Quinn Direct Insurance Ltd v The Law Society of England and Wales

A solicitor’s professional indemnity insurer has no implied right to obtain client-confidential or privileged documents held by a regulator after intervention. A claims-made policy does not entitle or oblige the solicitor to disclose such material without the client’s consent. The solicitor’s good-faith duties to the insurer cannot override the client’s privilege. The insurer’s role in the regulatory scheme is to provide indemnity and information to the Law Society, not to receive privileged material for the private purpose of resisting indemnity. A client’s claim may waive privilege and permit disclosure, but it is unnecessary to decide whether disclosure is then discretionary or mandatory.

South Bank Solicitors was operated by two solicitors. The Law Society intervened in the practice under the Solicitors Act 1974 and took possession of the firm’s documents. Quinn, the firm’s professional indemnity insurer, sought access to documents containing former clients’ confidential and privileged information to decide whether one partner had condoned fraud and could be denied indemnity.

Peter Smith J dismissed Quinn’s Part 8 claim, reported at [2010] Lloyd’s Rep. I. & R. 336. Quinn appealed. The central issue was whether the regulatory scheme or the policy entitled Quinn to obtain privileged documents held by the Law Society where the clients had not waived privilege.

The Chancellor gave the leading judgment. Rimer LJ and Jackson LJ agreed. The appeal was dismissed.

1. Nature of the claim. Quinn was not a party to the retainer between the former clients and South Bank Solicitors, nor was the Law Society a party to the insurance policy. Quinn therefore had no contractual right under the policy to obtain the privileged documents. Its challenge was confined to public law grounds, namely whether the Law Society acted unlawfully in refusing disclosure.
2. Client privilege and insurance. A solicitor insured under a claims-made policy is not entitled or obliged to disclose the client’s confidential or privileged documents to the insurer without the client’s consent. The solicitor’s duties of good faith and disclosure to the insurer cannot override the client’s privilege. Any resulting conflict, inadequate notification or possible vitiation of the insurance is a problem between the solicitor and insurer, not a reason to override the client’s entitlement. The approach to relaxing privilege must be one of the greatest circumspection, as illustrated by R v Derbyshire Justices [1996] AC 487.
3. Regulatory scheme. The document-possession powers under the Solicitors Act 1974 do not imply a reciprocal obligation on the Law Society to disclose privileged material to a qualifying insurer. If the insurer is integrated into the regulatory scheme, its role is that of indemnity provider and source of information for the Law Society, not recipient of confidential information. Quinn’s purpose was private: to obtain evidence supporting refusal of indemnity, rather than to advance a regulatory or public purpose.
4. Circle of confidence and waiver. Even assuming that a circle of confidence existed among the Law Society and its agents, there was no justification for including the insurer. The analogous reporting duty imposed on solicitors by the Solicitors’ Code of Conduct 2007 did not entitle every solicitor to obtain another client’s privileged information. Where the client consented or privilege was impliedly waived by a claim against the solicitor, disclosure could take place. It was unnecessary to decide whether the Law Society was then entitled or obliged to disclose.
5. Alternative policy construction. If the construction of clause 6.2(a)(4) arose for decision, the Chancellor would have agreed with the judge that it was not a freestanding obligation to provide information whenever requested. It operated in connection with an occurrence giving rise to a claim, and did not require information solely to investigate whether an insurance exclusion could be established. This alternative reasoning was unnecessary to the dismissal of the appeal.

• Court of Appeal (Civil Division): Quinn’s appeal was dismissed.
• Chancery Division: Peter Smith J dismissed Quinn’s Part 8 claim on 23 October 2009. The decision was reported at [2010] Lloyd’s Rep. I. & R. 336.