"> April 2011 Bad Faith Cases | Attorney Client Privilege

April 2011 Bad Faith Cases: The Two Way Street on Attorney Client Privilege Re-Opens in Pennsylvania (Pennsylvania Supreme Court)

In Gillard v. AIG Insurance Company, the insured brought a bad faith claim based on the insurers’ handling of his uninsured motorist claim.  During discovery, the insured sought production of all documents on file from the law firm representing the insurers.  The insurers withheld and redacted documents created by their counsel, asserting the attorney-client privilege.  The issue before the Pennsylvania Supreme Court was whether, and to what degree, the attorney-client privilege applied to attorney-to-client communications.
The Pennsylvania statute concerning privilege, 42 Pa. C.S. § 5928, states that “in a civil matter counsel shall not be competent or permitted to testify to confidential communications made to him by his client, nor shall the client be compelled to disclose the same, unless in either case this privilege is waived upon the trial by the client.”
Two intermediate appellate court decisions had ruled that this meant the privilege only applied to client to attorney communications, or attorney to client communications that incorporated the information received from the client.  Thus, a communication from an attorney to a client that did not meet the later standard was simply not subject to the attorney client privilege.  (These holdings did not address the work product doctrine’s applicability to the same communication).  Thus, the attorney client privilege was deemed a one way street in Pennsylvania.
After a thorough examination of the precedent that supported the lower courts’ view and the contrary position that the lawyer should be able to speak to the client freely within the privilege, the High Court determined that the attorney-client privilege does afford derivative protection to lawyer to client communications.  It rejected the insured’s argument that the Pennsylvania Legislature intended strict limits on the derivative protection.
In short, the two way street is open, and like lawyers in other states lawyers in Pennsylvania can speak to their clients within the protection of the attorney client privilege.
Date of Decision:  February 23, 2011
Gillard v. AIG Ins. Co., No. 10 EAP 2010, Supreme Court of Pennsylvania, 2011 Pa. LEXIS 393, 15 A.2d 44 (Feb. 23, 2011) (Saylor, J.)