UK: How To Obtain Two Sets Of Legal Advice For The Price Of One

Last Updated: 9 January 2002
Article by Simon Goldring

First published November 2001

Obtaining otherwise privileged documents by virtue of their "common interest" is an under-deployed weapon that is available to reinsurers in disputes with their cedants; it is also a way in which reinsurers can obtain two sets of legal advice for the price of one.

Imagine this scenario. A cedant takes legal advice on a claim presented to it. The lawyers advise that the claim is not covered because of an exclusion that is contained both in the original policy, and in the reinsurance, and therefore, advise that the cedant will not recover any sums paid from its reinsurers. Notwithstanding this, the cedant pays the claim and seeks indemnity from its reinsurers.

Clearly it will be in the reinsurers’ interests to obtain a copy of this advice in any subsequent dispute with its cedant, so as to establish that the claim falls outside cover.

The cedant will refuse to disclose this advice voluntarily to his reinsurers on the basis that it is protected by legal professional privilege. This is a rule of law that allows clients to obtain full and frank advice from their lawyers in the knowledge that it will not be seen by an opposing party.

However, it is settled law that no privilege attaches to communications between a solicitor and his client against persons having a joint or common interest with that client in the subject matter of the communications; for example, where a solicitor advises a company, its shareholders are also generally entitled to see this by virtue of their community of interest.

Does this principle also apply to the cedant/reinsurer relationship? If it does, then reinsurers in the scenario above will be entitled to see the legal advice that the cedant obtained concerning the coverage of the underlying claim. Furthermore, to the extent that it is inextricably linked to the advice concerning the underlying claim, the reinsurers may also be entitled to see the advice that the cedant obtained regarding the recovery under the reinsurance.

Mr Justice Moore-Bick considered this very issue in Commercial Union v Mander 1 . In that case, Commercial Union insured the potential purchasers of a ship against the loss of their deposit in the event of the cancellation of the contract. When delivery of the ship was delayed, the insured threatened to cancel the contract and claim on the insurance policy. In order to prevent a greater loss, Commercial Union agreed to provide the funds necessary to enable the ship to be completed, thereby preventing the claim on the policy. Commercial Union then sought to recover this amount from their reinsurers under a "follow the settlements" provision. The reinsurers elected to avoid the reinsurance and in the alternative, argued that they were not bound by the settlement (on the basis that Commercial Union was itself not liable to the original insured). In the course of the ensuing litigation, the reinsurers sought disclosure of the legal advice that Commercial Union had received concerning their liability under the policy. Commercial Union objected to this on grounds including that the documents were protected from disclosure by legal professional privilege.

Mr Justice Moore-Bick found that a contract of reinsurance containing a "follow the settlements clause" creates a community of interest between a cedant and its reinsurers; in such circumstances, the cedant is, for all practical purposes, obtaining legal advice concerning their liability under the policy for both their benefit and for the benefit of their reinsurers. By virtue of the community of interest therefore, reinsurers would generally be entitled to see the cedant’s documents concerning the handling of the original claim, including any legal advice that they have obtained. He found that this common interest exists notwithstanding the potential for disagreements that is inevitable in the relationship between reinsurers and their cedants in the conduct of the underlying claim, and it is not lost just because they subsequently "fall out".

Notwithstanding this, the reinsurers in this particular case did not get the documents. This was because they had elected to avoid the policy ab initio - that is to say, they had elected to treat the reinsurance, and therefore their relationship with the cedant, as if it had never existed. It did not matter that the cedant disputed the reinsurers’ entitlement to avoid. Since the reinsurers had elected to do so, they were unable to rely on the existence of a contract, and so could not prove that they had a common interest in the legal advice. In the absence of common interest, that legal advice was obviously protected by legal professional privilege.

Whether anything less than an avoidance would dispense with common interest was not addressed by Mr Justice Moore-Bick.

Therefore, a crucial tactical decision arises for reinsurers in circumstances where they have grounds to elect to avoid the reinsurance on the one hand, and have alternative grounds to repudiate the claim for falling outside cover on the other. Do they elect to avoid the reinsurance, in which case they will lose their right to see the legal advice obtained by the cedant or, do they insist on seeing that advice, and run the risk of affirming the reinsurance and therefore losing their right to avoid? The solution to this dilemma will depend on the facts of each case but the message to reinsurers is to consider the issue of common interest as soon as possible.

So, it is clear that legal professional privilege is not an adequate shield against a reinsurer given the community of interest, although the reinsurer may face difficult tactical considerations if it wishes to rely upon this.

However, is there anything that a cedant can do to avoid the problem from arising or to minimise its effects? First, it should always seek to involve its reinsurers in the underlying settlement; persuasion is always better than litigation. Secondly, and if this is not possible, it should seek to condition the manner in which the legal advice is provided; in particular the advice regarding the underlying claim and recoveries against reinsurers should be kept separate. Finally, cedants should take care with the preparation of internal memoranda relating to coverage and the handling of the underlying dispute - it may be highly embarrassing if these were obtained by their reinsurers.


1. [1996] 2 Lloyd’s Rep 640


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.