Navigation of the insurance defense counsel’s practice requires an understanding of the triangular relationship between the insurer, the insured and defense counsel. We commonly refer to this as the “tripartite relationship.” In order to understand how to approach difficult situations, such as defending claims under a reservation of rights and settling claims with or without the insured’s consent or contribution, a brief review of the attorney-client privilege and the rules of professional conduct is necessary.
The Supreme Court of Pennsylvania has not yet specifically ruled on the relationship between the insurer and defense counsel, as in Camico Mutual Insurance v. Heffler, Radetich & Saitta, 2013 U.S. Dist. LEXIS 10832 (January 28, 2013). That determination is dependent upon the terms of the agreement between the insurer, the insured and defense counsel. However, when defense counsel communicates with the insurer and the insured, with the permission of each, the communications within the triangular relationship are protected by the attorney-client privilege. The privilege is not in favor of the insurer or the insured, but the common business communications are protected from a mutual adversary, citing Tracy v. Tracy, 105 A.2d 122 (Pa. 1954).
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