Can an insurer's non-attorney claims staff review insurance staff counsel's files, which contain the insured client's confidential information?

Plain-English summary

An insurance company employs staff counsel to represent its insureds and conducts peer reviews of staff counsel's files to evaluate the attorneys' handling and develop best practices. The review panel had consisted only of staff attorneys, but the insurer proposed adding non-attorney members of its claims department. Staff counsel asked whether those non-attorney reviewers could access the insureds' confidential information in the files.

The opinion concludes they may not, absent the insured's informed consent. Rule 1.6(a) bars a lawyer from knowingly revealing a client's confidential information unless the client gives informed consent, the disclosure is impliedly authorized to advance the client's interests, or a Rule 1.6(b) exception applies (none of which fit here). Under Rule 1.0(h), the office of staff counsel is a "law firm," but the insurer's claims-department staff are not members or employees of that law firm and are not subject to staff counsel's supervision and control, so counsel cannot exercise the reasonable care required by Rule 1.6(c) to prevent their disclosure or misuse of confidential information.

Accordingly, the confidential information cannot be revealed to the non-attorney reviewers without the client's informed consent; unless the applicable insurance policy contains that consent, staff counsel must obtain it, and absent consent the confidential information must be redacted before the non-attorney reviewers see the file. The opinion analogizes to N.Y. State 716 (1999) (bills with confidential information cannot go to insurer-retained auditors without consent) and N.Y. State 721 (1999). Because the insurer pays staff counsel's fees, Rule 1.8(f) also applies, requiring the client's informed consent (usually in the policy), no interference with the lawyer's independent judgment or the client relationship, and protection of confidential information as required by Rule 1.6.

In practice

Under this opinion, an insurer cannot route the insured's confidential file information to its own non-attorney claims staff for peer review without the insured's informed consent. The opinion holds that, under New York's rules as they stood at the time, the dividing line is the law firm boundary: staff counsel's office is the firm, the claims department is not, and counsel cannot supervise non-firm personnel under Rule 1.6(c). The practical alternatives the opinion identifies are obtaining the insured's informed consent (which may be built into the policy) or redacting confidential information before non-attorney review.

Common questions

Q: Can an insurer's claims staff review the insured's confidential file for quality control?

A: Not without consent. The opinion concludes that non-attorney claims staff are outside staff counsel's law firm and not under counsel's supervision, so the insured's confidential information cannot be revealed to them under Rule 1.6 absent the insured's informed consent.

Q: Does it matter that staff counsel is an in-house legal department?

A: The office of staff counsel is a "law firm" under Rule 1.0(h), but the claims department is not part of it. Because counsel cannot supervise the claims staff under Rule 1.6(c), the firm boundary is what bars unconsented disclosure.

Q: What can the insurer do if it still wants non-attorney reviewers?

A: The opinion identifies two paths: obtain the insured's informed consent (which may be contained in the insurance policy), or redact the confidential information from the file before the non-attorney members review it.

Q: Does the insurer paying the lawyer change anything?

A: The opinion notes Rule 1.8(f) applies because the insurer pays the fees; that rule independently requires the client's informed consent, no interference with the lawyer's independent judgment, and protection of confidential information under Rule 1.6.

Background and rules framework

The opinion applies New York Rule 1.6(a) (no revealing confidential information without consent or an exception; cf. Model Rule 1.6), Rule 1.6(c) (reasonable care to prevent firm personnel from disclosing confidential information), Rule 1.0(h) (definition of "law firm," including an organization's legal department; cf. Model Rule 1.0), and Rule 1.8(f) (compensation from one other than the client; cf. Model Rule 1.8(f)). It relies on N.Y. State 716 (1999) and N.Y. State 721 (1999) on disclosure of insured confidential information to insurer-retained third parties.

Citations and references

Rules of Professional Conduct:

• New York RPC 1.6(a), (c) (confidentiality and supervision; cf. Model Rule 1.6)
• New York RPC 1.0(h) (definition of law firm; cf. Model Rule 1.0)
• New York RPC 1.8(f) (compensation from a third party; cf. Model Rule 1.8(f))

Other opinions cited:

• N.Y. State 716 (1999): insurer-retained auditors cannot review bills with confidential information without consent
• N.Y. State 721 (1999): insurer-directed use of a research service may not reveal confidential information without consent

See also

• NY State Bar Op. 1102: Insurance In-House Counsel Office Confidentiality
• NY State Bar Op. 1000: Fees Paid by a Third Party With Adverse Interests
• NY State Bar Op. 1118: Disclosing Confidences to Collect a Fee

Source

• Landing page: https://nysba.org/ethics-opinion-987/