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Lawyers as claims adjusters - does confidentiality apply?

There has been a growing trend in the insurance industry recently for insurance companies to hire newly minted but out of work attorneys to act as claims adjusters. This job was once looked down upon as a role for lawyers, but with an increasingly competitive job market in traditional law firms, many recent law school graduates are looking for experience and are willing to work in these types of jobs.

However, there are some problems with this approach when it comes time to review claims. Since attorneys are hired for the specific purposes of zealously representing their clients and have a duty to do so, there are some legitimate concerns about the objectivity and ethics of having an attorney act as both legal counsel and claims adjuster. One attorney representing policyholders says when a law firm handles a claim they "[Invariably] deny or severely cut back the claim."

In addition, insurance companies have started asserting attorney-client privilege to the documents prepared by attorney adjusters in an attempt to keep the process of evaluating a claim confidential and immune from discovery in the event of a lawsuit. This methodology is litigated frequently, with cases depending on how the court views the role of the attorney/adjuster at the time that the documents were produced. If the employee was acting as counsel at the time, then the paperwork may be excluded from a court case. On the other hand, if the duties were basic claims adjusting and had a normal business purpose, then the documents may be demanded during the discovery process.

For anyone who has had to appeal or litigate an insurance claim denial, these types of games and tricks probably sound familiar. Unfortunately, there are many situations in which an insurance company will deny a claim that should have been approved according to the terms of the policy and hope that they get away with it because policy holders aren't clear on their rights.

Source: ABA Journal, "Insurers are hiring lawyers, with an eye on privilege," Joe Cahill, March 1, 2013.

Information about policyholder's rights after an insurance claim denial can be found on our website.

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