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In most jurisdictions, the law on 'advice-of-counsel' defense is not well developed. For example, beyond claims for bad faith, advice of counsel is also a defense to a malicious prosecution claim in an insurance claim. In a malicious-prosecution lawsuit, this defense requires a complete presentation of facts by the defendant to his attorney and honest compliance with the attorney's advice. The gravamen is that the defendant seeks to avoid liability by claiming that he acted reasonably and in good faith on the attorney's advice. The attorney cannot have knowingly participate in implementing an illegal plan. 


It is a recognized defense to torts involving lack of probable cause, bad faith, or malice as an element of the cause of action. However, courts do not treat the defense identically in both contexts. The defense may not be as successful against a basic bad-faith cause of action as it would be against punitive damages, where the plaintiff must show a good deal more than that the insurer merely was unreasonable. The advice-of-counsel defense requires waiving the attorney-client privilege, at least for the specific coverage question. The issues that can arise when confidential communications become public need to be carefully scrutinized ...

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