Insurer Liability for Retained Counsel's Negligence: Direct and Indirect Claims for Actions of Retained Counsel

Recording of a 90-minute CLE webinar with Q&A

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Conducted on Wednesday, November 18, 2020

Recorded event now available

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Course Materials

This CLE course will examine when the negligence or malpractice of the defense counsel that the insurer retained to represent its policyholder may give rise to extra-contractual bad faith damages. The program will also discuss when the insurer itself may have direct claims against retained counsel for negligence.

Description

Under CGL insurance policies, the insurer has a "duty to defend" its policyholder in lawsuits alleging covered claims for bodily injury or property damage. This duty to defend comprises several "sub-duties," including a duty to provide competent counsel, to adequately fund the defense, to monitor the case and retain counsel (to facilitate settlement), and to pay for independent counsel when a conflict of interest arises between the insurer and insured.

Once an insurer assumes the duty to defend, the insurer is held to a reasonable standard of care in carrying out that duty. Insurers may fall short by overriding outside counsel's professional judgment and knowingly authorizing acts or omissions of the attorneys to such a degree that retained counsel is not independent. It is often difficult to determine when the insurer pushes counsel across the line from independent actor to acting as an extension of the insurer.

Policyholders may accuse their insurers of retaining unqualified counsel, failing to supervise or monitor the case, refusing to fund proper investigations and experts, or providing inadequate resources to rebut the plaintiff's claims. In such cases, the policyholder may assert a direct cause of action based on fault.

Listen as our experienced panel guides counsel for insurers and counsel for policyholders through this complex area of liability.

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Outline

  1. Duty to provide competent counsel
  2. Duty to adequately fund the defense
  3. Duty to monitor the case and retained counsel
  4. Duty to pay for independent counsel
  5. Theories of liability
    1. Negligence and gross negligence
    2. Agency and vicarious liability
    3. Section 12 of the Restatement of Insurance Liability
    4. Insurer suits against outside counsel

Benefits

The panel will reivew these and other key issues:

  • What exactly is the "duty" to defend?
  • How can the insurer breach the standard of care to provide competent counsel, fund the defense, and avoid conflicts?
  • How extensive is the duty to monitor outside counsel?
  • How much control of outside counsel by the insurer is too much control?
  • Can the insurer ever be vicariously liable?

Faculty

Lippa, Alison
Alison V. Lippa
Senior Counsel
Nicolaides Fink Thorpe Michaelides Sullivan

Ms. Lippa has over 25 years’ litigation experience, including in the representation of insurers in state and...  |  Read More

Overstreet, David
David W. Overstreet
Partner
Earhart Overstreet

Mr. Overstreet focuses his practice on commercial litigation and professional liability. He spends a significant amount...  |  Read More

Waneka, Nelson
Nelson A. Waneka
Shareholder
LLevin | Sitcoff | Waneka

Mr. Waneka specializes in insurance recovery. He has extensive experience litigating delayed and denied insurance...  |  Read More

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