If your legal team routinely loops in a parent company executive, a claims adjuster, a consultant, or a corporate affiliate on “privileged” conversations with outside counsel — the Arizona Supreme Court just handed down a decision worth circulating internally.
Gelvin v. Parker (Ariz. July 17, 2026) didn’t arise in a corporate context — it’s a divorce case — but the rule it announces applies with full force to companies and insurers, and it overrules prior case law that many practitioners were leaning on to justify broader confidentiality arrangements with third parties.
The core holding:
Attorney-client privilege over communications involving a third party is not established by agreement, consent, or subjective expectation of confidentiality. It’s an objective test — the third party’s involvement must be necessary to effectuate the legal representation itself. And critically, the burden of proving that necessity always sits with the party asserting privilege, not the party seeking discovery.
Why this matters for in-house teams:
→ Internal investigations.
If outside counsel is corresponding directly with a business unit contact, HR representative, or affiliate employee who isn’t the actual client, don’t assume a confidentiality agreement or NDA converts those communications into privileged ones. Courts will look at whether that person’s presence was actually necessary to the legal advice being given.
→ Claims and coverage communications.
Insurers routinely have adjusters, TPAs, or reinsurers copied on coverage counsel correspondence. This decision reinforces that those communications need an independent basis for privilege (common interest, agency, or genuine necessity) — a shared business interest in the outcome isn’t enough, and a confidentiality label in a service agreement won’t carry the day on its own.
→ Consultants and experts.
The functional/necessity exceptions the Court reaffirmed (Kovel-style experts who are “indispensable” to the communication) still hold — but they’re narrow, fact-specific, and the company bears the burden of proving indispensability, not just utility.
→ No presumption to fall back on.
The Court expressly rejected any presumption that third-party communications remain privileged absent contrary proof. That flips the practical risk calculus: silence or an untested assumption about confidentiality will not protect you in discovery.
Bottom line for corporate and insurance counsel:
Audit your standard practices around who gets copied on privileged communications, and make sure the “why” is documented in terms of necessity to the legal advice — not just convenience, business interest, or a signed confidentiality provision. If you can’t articulate why a specific third party needed to be part of that communication for counsel to do the job, assume it’s discoverable.
Wondering about the impact this decision may have on your organization, please feel free to connect with JP at jharrington@cm.law.
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