Solicitors PI: access to documents seized by the Law Society – Court of Appeal decision

In a recent decision, the Court of Appeal has confirmed that solicitors PI insurers are not entitled to blanket access to documents seized by the Law Society following an intervention in the practice of an insured firm.

For a full factual background click here. In summary, the insurer sought access to all confidential client documents of an insured solicitors firm, not just those in respect of which clients had waived privilege.

At first instance, the Judge rejected the insurer’s application on the basis that it was not appropriate to imply into the scheme for regulation of solicitors a provision or term entitling or obliging the Law Society to produce those documents to a firm’s PI insurer. The insurer appealed and argued that such an entitlement and/or obligation was a necessary implication of the regulatory scheme taken as a whole.

The appeal was rejected by the Court of Appeal for the following reasons:

•A solicitor under any form of “claims made” policy is not entitled nor bound to disclose to his insurer confidential and privileged documents or information of a client without that client’s consent. Those documents are held by the solicitor subject to the lifelong rights and privilege of the client and the solicitor is not entitled to ignore the client’s rights.
•Although a firm of solicitors owes a duty of good faith to its insurer, its duty of disclosure to that insurer cannot override the entitlement of its client to expect that privilege and confidentiality rights will not be broken or waived without the client’s consent.
•On an intervention by the Law Society, the solicitors are bound to give up possession of all documents, including those that are subject to clients’ privilege. However, the Law Society is under no corresponding obligation of disclosure to the solicitor and so no such obligation of disclosure to the insurer exists.
•To the extent that the PI insurer is “meshed in” to the regulatory regime, it is as the provider of indemnity insurance to solicitors and information to the Law Society. It is not “meshed in” to the regulatory system as the recipient of any services or information, let alone privileged information belonging to solicitors’ former clients.
•The insurer’s objective in seeking the information and documents was not the advancement of any public purpose or regulatory responsibility; rather, it was for its private purpose of seeking evidence to justify a refusal of an indemnity to the insured firm (to the detriment of the firm’s former clients).
•Although there may, in some circumstances, exist a “circle of confidence” at least to the extent of the various functions of the Law Society and its intervention agent, there was no reason why this should include the PI insurer.

The Court of Appeal’s decision upholds the first instance decision and is entirely clear: there is no provision or term implied into the regulatory scheme that entitles or obliges the Law Society to produce to a qualifying insurer documents emanating from a solicitors firm into which it has intervened and which are subject to clients’ privilege.


It is clear that the primary concern of both the Courts and the regulator is to protect the rights of innocent former clients. Insurers cannot request blanket access to an insured firm’s documents on the basis that it has suspicions that such documents might contain information relevant to coverage and policy response. Unless and insofar as privilege has been waived by the client, or never existed because there is evidence that the documents were part of a fraudulent scheme, an insurer is not allowed access to that information. In practice, this means that carefully targeted requests for disclosure have a much better prospect of success than a blanket request for the entire documents of a practice. Whilst insurers will no doubt find this frustrating in circumstances where they suspect fraud, this situation is inevitable if the rights of former clients are to be given due consideration and respect.

The Court of Appeal judgment made an interesting point about conflicts of interest. If a client will not waive its privilege to enable proper disclosure to be made by a solicitor to its insurer, the consequence of the resulting conflict of interest might be that the insurance is vitiated or the notification made by the solicitor inadequate. That, according to the Court of Appeal, is the problem of the solicitor and not its client. The solicitor’s duty of disclosure to its insurer cannot override the entitlement of the client to confidence in its privileged documents and information. That is an unhelpful observation for ‘claims made’ policies, particularly as regards the precautionary notification of circumstances which might lead to a claim. The Courts’ unpredictable response to relevant coverage points taken on the basis of inadequate disclosure introduces an unwelcome element of uncertainty into an already contentious area.

This article first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information about Law-Now, please go to www.law-now.com