Georgia Injury Lawyers Blog
The Tripartite Relationship
When a liability insurer retains defense counsel to represent an insured, the resulting relationship among the three parties is often called a “tripartite relationship.” This relationship is unique in the insurance context. Georgia, like a majority of states, generally holds that the defense attorney has two clients: the insurance company and the insured. In most situations, the objectives of the insurer and the insured align and the tripartite relationship is beneficial to all parties. Insurers have an interest in controlling the costs of litigation, which can be done through billing arrangements with appointed counsel. In turn, defense attorneys receive regular business from their insurance company clients and are generally well compensated for their services. Meanwhile, the insured is to be provided a defense from competent counsel with expertise in defending against claims brought against the insured.
Nonetheless, any time multiple parties are involved in such a relationship, ethical issues arise. One court stated that the ethical dilemma created by the tripartite relationship would “tax Socrates, and no decision or authority … furnishes a completely satisfactory answer.” Lawyers appointed by the insurance company may be in-house attorneys, staff counsel, “captive” law firms, or panel counsel. Regardless of the label, the attorney appointed by the insurance company to represent the insured typically has a business or employment relationship (often a long-standing one) with the insurer. The laws of human nature attendant to this relationship are difficult to ignore.