Dispute Resolution | Appeal Court decision on the Scope of Attorney-Client Privilege in the Insurance Sector

Eidsivating Court of Appeal held in a ruling 14 September 2020 (LE-2020-125081), that initial correspondence between lawyers employed by Claims Link AS (“Claims Link”), acting on behalf of HDI Global Speciality SE (the “Insurer”), and the assureds regarding a possible insurance event was not subject to attorney-client privilege until the Insurer had declined cover of the event. The Appeal Court argued that the requested correspondence was given to Claims Link’s lawyers in their capacity as claims handlers providing “ordinary” claims handling services on behalf of the Insurer. This implied that Claims Link did not provide legal services at this stage. Therefore, the correspondence was not protected by Section 22-5 of the Norwegian Dispute Act (2005), which prohibits courts to receive evidence covered by attorney-client privilege. The Appeal Court’s decision is still subject to appeal and not final and enforceable.

Foto: Heiko Junge / NTB

Background

In the underlying suit, the buyers of a real estate are requesting a declaration that they are entitled to repudiate the purchase agreement on the basis of material defects.

The buyers requested that the Insurer disclosed initial correspondence between the seller and Claims Link regarding notices on the defects of the real estate and the claims submitted to the Insurer. The Insurer declined disclosing this evidence on the grounds that the correspondence is subject to attorney-client privilege as the correspondence was with an attorney employed by Claims Link.

Claims Link is a company providing claims handling services to insurers. In essence this implies a service where every individual claim request is reviewed to determine whether the event is covered under the insurance and for which amount. On its website, Claims Link describes itself as an “independent intermediary” between the Insurer and the assureds.

The Eidsivating Court of Appeals’s ruling

The Appeal Court concluded that the correspondence was not subject to attorney-client privilege. The key reasoning was that Claims Link had primarily acted in a capacity of claims handler, providing “ordinary” claims handling services on behalf of the Insurer, that would otherwise have been conducted by the Insurer itself. Hence, Claims Link had not acted as the seller’s nor the Insurer’s lawyers.

The Appeal Court emphasised that Claims Link described itself as an independent intermediary between the Insurer and the assureds on its website. This implied that Claims Link’s primary assignment is to provide ordinary claims handling services as the Insurer’s representative in Norway. Thus, the services provided by the lawyers employed by Claims Link could only be characterised as legal services when the Insurer had declined cover of the event and a dispute between the buyers and the seller and/or the Insurer arose.

As the requested evidence only concerned correspondence prior to when the dispute arose, the Appeal Court found that the Insurer was obliged to disclose the requested correspondence in line with the general duty to give evidence set out in Section 21-5 of the Dispute Act.

Our remarks

The Court of Appeal’s starting point is that only legal services are protected by attorney-client privilege. This is in line with previous rulings from the Norwegian Supreme Court cf. e.g. Rt. 2010-1638 and HR-2018-2403-A.

However, the Supreme Court has clearly stated that legal services are not limited to legal advice given in connection with disputes, but also includes legal assistance and counseling in a wider sense. Legal services include both the existence of the client relationship and the detailed content of the lawyer’s assignment. But it is pointed out that in cases where a lawyer e.g. conducts real estate or wealth counseling or is acting as a liquidator in an estate of a deceased, the prohibition of evidence covered by attorney-client privilege will as a main rule not apply. The Appeal Court now appears to add claims handling to the list.

In our view, the previous decisions of the Supreme Court imply that the assessment of whether the requested correspondence is subject to attorney-client privilege, should not be decided based on when the correspondence took place, but rather by the substance of the services provided by Claims Link to the Insurer.

The Appeal Court’s decision does not provide much information on the substance of the services provided by Claims Link other than stating that Claims Link is a claims handler, providing “ordinary” claims handling services on behalf of the Insurer. Claims handling services typically includes clarifying the facts regarding liability, causation and loss and collating documentation in this regard (including obtaining the views of the assured on the facts). Further, claims handling services may include advising the insurer and the assured regarding potential liability towards a third-party or obtaining legal advice on such liability and also considering whether the evidenced event is covered under the terms and conditions of the insurance policy. Therefore, there are good reasons to consider claims handling services with a content as this, to be encompassed by attorney-client privilege to the extent this is done by lawyers acting on behalf of the insurer, cf. e.g. Rt. 2014-773.