Triangulation: Plaintiff, Defendant, Insurance Company

Lawyers, including defense lawyers in civil cases, have a duty of loyalty to a client. That loyalty is described by the Supreme Judicial Court in its commentary to the Ethical Rules as “an essential element.” Given that the liability insurer pays the defense lawyer and indeed hires him/her, a reasonable question arises as to whether that attorney can be properly independent. The duty of loyalty runs to the defendant and not the liability insurer. The rules require that if there is a conflicting interest, the insurer is required to provide special counsel for the insured, an arrangement that seeks the special counsel’s professional independence.

The reality is that seldom is a special counsel retained on behalf of the insured. (Of course, nothing prohibits an insured from paying at his/her own expense his own attorney to represent him in addition to the insurance attorney). Under any scenario, the client is the insured, not the insurer. It leaves the rest of us wondering because there are scenarios where the insured “can be held out to dry.” The fiduciary responsibility that flows to the insured by his/her retained attorney is at risk. This is a development which should not be overlooked by the plaintiff’s attorney. Over the years, many plaintiff’s lawyers have said that they will settle a case within the policy limits, an offer which should be attractive to an insured, if not the insurer. What happens then when the insurer refuses? Future blogs will discuss these scenarios which create problems for the defense and perhaps opportunities for the plaintiff.