The Pennsylvania Supreme Court recently addressed the breadth of attorney-client privilege in Pennsylvania in Gillard v. AIG Insurance, No. 10 EAP 2010 (Pa. 2011). Gillard concerned a claim of bad faith arising out of the insurance company s handling of an uninsured motorist claim. During discovery, Gillard sought the production of all documents from the law firm representing the insurers in the underlying litigation. The insurance company withheld documents created by counsel, asserting the attorney-client privilege. In response, Gillard sought to compel production, asserting that the privilege was limited only to communications from the client to the attorney. Following an in camera review, the trial court adopted the one-way street perspective, and ordered production of the documents which were communications from the attorney to the client in the underlying litigation.
The insurance company filed an interlocutory appeal. The Superior Court recognized some allowance within the privilege for derivative protection of attorney-to-client communications, i.e., attorney communications which reveal confidential communications made to the attorney by the client. Nonetheless, the Superior Court determined that none of the sought-after documents fell within this category, and therefore the trial court decision was affirmed. The insurance company appeal to the Pennsylvania Supreme Court.
The attorney client privilege is governed by 42 Pa.C.S.A. 5928, which provides as follows:
In a civil matter counsel shall not be competent or permitted to testify to confidential communications made to him by his client, nor shall counsel be compelled to disclose same, unless in either case this privilege is waived upon the trial by the client.
42 Pa.C.S.A. 5928. In reaching its decision, the Gillard court noted that Pennsylvania courts have been inconsistent in expressing the scope of the attorney-client privilege, with the disharmony relating to the tension between the encouragement for trust and candid communication between lawyers and their clients and the accessibility of material evidence to further the truth-determining process. The Court recognized that there was no question, and that both sides had conceded, that the privilege does afford derivative protection to attorney-to-client communications which are intertwined with confidential client-to-attorney communications. In assessing the scope of this extension, the Court noted that the underlying purpose of the privilege must be considered. The Court stated that client communications and attorney advice are often inextricably intermixed, and we are not of the view that the Legislature designed the statute to require surgical separations and generate the inordinate practical difficulties which would flow from a strict approach to derivative protection. Accordingly, the Court held that in Pennsylvania, the attorney-client privilege operates in a two-way fashion to protect client-to attorney communications or attorney-to-client communications made for the purpose of obtaining or providing professional legal advice.
Unfortunately, the Court did not reconcile the expansion of the privilege with the expanded discovery permitted in claims of insurance bad faith. The explanatory comment to Pennsylvania Rule of Civil Procedure 4003.3 states that
[a]s to representatives of a party, and sometimes an attorney, there may be situations where his conclusions or opinions as to the value or merit of a claim, not discoverable in the original litigation, may be discoverable in subsequent litigation. For example, suit is brought against an insurance company for unreasonable refusal to settle, resulting in a judgment against the insured in an amount in excess of the insurance coverage. Here discovery and inspection should be permitted in camera where required to weed out protected material.
Pa.R.C.P. 4003.3, Explanatory Comment – 1978. The decision in Gillard expands the attorney-client privilege generally, apparently including in bad faith cases. This decision strikes a blow to plaintiffs in bad faith cases, as often information in the files of the underlying insurance defense counsel s file on the original claim is necessary to support a claim that the insurer acted in bad faith in evaluating a claim. The conflict between this decision and the comment to Rule 4003.3 appears to raise continued questions concerning the discoverability of allegedly privileged material.