WILBUR, Justice.

[¶ 1.] Timothy Andrews sued Twin City Fire Insurance Company (Twin City) and Ridco, Inc. a/k/a Riddle's (Ridco) for the alleged bad faith handling of his workers' compensation claim. During the discovery stage of the bad faith claim, Andrews filed a motion to compel Twin City to produce wholly unredacted claim files, personnel files, and privilege logs. The circuit court concluded that Twin City impliedly waived the attorney-client privilege and ordered Twin City to produce all of the disputed documents in unredacted form. Twin City filed a petition for intermediate appeal. We reverse and remand.

Background

[¶ 2.] Andrews suffered a compensable, work-related injury to his neck and back on March 4, 2005, while employed by Ridco as a gold polisher. Twin City insured Ridco for purposes of workers' compensation during all times relevant to Andrews's claims. Twin City timely paid, in the proper amounts, Andrews's temporary disability benefits from his date of injury through May 12, 2005.1 On April 11, 2007, Andrews filed an action before the South Dakota Department of Labor seeking additional workers' compensation benefits. The administrative law judge ruled in favor of Andrews and determined that Andrews's 2005 work-related injury was a major contributing factor to his neck pain and continued need for treatment.

[¶ 3.] On July 27, 2010, Andrews filed the present lawsuit against Twin City and Ridco alleging bad faith handling of his workers' compensation claim. Andrews asserted (1) common law bad faith; (2) aiding and abetting or civil conspiracy to commit fraud or statutory deceit and to deny first party insurance benefits in bad faith; (3) fraud or statutory deceit; and (4) retaliatory discharge. This action was based on the theory that Twin City systematically handled workers' compensation claims, including Andrews's claim, in bad faith under a claim handling program known as the "Large Loss Initiative" (the Initiative) — also referred to as the "Million Dollar List." Twin City's parent company, the Hartford Financial Services, Inc. (the Hartford), created the Initiative in October of 1998. The purpose of the program was to give greater attention to claims that had reserves in excess of $1,000,000. Over the course of the program, the Hartford identified 247 "large loss initiative" claims. Twin City provided e-mails from the Hartford indicating that the Initiative was discontinued in 2000. Andrews pointed out, however, that the Hartford mentioned the possibility of conducting a similar review of claims with a $500,000 reserve in an e-mail dated March 6, 2001.

[¶ 4.] Although Andrews's claim file was never reserved for more than $322,688 — falling short of both the $1,000,000 and the $500,000 thresholds — Andrews continued to argue that there was a connection between the Initiative and his claim file. Andrews based this assertion on the allegation that Twin City's claim-handling practices were similar to the practices employed under the Initiative. Andrews noted that "some of the very same Hartford claim department personnel involved in handling and supervising [the Initiative] program claims were also involved in [Twin City's] handling of Timothy Andrews'[s] claim[.]"

[¶ 5.] Andrews sought discovery of a number of documents from Twin City. On May 23, 2012, Andrews served Twin City with requests for production, which included the following two requested sets of documents at issue on this appeal: (1) the Andrews claim file2 and (2) 247 workers' compensation claim files administered under the Initiative.3 Twin City objected to both of these requests on the basis that certain documents were protected by the attorney-client privilege. Initially, Twin City refused to provide Andrews with any requested material containing attorney-client privileged information.

[¶ 6.] On November 26, 2012, Andrews filed a motion to compel Twin City to produce all of the documents responsive to his requests. Twin City opposed the motion and moved for a protective order. The court entered an order on February 11, 2013, requiring Twin City to submit the Andrews claim file notes to the court for an in camera review. The court stated that it would conduct the in camera review before making a "final determination as to whether some or all such documents are subject to discovery." The order further required Twin City to produce for Andrews the claim file notes for the 247 "large loss initiative" claim files. In accordance with the order, Twin City produced 199 of the 247 "large loss initiative" claim file notes (199 "other" claim file notes), which were all the claim file notes that existed at the time of Andrews's request. Twin City redacted the attorney-client privileged communications contained in these claim file notes.

[¶ 7.] The circuit court conducted a status hearing on May 28, 2013, to address the attorney-client privilege as it applied to both the Andrews and the 199 "other" claim files. The court stated that "if [the redacted material is] a communication from an attorney to the claims people or if it's a communication from claims people to the attorney seeking legal advice, it should not be produced. But otherwise, everything is subject to production from what I saw."

