Insurer audit requirements may compromise solicitor-client privilege and confidentiality

January 25, 1999

The Law Society has recently learned that some lawyers who act for insurers may be faced with instructions from those insurers to submit their accounts to third party auditors for review, instead of submitting the accounts to the insurer itself.

When retained by an insurance company to defend an insured, a lawyer has duties of loyalty and confidentiality to both the insurer and the insured. You should be aware that lawyers who comply with an insurer’s instruction to send an account containing confidential information to a third party auditor, without the informed consent of the insured, may breach solicitor-client privilege and contravene their duty of confidentiality to the insured.

The ethical implications of insurer instructions to lawyers to disclose confidential information to third party auditors will be considered shortly by the Law Society Ethics Committee. Lawyers who have questions about this issue or views they would like the Ethics Committee to consider should contact Jack Olsen at the Law Society by telephone at (604) 443-5711 (toll-free in B.C. 1-800-903-5300), by fax at (604) 687-0135 or by e-mail at jolsen@lsbc.org.