Article by Robert E. O'Malley
This Article examines the conflict of interest issues that frequently arise in the insurance defense practice. Upon examination it becomes clear that these issues are neither as complex nor as difficult to resolve as they appear. The source of much of the confusion in liability insurance litigation is the “dual-client” doctrine, namely, the increasingly well-entrenched rule that the insurance defense counsel is deemed to have two clients in any given case: the insurer and the insured.
Within the framework of the dual-client doctrine, however, the insured is favored over the insurer. Under certain circumstances, in fact, the insured is deemed to be defense counsel's sole client.
The dual-client doctrine is a confusing and increasingly useless anachronism. It is unsound as a matter of policy, law, and legal ethics. This Article argues that the insured should be deemed to be the only client of defense counsel in every case. That is not to say, however, that the insurer should be treated by defense counsel with the disdainful indifference reserved for a client's adversary. The complex and interdependent relationship between and among the insured, the insurer, and defense counsel, as well as the collateral relationship between defense counsel and the insurer, demand that the insurer's contractual rights and financial interest in the matter be considered and respected by defense counsel.
About the Author
Robert E. O'Malley. Vice Chairman and Loss Prevention Counsel, Attorneys' Liability Assurance Society, Inc., Chicago, Illinois.
Citation
66 Tul. L. Rev. 511 (1991)