[¶ 8.] On June 7, 2013, the circuit court entered a second order confirming its statements during the status hearing, stating in pertinent part:

The court ordered Twin City to apply this standard when reviewing its redactions to the Andrews claim file notes and the 199 "other" claim file notes. The court further ordered that all of these documents be produced no later than June 21, 2013.4 Twin City reviewed each of the previous redactions and unredacted most, but not all, of the previously redacted attorney-client communications in the Andrews claim file notes and submitted the notes to Andrews and the court.

[¶ 9.] On October 22, 2013, Andrews filed a motion to compel Twin City to produce wholly unredacted claim file notes for the Andrews claim file and the 199 "other" claim files. Andrews argued that he was entitled to production of the unredacted attorney-client communications based on the following reasons:

Additionally, Andrews compared the Andrews claim file notes to three pages of heavily redacted claim file notes from Jackie Hammonds's claim file — one of the 199 "other" claim files.5 The redactions to the Hammonds claim file notes, Andrews contended, left the reader "with absolutely no idea of what decisions were made during that time period or of the grounds for those decisions." In comparison, Andrews argued that the extent of the redactions to the Andrews claim file notes is "conclusive as to the failure of these two logs at least to comply with the requirements of SDCL 58-3-7.4." Twin City responded that the attorney-client communications that were redacted constituted protected legal communications occurring after Andrews initiated the administrative proceeding against Twin City and, therefore, the communications were not a delegation of Twin City's claims handling responsibility.

[¶ 10.] Twin City filed for a protective order "limiting the scope of discovery to materials and information related to the Andrews claim, the sole subject matter of this case." Twin City argued that "[t]he additional discovery requested by [Andrews] is not likely to lead to the discovery of admissible evidence because there is no connection between these `other claim' files and [Andrews's] claim or alleged damages." The circuit court conducted a hearing on November 5, 2013, regarding Andrews's motion to compel and on Twin City's motion for a protective order. Twin City offered to provide the Andrews claim file notes for an in camera inspection, stating as follows: "If the [c]ourt would like us to produce ... samples, it's a lot of materials, but we would be happy to produce it again for an in camera review. That's as to the Andrews[] claim file, Your Honor. There's not been any showing of waiver." The circuit court rejected the offer for an in camera inspection.

[¶ 11.] The circuit court concluded that Twin City impliedly relied on the advice of counsel in handling Andrews's bad faith claim and the 199 "other" claims, and therefore waived the entire attorney-client privilege:

On November 14, 2013, the court filed an order denying Twin City's motion for a protective order. The court further ordered that Twin City "produce within 30 days completely unredacted copies of the claim file notes it has previously been ordered to produce in the present proceeding."

[¶ 12.] Twin City filed a motion for reconsideration and requested that the court allow it to file the disputed materials under seal for purposes of this appeal. Twin City also offered to provide the court with the 199 "other" claim file notes and a privilege log in order to conduct an in camera review. On December 3, 2013, the circuit court conducted a hearing on the motion. The court concluded that it would adhere to the earlier November 14 order, stating as follows:

In an order dated that same day, the court denied Twin City's motion to file the disputed materials under seal and ordered that Twin City produce unredacted copies of the Andrews claim file notes and the 199 "other" claim file notes.

[¶ 13.] Twin City raises the following issues for our review:

Standard of Review

[¶ 14.] Normally, we review "a circuit court's discovery orders under an abuse of discretion standard." Dakota, Minn. & E. R.R. Corp. v. Acuity (DM & E), 2009 S.D. 69, ¶ 47, 771 N.W.2d 623, 636. "An abuse of discretion `is a fundamental error of judgment, a choice outside the range of permissible choices, a decision, which, on full consideration, is arbitrary or unreasonable.'" In re Jarman, 2015 S.D. 8, ¶ 19, 860 N.W.2d 1, 9 (quoting Thurman v. CUNA Mut. Ins. Soc'y, 2013 S.D. 63, ¶ 11, 836 N.W.2d 611, 616). However, "[w]hen we are asked to determine whether the circuit court's order violated a statutory privilege," see SDCL 19-13-3 (Rule 502(b)), "it raises a question of statutory interpretation requiring de novo review." DM & E, 2009 S.D. 69, ¶ 47, 771 N.W.2d at 636 (quoting Maynard v. Heeren, 1997 S.D. 60, ¶ 5, 563 N.W.2d 830, 833).

