My former colleagues at Bullivant Houser Bailey have done a nice job of summarizing two recent decisions, one from Washington and one from Idaho, limiting the application of the attorney-client privilege where outside coverage counsel participates in a fact investigation for coverage purposes. Both decisions (Idaho’s Stewart Title v. Credit Suisse in federal court, Washington’s Cedell v. Farmers in state court) made it clear that an insurance company cannot seek to shield a coverage determination made in bad faith behind the privilege by using outside counsel, whether it’s a first-party or a third-party coverage issue. In both cases the insured sought discovery of counsel’s work product to support a bad-faith claim. It is hard enough to prove bad faith in either state; it’s nice to see judges recognizing a common carrier tactic for what it is: an effort to make it nearly impossible.
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