Articles Tagged with Insurance Law Ethics

Defense of an Insured by Insurer’s In-House Counsel

A trend toward the use of in-house counsel to defend insureds has emerged. Insurers benefit because in-house attorneys become specialists not only in general insurance law, but also in the particular workings of their employer.  Additionally, the insurer recognizes savings through not paying outside counsel bills.

When an in-house attorney represents an insured, unique ethical issues may arise, including whether the attorney is assisting the insurer in the unauthorized practice of law. The North Carolina Supreme Court held that “a licensed attorney who is a full-time employee of an insurance company [may not] ethically represent one of the company’s insureds as counsel of record” as doing so would constitute aiding the insurer in the unauthorized practice of law. There is little doubt that the use of in-house attorneys should intensify attention on the tripartite relationship.  However, the majority of jurisdictions – including Georgia – hold that an in-house attorney may defend an insured without engaging the insurer in the unauthorized practice of law.

Multiple Insureds

Where multiple insureds are entitled to a defense under the same policy for the same claim, the insurer often assigns the same defense counsel to defend the insureds, creating potential conflicts.  For example, a passenger in a car may sue both the driver and the owner of the car after a wreck.  An owner and a driver are typically entitled to a defense under the same policy.  However, the driver and the owner may have conflicting interests if, for example, the owner asserts that the driver was operating the car without permission.

If hired to represent multiple insureds under the same policy, defense counsel should, at the inception of the representation