Analysis

[¶ 15.] 1. Whether the circuit court erred in holding that, based on this record, Twin City impliedly waived the attorney-client privilege for the Andrews and the 199 "other" claim file notes.

[¶ 16.] The circuit court concluded that Twin City impliedly waived the attorney-client privilege for the Andrews claim file notes and the 199 "other" claim file notes. The court appeared to have relied on two theories to support its conclusion of implied waiver: (1) Twin City impliedly injected the advice of counsel into the bad faith litigation and (2) Twin City completely delegated its claim handling function to outside counsel. The court did not enter any evidentiary findings in support of its implied waiver conclusions as to the Andrews claim file notes and the 199 "other" claim file notes, nor did the court allow Twin City to submit the 199 "other" claim file notes under seal. Accordingly, our review of this issue is limited to the incomplete record before us on appeal.

Advice of counsel

[¶ 17.] Twin City argues that the circuit court erred when it applied a blanket waiver of the attorney-client privilege to the Andrews claim files notes and the 199 "other" claim file notes without first determining whether Twin City had affirmatively injected its reliance on the advice of counsel into the bad faith litigation.6 Twin City requests that this Court remand the case with instructions to enter specific and detailed findings regarding whether Twin City affirmatively injected its reliance upon the advice of counsel into the bad faith litigation such as would constitute an implied waiver under Bertelsen v. Allstate Insurance Co., 2011 S.D. 13, ¶¶ 50-53, 796 N.W.2d 685, 702-03.

[¶ 18.] The attorney-client privilege is described in SDCL 19-13-3 (Rule 502(b)).7 The client is the holder of the attorney-client privilege. State v. Catch the Bear, 352 N.W.2d 640, 645 (S.D.1984). As such, the attorney-client privilege "may only be waived by the client, or through [the client's] attorney." DM & E, 2009 S.D. 69, ¶ 51, 771 N.W.2d at 637. The burden of establishing a waiver of the attorney-client privilege rests with the party asserting the claim of waiver — in this case, Andrews. Id. In order to invoke a waiver of the privilege, "the record must `demonstrate that the client impliedly or explicitly consented to his attorney waiving the attorney-client privilege on his behalf.'" Id. (quoting State v. Rickabaugh, 361 N.W.2d 623, 625 (S.D.1985)).

[¶ 19.] One of the well-established exceptions to the attorney-client privilege is the "advice of counsel" exception. Kaarup v. St. Paul Fire & Marine Ins. Co., 436 N.W.2d 17, 21 (S.D.1989). When a party expressly relies on "the advice of counsel as an essential element of his defense, that party cannot refuse to disclose such advice." Id. However, "most sophisticated litigants will know better than to dig that hole for themselves." Bertelsen, 2011 S.D. 13, ¶ 50, 796 N.W.2d at 702 (quoting State Farm Mut. Auto. Ins. Co. v. Lee, 199 Ariz. 52, 13 P.3d 1169, 1181 (2000)). Certainly, "[a] privileged person would seldom be found to waive, if his intention not to abandon could alone control the situation." 8 John H. Wigmore, Evidence in Trials at Common Law § 2327, at 636 (J. McNaughton rev. ed.1961). In this case, the record is clear that, at this point in the bad faith litigation, Twin City has not expressly relied on the advice of counsel as an essential element of its defense.

[¶ 20.] Nonetheless, "[a]n insurer need not expressly rely upon the advice of counsel to waive the attorney-client privilege." Bertelsen, 2011 S.D. 13, ¶ 50, 796 N.W.2d at 702. An insurer may impliedly waive the attorney-client privilege "by injecting privileged communications into a case." Id. When "an insurer makes factual assertions in defense of a claim which incorporate, expressly or implicitly, the advice and judgment of its counsel, it cannot deny an opposing party `an opportunity to uncover the foundation for those assertions in order to contradict them.'" Tackett v. State Farm Fire & Cas. Ins. Co., 653 A.2d 254, 259 (Del.1995). "A waiver is to be predicated not only when the conduct indicates a plain intention to abandon the privilege, but also when the conduct (though not evincing that intention) places the claimant in such a position, with reference to the evidence, that it would be unfair and inconsistent to permit the retention of the privilege." Wigmore, supra ¶ 21, § 2388 at 855. See also Cerney v. Paxton & Gallagher Co., 83 Neb. 88, 119 N.W. 14, 16 (1908) ("Any other rule would enable the client to use as a sword the protection which is awarded him as a shield."), overruled on other grounds, Caster v. Moeller, 176 Neb. 446, 126 N.W.2d 485 (1964).

