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Lloyd’s “Custom and Practice” Shield Shattered: EDNY Orders Lloyds’ to Release Attorney Client Communications

April 14, 2016

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The ancient dictum – <strong>No Man May Serve Two Masters Without The Consent Of Both To The Double Employment</strong> – surfaced in <em><a href="http://blog.wcmlaw.com/wp-content/uploads/2016/04/Certain-Underwriters-at-Lloyds-v.-National-Railroad-Passenger-Corporation.pdf" rel="">Certain Underwriters at Lloyd's v. National Railroad Passenger Corporation</a> [Amtrak], 2016 (E.D.N.Y.). </em>And it surfaced to defeat Underwriter’s claim of attorney-client privilege in litigation with Amtrak over environmental contamination and asbestos exposure between 1972 and 1976.
In that era, following established market “custom and practice” defense counsel’s reports were routinely routed to Underwriters through London brokers -- and this is precisely why Amtrak contended the privilege was waived.
While market practices (to a degree) have since changed, the Amtrak decision is an important reminder that “direct reporting” (that is, from counsel to clients) is the only safe way to avoid an assault on attorney-client privilege.
While Underwriters have moved for reconsideration of the order directing the release of what ordinarily would be protected, the case serves as a stern warning that using brokers as a distribution mechanism is a risky practice indeed.
In general, to establish that attorney-client privilege attaches to a questioned document, the proponent must establish that the communications were:
<ul style="list-style-type: circle;">
<li>Between a client and his or her attorney;</li>
<li>Intended to be, and in fact were, kept confidential; and</li>
<li>Made for the purpose of obtaining or providing legal advice.</li>
</ul>
In Amtrak, the attack focused on the second requirement.  How could the questioned documents be confidential when they were distributed through the London brokers?  Of significance, the court dismissed what it described as “flimsy and unsupported” claims of established market practice and necessity as grounds for overriding a central requirement of attorney-client privilege.
We are following this case, but the clear takeaway is this:  Adopt a direct reporting scheme for all matters in which you intend to preserve the sanctity of attorney-client communications.
For more information, please email Dennis M. Wade at <a href="mailto:dwade@wcmlaw.com">dwade@wcmlaw.com</a>.
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