Zurich has updated its "Litigation Management Guidelines" to give the insurer an unprecedented level of control over defense counsel's activities. The new Guidelines adopt the Recommended Case Handling Guidelines for Insurers created by The Defense Research Institute, and also append an extensive Addendum covering business policies, expense and professional fee payment, and other administrative points.
The Guidelines purport to impose a sweeping waiver of attorney-client privilege and work product protection, even though the law in most states imposes significant limitations on an insurer's access to privileged or protected information developed by defense counsel - especially where the insured is entitled to so-called Cumis or independent counsel as a result of conflicts of interest with its insurer. Zurich's Guidelines mandate almost complete and constant transparency in case development and strategy, stating "counsel should provide a significant development report to immediately communicate important case developments to the claims professional, such as settlement overtures by other parties, codefendant strategies or developments, new information obtained through discovery, etc." The Addendum also requires counsel to "enunciate the impact of the information being conveyed," specifically on "case strategy, evaluation, posture, and resolution opportunities." Zurich essentially attempts to coerce insureds to waive the attorney-client privilege and work product protection by expressly stating that Zurich reserves the right to review defense counsel's files and will not pay for defense activities for which Zurich is not given access to "full" explanation and documentation.