[¶ 21.] In Bertelsen, we adopted and supplemented the implied waiver test from Hearn v. Rhay, 68 F.R.D. 574 (E.D.Wash. 1975). Bertelsen, 2011 S.D. 13, ¶¶ 50-53, 796 N.W.2d at 702-03. The Hearn test provides three criteria for a court to consider in determining whether a party impliedly waived the attorney-client privilege:

Id. ¶ 50, 796 N.W.2d at 702 (alteration in original) (quoting Hearn, 68 F.R.D. at 581). "We supplemented[ed] the Hearn test to emphasize further the importance of protecting the attorney-client privilege." Id. ¶ 53, 796 N.W.2d at 703.

Id. (citations omitted). See also Harter v. University of Indianapolis, 5 F.Supp.2d 657, 664 (S.D.Ind.1998) (stating that "when a client files a lawsuit [or raises an affirmative defense] in which his or her state of mind (such as good faith or intent) may be relevant, the client does not implicitly waive the attorney-client privilege as to all relevant communications unless the client relies specifically on advice of counsel to support a claim or defense").

[¶ 22.] Here, Andrews argues that Twin City injected its reliance upon the advice of counsel into the bad faith litigation by embedding attorney-client privileged communications in the Andrews claim file notes and then redacting the communications. This practice of "embedding and redacting," Andrews contends, has compromised his "ability to determine [Twin City's] claim handling decisions and the grounds thereof."8 Andrews alleges that this practice constitutes an implied waiver of the attorney-client privilege because it is inconsistent with the needs of a plaintiff who asserts a claim of bad faith.

[¶ 23.] This theory of implied waiver asserted by Andrews misconstrues the Bertelsen test. Regardless of whether Twin City "embedded and redacted" attorney-client communications into the claim files notes as Andrews suggests, this practice does not demonstrate that Twin City injected its reliance on the advice of counsel into the bad faith litigation. Under Bertelsen, Andrews must demonstrate that Twin City asserted the attorney-client privilege as a result of an affirmative act, such as raising an affirmative defense, and then that Twin City specifically relied on the advice of counsel to support its argument that it acted in good faith. 2011 S.D. 13, ¶ 53, 796 N.W.2d at 703. There has been no such showing in this case.

[¶ 24.] At this point in the litigation, Twin City has merely alleged that it did not act in bad faith. See Bertelsen, 2011 S.D. 13, ¶ 53, 796 N.W.2d at 703 (stating that "[a] denial of bad faith or an assertion of good faith alone is not an implied waiver of the privilege"). Twin City has not placed at issue its subjective good-faith reliance on the advice of counsel such as would invoke an implied waiver of the Andrews and the 199 "other" claim file notes. See id.; Allstate Ins. Co. v. Clancy, 936 N.E.2d 272, 278 (Ind.Ct.App.2010), vacated, Allstate Ins. Co. v. Clancy, 950 N.E.2d 1201 (Ind.2011) ("[A]n insurer that states that it was not acting in bad faith because it acted in accordance with the applicable law neither expressly, nor impliedly, raises the defense of advice [of] counsel. In such an instance, it is not the subjective good-faith reliance on the advice of counsel that constitutes the defense, but the objective compliance with applicable law.").

[¶ 25.] Accordingly, the record does not support the circuit court's conclusion that Twin City impliedly waived the attorney-client privilege to the Andrews claim file notes and the 199 "other" claim file notes. The circuit court did not enter any findings as to whether Twin City injected, by an affirmative act, privileged communications into the litigation and thereby made the privileged information relevant to the bad faith litigation by specifically relying on the advice of counsel in support of its argument that it acted in good faith. See Bertelsen, 2011 S.D. 13, ¶ 53, 796 N.W.2d at 703. The circuit court's failure to determine whether Twin City interjected, by an affirmative act, privileged communications into the bad faith litigation constitutes reversible error.

