people talking in front of a courthouseAre communications among a client, a third party, such as an insurance broker, and the client’s attorney privileged? The answer is yes, if the communications are confidential and reasonably necessary to accomplish the purpose for which the lawyer was consulted. Behunin v. Superior Court, 2017 WL 977095 (2d Dist. March 14, 2017), decided last week, addresses this question.

Behunin addressed whether communications among a client, his lawyer and a public relations consultant hired in connection with litigation were privileged. The consultant was hired to create a website containing purportedly damaging information about the opposing parties (Charles Schwab and his son). The client, Behunin, hoped that the bad publicity would encourage the Schwabs to settle. Instead, the Schwabs sued for defamation and sought discovery of the communications with the consultant. The Court of Appeal agreed with the trial court that the communications were not privileged. The record showed that, while the consultant’s work was part of the client’s litigation strategy, it was not reasonably necessary to aid the lawyer.

The same issue arises from time to time when insurers seek discovery of communications between the insured, its broker and policyholder counsel before and during litigation. The insured and counsel often seek the input and advice of the broker about drafting and underwriting issues, policy interpretation, and insurer attitudes about specific issues or dispute resolution. In these instances, the broker is effectively acting as a consulting expert and communications and work product should be protected in the same way.

The first case to address the issue squarely under California law was Atmel Corp. v. St. Paul Fire & Marine Ins. Co., 409 F. Supp. 2d 1180 (N.D. Cal. 2005), argued by Farella. The court held that communications among Atmel, its lawyers and brokers regarding the negotiation of policies and specific claim issues were reasonably necessary for the consultation, including aiding the lawyers’ transmission of information to the insurers. The disclosures to the broker therefore did not waive the attorney-client privilege and work-product protection. Other cases have followed suit. See, e.g., County of San Bernadino v. Pacific Indemnity Ins. Co., 2014 WL 12588292 (C.D. Cal. July 30, 2014)(attorney-client privilege); Cottage Health System v. Admiral Ins. Co., 2015 WL 12806480 (C.D. Cal. December 22, 2015)(work product protection). We have also prevailed on this issue in San Francisco and Los Angeles state trial courts.

It’s important to note that not all attorney-client communications or attorney work product disclosed to the broker are protected. To avoid a waiver, the disclosure must be reasonably necessary to further the purpose of the lawyer’s engagement. Moreover, the disclosure must remain confidential. It’s important to make the broker aware that any such disclosures made to them cannot be shared with any other party.