Engagement letters matter. The plaintiff insured in Pengate Handling Sys., Inc. v. Westchester Surplus Lines Ins. Co., 2007 U.S. Dist. LEXIS 13303 (E.D. Pa. Feb. 27, 2007), sought communications between the defendant insurer and the outside law firm which the carrier had retained shortly after the claim was filed. District Judge Sylvia Rambo found "the engagement correspondence is ambiguous at best as to whether [the law firm's] role was that of legal advisor or claims adjuster...." Following a review of the facts, the Court concluded that, until the time the claim was denied by the insurer, the law firm's lawyers "acted as claims investigators or adjusters," opening up their communications with their client to discovery.

Equally significant, the Court denied work product protection during the pre-denial period for the same counsel/client communications because the prerequisite anticipation of litigation was absent: "[T]he nature of the relationship between the parties is fairly categorized as a typical insurer-insured relationship where a claim has been filed. Therefore, the court finds that documents prepared prior to that date [i.e., on which the claim was denied] fall into a 'routine investigation' or 'ordinary course of business category' and are not protected work product."

Finally, the Pengate Court held that work done by an outside expert prior to the time that the claim was denied was subject to discovery because the protections of Fed.R.Civ.P. 26(b)(4) for non-testifying experts are triggered by the same anticipation-of-litigation standard as work product protection -- and no such anticipation existed before the claim was denied.