[¶ 26.] Furthermore, the attorney-client privilege is waived only "to the extent necessary to reveal the advice of counsel [Twin City] placed at issue." Bertelsen, 2011 S.D. 13, ¶ 53, 796 N.W.2d at 703. See also People v. Madera, 112 P.3d 688, 691 (Colo.2005) (rejecting the finding that the defendant impliedly waived the entire attorney-client privilege on the basis that "`the court must impose a waiver no broader than needed to ensure the fairness of the proceedings before it'") (quoting Bittaker v. Woodford, 331 F.3d 715, 720 (9th Cir.2003)). Thus, it is possible that the circuit court also erred by concluding that Twin City waived the privilege in its entirety. But, without any findings to support its blanket waiver conclusion, we are unable to determine if a blanket waiver is necessary.

Complete delegation of claims handling function

[¶ 27.] The record reflects that the circuit court also relied on DM & E to support its conclusion that Twin City impliedly waived the attorney-client privilege. In DM & E, this Court held "that where an insurer unequivocally delegates its initial claims function and relies exclusively upon outside counsel to conduct the investigation and determination of coverage, the attorney-client privilege does not protect such communications." 2009 S.D. 69, ¶ 56, 771 N.W.2d at 638. Andrews contends that Twin City "completely delegated" its claim handling duties to outside counsel, and therefore the redacted communications were not protected by the attorney-client privilege because the attorneys were acting as claims adjusters in the underlying workers' compensation claim. See id.

[¶ 28.] An unequivocal delegation of the claims handling function is not an implied waiver of the attorney-client privilege; rather, it places the material "outside the scope of the asserted privileges." Id. ¶ 55 (quoting Mission Nat'l Ins. Co. v. Lilly, 112 F.R.D. 160, 163 (D.Minn.1986)). Thus, the circuit court had no basis to rely on DM & E to support its conclusion that Twin City impliedly waived the attorney-client privilege. Moreover, even if we were to address the merits of this argument, we are unable to discern based on the limited record before us whether Twin City delegated its claim handling function in the underlying workers' compensation action, and relied exclusively upon outside counsel.9

[¶ 29.] 2. Whether the circuit court erred in holding that Twin City impliedly waived the attorney-client privilege without conducting an in camera inspection of the claim file notes for the Andrews and the 199 "other" claim files.

[¶ 30.] The next issue is whether the circuit court was required to conduct an in camera review of the Andrews claim file notes and the 199 "other" claim file notes to determine whether Twin City either impliedly waived the attorney-client privilege, see Bertelsen, 2011 S.D. 13, ¶¶ 50-53, 796 N.W.2d at 702-03, or whether the communications were outside the scope of the asserted privilege. See DM & E, 2009 S.D. 69, ¶¶ 55-56, 771 N.W.2d at 638. Twin City argues that the circuit court should have conducted an in camera review of the disputed documents before making a determination as to implied waiver. We agree.

[¶ 31.] We have held that "the preferred procedure for handling privilege issues is to allow for an in camera review of the documents[.]" DM & E, 2009 S.D. 69, ¶ 49, 771 N.W.2d at 637. The "party asserting privilege must make a showing to justify withholding materials if that is challenged." Id. ¶ 48, 771 N.W.2d at 636 (quoting 8 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2016.1 (2009)). "The question whether the materials are privileged is for the court, not the party, to decide, and the court has a right to insist on being presented with sufficient information to make that decision." Id. (quoting 8 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2016.1 (2009)). "The most feasible way for an insurer to satisfy [the burden of establishing that materials sought to be excluded from discovery on the basis of privilege] is to obtain judicial review of the materials in camera." Unklesbay v. Fenwick, 167 Ohio App.3d 408, 855 N.E.2d 516, 522 (2006).

[¶ 32.] In this case, there are two sets of documents at issue: the Andrews claim file notes and the 199 "other" claim file notes. In the February 11, 2013 order, the circuit court instructed Twin City to produce the Andrews claim file notes for the court for an in camera review.10 Twin City complied and submitted the Andrews claim file notes to the court for an in camera review. The circuit court then issued an order on June 7, 2013, requiring Twin City to conform its redactions to the analysis set forth in the order. Twin City produced a privilege log for the Andrews claim file notes on July 31, 2013, pursuant to SDCL 15-6-26(b)(5). The privilege log consisted of an unredacted copy of the claim file notes with the redacted communications highlighted in yellow.11 Then, during the November 5, 2013 hearing, Twin City again offered to provide the Andrews claim file notes to the court for an in camera inspection.12 There is no indication in the record that the circuit court conducted an in camera review of the Andrews claim file notes once Twin City had complied with the June 7, 2013 order and unredacted more of the attorney-client communications. Nor did the circuit court make any findings about the propriety of each redaction made by Twin City in the Andrews claim file notes.

