Privilege right upheld

Solicitors are not obliged to disclose privileged information to insurers in the absence of a claim or waiver, the Court of Appeal has held in an important case on disclosure.

In Quinn Direct Insurance v Law Society [2010] EWCA Civ 805, the appeal judges upheld the High Court’s decision that insurers could not access documents seized from a two-partner law firm during an intervention by the Solicitors Regulation Authority unless the client waived privilege.

The insurer, Quinn, wished to view the documents to assess whether it was obliged to indemnify the second partner of the firm. The Law Society argued the files were subject to legal privilege and could not be disclosed.

Nick Bird, partner at Reynolds Porter Chamberlain LLP, says: “Quinn argued that they were entitled to see the files because insurers of solicitors were part of the regulatory framework of solicitors in England and Wales.

“They also said that they were within a ‘circle of trust’ which entitled them to see confidential material but not to pass it on. The Court of Appeal rejected these arguments, so insurers will have greater difficulty in obtaining material to try and avoid cover in this situation.

“However, the court also said that this may now prevent solicitors from complying with their duties under the policy of insurance to disclose confidential information as part of the renewal and notification process. This may cause conflicts between the solicitor’s obligations under his insurance policy and the duty he has to his client.

“If the judgment is not appealed and remains the law then either some solicitors will have to revise their terms and conditions so that the client waives privilege for the purpose of notifying insurers, or insurance policies will have to be amended to prevent solicitors from being under any duty to disclose this material.”