Chapter 4. Insurance defense practice - Consideration of insured's personal or business interests

4:18. Insurance Defense Practice-- Consideration of Insured's Personal or Business Interests

An often-overlooked area of conflict of interest involves the personal or business interests of the insured defendant that transcend the facts of the case. Once example is whether the insurance defense lawyer has a duty to inform the insured client of an insurer’s potential insolvency, so that the client might take measures to protect his assets.[1] Perhaps more common is the situation that arises where there is a long-standing business relationship between a physician and hospital, trucking company and broker, or large retail chain and a manufacturer that sells products primarily through that retail chain. There may be an agreement by one entity indemnifies another, which in turn tenders it to the manufacturer's insurer. The insurer, having no concern whatsoever for the insured's business relationship with the retailer, might direct the insurance defense counsel it retains to raise all manner of technical defenses in an effort to avoid taking over the defense, thereby placing the insured's primary business relationship at risk. In such a situation the defense counsel hired by the manufacturer's insurer may advise the insured to have separate counsel address the issue with the insurer and consider the provisions of Rule of Professional Conduct 2.2, Lawyer as Intermediary.




[1] Douglas R. Richmond, Emerging Conflicts Of Interest In Insurance Defense Practice, 32 Tort & Ins. L.J. 69 (Fall, 1996).

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