[¶ 33.] Regarding the 199 "other" claim file notes, Twin City provided the circuit court with copies of those documents pursuant to the February 11, 2013 order. The first time Twin City offered to provide the court with unredacted copies of the 199 "other" claim file notes for an in camera review was in its brief on the motion for reconsideration after the November 5, 2013 hearing.13 Twin City did not offer to provide the court with the 199 "other" claim file notes for an in camera review during or before the November 5, 2013 hearing.14 At the December 3, 2013 hearing, Twin City again offered to provide the 199 "other" claim file notes to the court for an in camera review. The court rejected Twin City's offer and stated that "without a privilege log on this, I don't think there's anything that the Supreme Court is going to come forward.... I think that the process was not followed in this matter from the outset, and my ruling stands."

[¶ 34.] Andrews argues that this Court has not held that there is a procedural requirement for a circuit court to conduct an in camera review before ruling on a party's assertion of the attorney-client privilege, but, rather, this Court has merely said that an in camera review is the preferred method. See DM & E, 2009 S.D. 69, ¶ 49, 771 N.W.2d at 637; Arnoldy v. Mahoney, 2010 S.D. 89, ¶ 33, 791 N.W.2d 645, 657. Thus, according to Andrews, the circuit court was not required to conduct an in camera review of the disputed documents. We disagree. The circuit court could not resolve the issue of implied waiver and complete delegation in this case without first conducting an in camera review of the disputed documents. Moreover, the circuit court indicated that it would conduct an in camera review of the Andrews claim file notes. However, even though Twin City complied and provided the court with the Andrews claim file notes, the court failed to make any findings to support its conclusions. Twin City subsequently offered to provide the court with copies of the 199 "other" claim file notes for in camera review, which offer the court refused. While we do not hold that there is a procedural requirement to conduct an in camera review before ruling on a party's assertion of the attorney-client privilege, the present facts establish that Twin City satisfied its burden of triggering the circuit court's obligation to conduct an in camera review of the disputed documents.15 See DM & E, 2009 S.D. 69, ¶ 48, 771 N.W.2d at 636 (holding that the "party asserting privilege must make a showing to justify withholding materials if that is challenged"). See also Unklesbay, 855 N.E.2d at 522 (stating that "[t]he most feasible way for an insurer to satisfy this burden is to obtain judicial review of the materials in camera").

[¶ 35.] Upon review of the record, we conclude that the circuit court abused its discretion in failing to conduct an in camera review of the Andrews claim file notes and the 199 "other" claim file notes. Based on the facts of this case, an in camera review is necessary to determine whether Twin City completely delegated its claim handling function or impliedly waived its attorney-client privilege by injecting its reliance upon advice of counsel into the bad faith litigation by an affirmative act. See DM & E, 2009 S.D. 69, ¶ 56, 771 N.W.2d at 638; Bertelsen, 2011 S.D. 13, ¶ 53, 796 N.W.2d at 703.

[¶ 36.] An in camera review is necessary in this case to determine whether Twin City "unequivocally delegate[d] its initial claims function and relie[d] exclusively upon outside counsel to conduct the investigation and determination of coverage[.]" DM & E, 2009 S.D. 69, ¶ 56, 771 N.W.2d at 638. The propriety of any determination of complete delegation rests on the nature and content of the communications. "To the extent that [Twin City] acted as claims adjusters, then, their work-product, communications to client, and impressions about the facts will be treated herein as the ordinary business of plaintiff, outside the scope of the asserted privileges." Id. ¶ 55 (quoting Lilly, 112 F.R.D. at 163). Thus, in order to determine whether Twin City completely delegated its claim handling function to outside counsel, the circuit court must conduct an in camera review of and make findings regarding the claim file notes at issue.

