Bar News - December 15, 2000
Ethics Opinion: Complying with Billing Audits Creates Risk of Breaches in Client Confidentiality
By: Peter Beeson
THE ETHICS COMMITTEE of the New Hampshire Bar Association has issued a formal Advisory Opinion regarding ethical issues that arise from the use of third-party auditors by insurance companies to review the billing statements of their defense counsel. Such auditing companies are frequently employed to review bills for compliance with billing guidelines of the insurance company.
This opinion places New Hampshire in line with a growing number of jurisdictions that have expressed serious concerns about the conflict between the use of third party auditors and an attorney's ethical and fiduciary obligations to protect the confidences of his or her client - the insured party.
Key conclusions of the opinion include the following:
- The billing statements of insurance defense counsel will always contain information that is protected by Rule 1.6(a) of the New Hampshire Rules of Professional Conduct, and may not be revealed to a third party auditing company unless the client provides informed consent following consultation.
- In most cases, an attorney's billing records - particularly those generated by insurance defense counsel in the detail required to meet typical billing guidelines - will also contain either direct or implicit descriptions of privileged client communications and attorney work product. Disclosure of these billing records to third party auditing companies creates a risk of waiver of the common law privileges that would otherwise protect the confidentiality of the material.
- An insurance practitioner may not satisfy his or her ethical obligations by providing billing statements to the insurance company for forwarding to the third party auditor - rather than directly to the auditing company. The obligation to protect client confidences precludes this type of tacit, or indirect, participation in conduct that may jeopardize the client's legal interests.
- Barring circumstances in which the benefits to the insured/client of disclosure of protected confidential information would outweigh any potential harm, an attorney may not, ethically, comply with an insurer's request to seek the consent of a client to disclose billing statements to third party auditors.
- Because of the unique nature of the tripartite relationship between defense counsel, the insured and the insurance carrier, the submission of billing information to the insurance company does not raise the same ethical concerns.
Peter E. Beeson is a member of the NHBA Ethics Committee. The formal opinion is a product of the entire committee.
|
