Pa. SC: Privilege goes both ways

By Jessica M. Karmasek | Feb 25, 2011


HARRISBURG, Pa. (Legal Newsline) - The Pennsylvania Supreme Court has ruled that the attorney-client privilege in the state operates in "a two-way fashion," protecting those communications made from client to attorney or attorney to client.

The Court, in its 24-page opinion filed Thursday, reversed a superior court's ruling and remanded the case.

The case involves a claim of bad faith arising out of insurance companies' handling of appellee William Gillard's uninsured motorist claim.

During discovery, Gillard sought production of all documents from the file of the law firm representing insurers AIG Insurance Company, The Insurance Company of the State of Pennsylvania, Key Auto Insurance Plan and AIG Claims Services.

The insurance companies withheld and redacted documents created by counsel, asserting the attorney-client privilege.

In response, Gillard sought to compel production. He took the position that the attorney-client privilege in Pennsylvania is very limited to confidential communications initiated by the client.

For their part, the insurance companies highlighted the privilege's purpose to foster "the free and open exchange" of relevant information between the lawyer and his client.

To encourage such candid disclosure, the companies reasoned that both client- and attorney-initiated communications must enjoy protection.

However, in its ruling, a common pleas court adopted the "one-way street" perspective. The court repeatedly grounded its ruling on the direction of the flow of the information, not the content.

The insurance companies, the lower court said, had not argued that the withheld attorney communications contained information originating with the client. The insurers then filed an interlocutory appeal.

A superior court affirmed the lower court's opinion, discerning no specific claim that the sought-after documents would disclose confidential communications made by the insurers to their attorneys. Thus, it held, the privilege did not apply.

Justice Thomas G. Saylor, who authored the high court's opinion, said "very good arguments" were made on both sides concerning the privilege's appropriate breadth.

However, "it is our own considered judgment, like that of the United States Supreme Court, that -- if open communications is to be facilitated -- a broader range derivative protection is implicated," the Court wrote.

"In this regard, we agree with those courts which have recognized the difficulty in unraveling attorney advice from client input and stressed the need for greater certainty to encourage the desired frankness."

The Court continued, "Indeed, we believe it would be imprudent to establish a general rule to require the disclosure of communications which likely would not exist (at least in their present form) but for the participants' understanding that the interchange was to remain prviate."

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.

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