[¶ 37.] Likewise, the circuit court should have conducted an in camera review of the claim file notes before concluding that Twin City impliedly waived the attorney-client privilege by relying on the advice of counsel. See Bertelsen, 2011 S.D. 13, ¶ 53, 796 N.W.2d at 703. The attorney-client privilege is waived only to the "extent necessary to reveal the advice of counsel [Twin City] placed at issue." Id. The circuit court erred when it applied a blanket waiver of the attorney-client privilege without determining the extent, if any, of the implied waiver. An in camera review of the Andrews claim file notes and the 199 "other" claim file notes would have enabled the circuit court to articulate findings and make that determination.

[¶ 38.] 3. Whether the circuit court must analyze waiver of the attorney-client privilege under the respective state law where each of the 199 "other" claim files arose.

[¶ 39.] Twin City contends that the proper legal analysis of whether it waived the attorney-client privilege with respect to the 199 "other" claim file notes is that the claim files should be analyzed pursuant to the state law governing each file. Twin City points out that most of the 199 "other" claim file notes originated in other jurisdictions and have no connection with South Dakota. Andrews responds that "the threshold problem with [Twin City's] proposed requirement is not the practical difficulty of conducting such an analysis ... but rather the fundamental incoherence of the proposal."

[¶ 40.] In Chambers v. Dakotah Charter, Inc., we adopted "the most significant relationship approach to govern multi-state tort conflicts." 488 N.W.2d 63, 67 (S.D. 1992) (adopting Restatement (Second) of Conflict of Laws §§ 6, 145 (1971)). In determining the choice of law regarding an assertion of a privilege, the Restatement provides as follows:

Restatement (Second) of Conflict of Laws § 139 (1971) (emphasis added).16 For privileged information, "[t]he state which has the most significant relationship with a communication will usually be the state where the communication took place[.]" Restatement (Second) of Conflict of Laws § 139 cmt. e (1971).

[¶ 41.] To the extent that the 199 "other" claim file notes have no connection to South Dakota other than the circuit court compelling their production, the "most significant relationship" test is the appropriate analysis for evaluating whether the attorney-client privilege is waived for each claim file. The state with the "most significant relationship" to each claim file is generally the state where the communications took place. Once the circuit court has applied the "significant relationship" test and selected the state that satisfies the test, the court must apply the law of that state to determine whether the attorney-client privilege is waived. Accordingly, the circuit court on remand shall apply the "most significant relationship" test to some or all of the 199 "other" claim files as appropriate, if the court finds that any of the 199 "other" claim files are relevant to the bad faith litigation, in order to determine the appropriate law to be utilized to evaluate whether the attorney-client privilege is waived.

CONCLUSION

[¶ 42.] We reverse and remand for findings as to whether Twin City injected, by an affirmative act, its reliance upon the advice of counsel into the bad faith litigation thereby making the disputed communications relevant to the case such that would constitute an implied waiver of the attorney-client privilege. See Bertelsen, 2011 S.D. 13, ¶ 53, 796 N.W.2d at 703. If the circuit court finds that Twin City impliedly waived the attorney-client privilege by injecting the advice of counsel into the bad faith litigation, then the court must conduct an in camera review to determine and make findings as to the extent that the attorney-client communications should be revealed. See id. (holding that "a client only waives the privilege to the extent necessary to reveal the advice of counsel he placed at issue"). Regarding the claim of complete delegation, the circuit court must conduct an in camera review of the disputed documents to determine and make findings as to whether Twin City unequivocally delegated its initial claims function and relied exclusively upon out-side counsel to conduct the investigation and determination of coverage. See DM & E, 2009 S.D. 69, ¶¶ 55-56, 771 N.W.2d at 638.

[¶ 43.] In addition, Twin City shall submit to the circuit court some or all of the 199 "other" claim files along with a privilege log, if the court determines that any of those claim files are relevant to this bad faith litigation, for an in camera review. See id. To the extent that any of the 199 "other" claim files are relevant to the bad faith litigation, the circuit court must apply the "most significant relationship" test to each of the relevant 199 "other" claim files in order to determine under the law of the appropriate state whether the attorney-client privilege was waived.

[¶ 44.] Reversed and remanded with directions for proceedings consistent with this opinion.

[¶ 45.] GILBERTSON, Chief Justice, and ZINTER and SEVERSON, Justices, and KONENKAMP, Retired Justice, concur.

[¶ 46.] KERN, Justice, not having been a member of the Court at the time this action was assigned to the Court, did not participate.