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Attorney-Client Privilege: A Two Way Street

Bringing welcome clarity for regulated entities, especially those that rely heavily on in-house legal teams whose members interact on a day-to-day basis with business decision makers, the Pennsylvania Supreme Court this week reversed the Superior Court’s narrow “client to lawyer” limitation on the attorney-client privilege and held that the privilege operates “in a two-way fashion to protect confidential client-to-attorney or attorney-to-client communications made for the purpose of obtaining or providing professional legal advice.” Gillard v. AIG Insurance Co., _A.3d ___(Pa. 2011) (10 EAP 2010; filed February 23, 2011) (Saylor, J.).

Gillard involved a bad faith suit arising out of defendant insurance companies’ handling of an uninsured motorist claim. The plaintiff sought production of “all documents from the file” of the law firm representing the insurers in the action that gave rise to the bad faith claim. The insurers redacted some documents and withheld others, asserting attorney-client privilege. The trial judge ruled that the privilege did not apply to any documents that were communications from attorney to client, and the Superior Court affirmed.

Under the lower courts’ narrow “client only” approach, legal advice and proactive observations made by in-house lawyers, which often could reveal privileged facts and observations about the client and its business, were left unprotected. Recognizing the “difficulty of unraveling attorney advice from client input,” a task necessitated by the Superior Court’s narrow view of the privilege, Justice Saylor’s 5-justice majority opinion emphasizes the imprudence of adopting a general rule that would require 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 private.” Justices Eakin and McCaffery filed separate dissenting opinions.

A link to the Supreme Court’s opinions can be found here.

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