect of the application of policy wording to the facts developed during the claim investigation.  If counsel becomes the “investigator,” counsel’s reports in respect of the facts may be discovered.

On this latter precept, my preference is to let the transcript of the Examination Under Oath speak for itself; while I convey my mental impressions and legal advice in a separate report.

These three precepts just scratch the surface of what must be done to secure the sanctity of attorney-client privilege in first party contests.  So, as and when you take a decision to employ counsel, it helps to have a clear understanding of what will be later disclosed and what may be lawfully shielded from scrutiny.

If you would like to discuss this important issue further, please call or email me.  And that’s it for This and That.