In answering the first question, the Court was clear that when an insurance carrier hires an attorney to represent its insured, the attorney-client relationship is between the attorney and insured. The attorney’s fiduciary duty is to the insured/client, and not the insurer.
Jan 01, 2004 · Under subparagraph 1.8(f), a lawyer may not accept compensation from an insurance company to represent its insured unless the lawyer exercises independent …
You may think that the lawyer works for the insurance company. In some instances, the lawyer might work at a “captured” firm, so that could be technically true. Usually, the lawyer is part of …
Under certain circumstances, an insurer is obligated under a liability insurance policy to designate and compensate an attorney for defense of its insured. Unless otherwise specified by contract …
Dec 28, 2014 · Insurance Law Lawyers all know that in many instances an insurance company hires the attorney who represents a person or entity being sued. The issue — December 28, …
The most important lesson to take from this is that the retained defense counsel owes its duty of loyalty to the insured and, once it has been retained to represent the insured, it cannot help the insurance company decide coverage issues involving the same insured.
This does not mean that an attorney, or a firm, can be retained only to defend insureds or retained only as coverage counsel. They can do both, just most often not for the same insured, and definitely not on the same claim, as long as there is no conflict. Knowing the difference between the two roles benefits everyone. Every adjuster should keep this in mind when assigning and retaining counsel; it will do much to ensure a successful outcome of the case, and that, after all, is the goal.
You may think that the lawyer works for the insurance company. In some instances, the lawyer might work at a “captured” firm, so that could be technically true. Usually, the lawyer is part of an outside law firm that has a business relationship with the insurance company. The insurance company pays the lawyer to represent you, the client. It’s tempting to think that when the insurance company pays to defend you, the lawyer favors the insurance company’s interests over the client’s interests. So, what exactly are a lawyer’s ethical duties to the client?
In most litigation, lawyers hired under an insurance policy will represent the defense. We sometimes get calls from defendants upset with their lawyers, or have questions about their lawyers’ actions, or loyalties. Here’s how the attorney-client-insurance company relationship is supposed to work.
If the insurance company isn’t happy, it might refuse to pay all of the bills, or not hire the lawyer again. Law firms are a business, too, and face the same business pressures.
First, the client must consent. Second, there can be no interference with the lawyer’s independent professional judgment on behalf of their client. And third, the lawyer must protect the client’s confidential information, per Rule 1.6. But this can put the defense lawyer in an awkward position.
The insurance company pays the lawyer to represent you, the client. It’s tempting to think that when the insurance company pays to defend you, the lawyer favors the insurance company’s interests over the client’s interests.
You may think that the lawyer works for the insurance company. In some instances, the lawyer might work at a “captured” firm, so that could be technically true. Usually, the lawyer is part of an outside law firm that has a business relationship with the insurance company. The insurance company pays the lawyer to represent you, the client.
If you admit fault, your lawyer cannot, or at least should not, tell you to lie. If you don’t want to go to trial, but you feel like your lawyer is forcing you to, consider putting your concerns in writing to your lawyer and your insurance company.
What does "primary" client mean in terms of a lawyer's conduct? It appears the attorney at least owes the insured a heightened duty of communication and loyalty. See RPCs 92 and 118. The crux of dual client representation, however, is uncompromising allegiance to two clients. That is, absent a waiver, the attorney may advocate and pursue only courses of action that make both clients better off. Therefore, despite the insured's "primary" designation, where the interests of the insured and insurer diverge, the attorney may not subordinate the interests of the insurer in favor of the insured.
1 In addition, Rule 7.2 prohibits an attorney from assisting the client in conduct the attorney knows to be fraudulent.
In all likelihood, however, no conflict will exists because, upon recommendation of the withdrawing attorney, the insured will retain separate, independent counsel for his defense. 3 Unless the insurer, by reason of attorney withdrawal, received a heads up as to a potential coverage dispute, however, it may be no better off than it was in the first instance.
Many practitioners of insurance defense maintain that no conflict exists because the insurer has an absolute obligation to defend the insured so long as the complaint alleges facts which, if proven at trial, would be covered by the policy, whether or not such claims are baseless or fraudulent. Although recent case law indicates that under certain liability policies, the insurer's duty to defend is governed by the four corners of the claimant's complaint, 2 North Carolina has not acknowledged a similar duty to defend on the part of insurance defense attorneys when faced with a conflict of interest or client fraud. See Rules 5.1 and 7.2, CPR 255 and RPC 103. Moreover, the insurer's contractual duty to defend irrespective of the merits of the complaint, does not eliminate the conflict for an attorney with knowledge of collusion between the insured and the claimant because the attorney cannot act in the insurer's best interest. If the attorney could divulge the insured's fraudulent behavior, the insurer could choose either to defend under reservation of right, thereby preserving its right to contest coverage later, or to decline to defend, relying upon proof of fraud or collusion to absolve it from any subsequent breach of contract or bad faith claim by the insured. Because the attorney's duty of confidentiality to the insured materially hinders representation of the insurer, the attorney must also advise the insurer to seek separate counsel. The theory is, where a fundamental conflict of interest exists, both the insured and insurer would be better off with separate counsel whose loyalty is not divided.
Other authorities suggest that continued representation of the insurer, where the attorney has knowledge of the insured's fraud, violates Rule 7.2 inasmuch as the attorney is acquiescing in such conduct. Even if we assume that representation of the insurer does not violate any ethical duty not to assist client fraud, the attorney is still faced with a conflict of interest under Rule 5.1. The attorney's duty of confidentiality owed to the insured conflicts with the insurer's interest in limiting its expenditures to those covered by the policy. Furthermore, the insurer cannot consent to representation because the confidentiality rules preclude the attorney from fully disclosing the reason for withdrawal. See Rule 5.1.
The theory is, where a fundamental conflict of interest exists, both the insured and insurer would be better off with separate counsel whose loyalty is not divided. The preceding section discusses an insurance defense attorney's professional duties under our Rules of Professional Conduct.
The insurer appoints defense counsel, in accordance with the policy, to defend in the name of the insured. During the course of the attorney-client relationship, the insured reveals that he and the claimant set up the whole incident to obtain insurance money under the policy. What should the attorney do?
You could retain your own counsel to co-represent you, but you need to make certain he does not "interfere" with the defense provided by the insurance company. In any event, you would likely have to pay for your own counsel. More. 0 found this answer helpful. found this helpful.
If the insurance company is paying for the attorney without any reservation of rights, ie. a suggestion that they may assert an exclusion as a basis to deny coverage or come after you fees, then they have a right to control the defense. You could retain your own counsel to co-represent you, but you need to make certain he does not "interfere" with the defense provided by the insurance company. In any event, you would likely have to pay for your own counsel.