D.C. Bar Legal Ethics Committee Opinion No. 290, dated April 20, 1999

Following in trace of Virginia and Maryland, the D.C. Bar’s Legal Ethics Committee released an opinion which addresses the topic of detailed disclosures of information to insurance companies and their outside auditing firms. The opinion summarizes its conclusions as follows:

"A lawyer may release an insured client’s confidential or secret information, including detailed work descriptions, to the insurer or an auditing firm hired by the insurer, only after the lawyer has made appropriate disclosure to the insured and obtained consent. Client consent to disclose confidential or secret information to the insurance company does not provide a basis to infer client consent to disclose the same information to the insurer’s auditing firm."

The Committee relied in large part on Rule 1.8(e), which prohibits a lawyer from accepting compensation for representing a client from one other than the client unless: (1) the client consents after consultation; (2) there is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship; and (3) information relating to a client’s representation is protected as is required by Rule 1.6.

Thus, an attorney must determine whether the itemized invoice furnished to the insurer contains client confidences (information protected by the attorney-client privilege) or client secrets (information gained in the professional relationship that the client has requested to be held inviolate or the disclosure of which would be embarrassing, or would likely be detrimental to the client). Neither the Rules nor the requirements of any laws permit disclosure of an insured’s confidences and secrets to the insurer for auditing purposes. Thus, a lawyer may only share confidential information with the insurer with the consent of the client after full disclosure.

The insurance contract or other agreements the insured entered into in submitting the claim may grant the insurer access to confidential or secret information. "The lawyer’s duty to the insured, however, is governed by the Rules of Professional Conduct, not by the insurance contract." The lawyer will need to review such agreements with the client to determine whether they constitute informed consent for disclosure required by Rule 1.6.

The Opinion also includes the following statement concerning the rule if the lawyer provides the protected information to the insurer, who then sends it to the outside auditor:

"Prior to disclosure of protected information to the insurer . . . the lawyer should instruct the insurer not to release the protected information and should designate all such information clearly. If there is reason to believe that the insurer will not follow this instruction, the lawyer should so advise the client, prior to disclosure, explaining any additional risks that would result from disclosure by the insurer to a third party."

[Ed. Note: A practical solution is to avoid including any client confidences or secrets in billing statements, while at the same time providing enough detail to satisfy the insurer’s litigation guidelines.]

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