In the classic sword/shield scenario, a party cannot both invoke an advice-of-counsel defense and also use the attorney-client privilege to shield from an opponent the very advice that the client placed at issue. That said, courts have also consistently held that in order for a waiver to occur, a party must affirmatively put its own lawyer’s advice at issue. A party’s claim of a lack of bad faith generally is insufficient to generate a privilege waiver, and a clever litigant cannot, through discovery or otherwise, impose a waiver on its opponent by injecting the opponent’s consultations with counsel into a dispute.
For example, in the context of an insurance bad faith claim, if a defendant-insurer claims a lack of bad faith in a denial of coverage and affirmatively relies on its receipt of advice from counsel as evidence of that lack of bad faith, the insurer inarguably has waived the privilege. If, however, in response to a bad faith claim, the insurer denies that it acted in bad faith but does not point to advice it received from counsel as evidence of its lack of bad faith, there is no waiver of the privilege. This is so even when, in such circumstances, opponents argue that the insurer has put its state of mind at issue; after all, the argument goes, counsel’s advice would be relevant because, if a lawyer advised the insurer that it owed coverage to the plaintiff, that would undermine the insurer’s contention that did not deny the claim in bad faith.
