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Insurer's Duty to Prosecute the Policyholder's Affirmative Claims: Ethical and Coverage-Savvy Litigation Strategies

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

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, May 23, 2023

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This CLE webinar will discuss the scenarios when an insurer's duty to defend requires it to prosecute the policyholder's affirmative counterclaims, crossclaims, or third-party claims. The panelist will also discuss Model Rules of Professional Responsibility 1.1 (Competence), 1.2 (Scope of Representation), 1.3 (Diligence), and 1.7 (Conflicts of Interest) and when the failure to pursue affirmative relief claims might fall below the standard of care owed by attorneys that represent litigants engaged in defensive prosecution of claims "conducted against liability."

Description

Typically, affirmative relief claims, including counterclaims, crossclaims, or third-party claims, do not fall within the duty to defend. But when the policyholder has strategically defensive affirmative counterclaims, for example, theft of trade secrets in an unlawful discharge case, many courts have held that prosecution of those affirmative counterclaims is within the scope of coverage and duty to defend. This scenario flourishes in business tort, employment, and intellectual property disputes.

The insurer's obligation to fund affirmative relief may also arise if its policyholder sues a third party and that third party counterclaims against the policyholder. If the insurer must defend the counterclaim, it may also end up financing the policyholder's lawsuit for affirmative relief if that affirmative relief is inextricably tied to the defense of the counterclaim. Of course, the insurer is subrogated to any recovery for attorneys' fees and may end up recovering all its costs.

The insurer can also sometimes be obligated to defend based on allegations arising in parallel legal proceedings originating from a common core of operative facts. The program will review the distinct ways that jurisdictions across the nation have addressed this issue.

Listen as David A. Gauntlett, Principal at Gauntlett Law, discusses when the duty to defend includes the duty to pay or seek affirmative relief, and why it is often in the best interests of the insurer as well as the policyholder.

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Outline

  1. THE DUTY TO DEFEND
    1. Defining "Defense" of Claims
    2. Pertinent Policy Language
    3. When Policy Language is "Ambiguous"
    4. The "In For One, In For All" Rule
    5. The Breadth of the "Conducted Against Liability" Doctrine
  2. WHEN INSURERs SEEK TO CONTROL THE DEFENSE
    1. The Right to Independent Counsel
    2. The Restatement of Insurance Coverage
    3. Affirmative Prosecution of Claims While the Defense is Provided by "Appointed Counsel"
  3. WHEN DEFENSIVE COUNTERCLAIMS OR CROSS-CLAIMS TRIGGER INSURER FUNDING DUTIES
    1. Inextricably Intertwined Claims
    2. Strategically Defensive Claims
    3. Parallel Proceedings
  4. RESPONDING TO INSURER ARGUMENTS
  5. STRATEGIES FOR POLICYHOLDERS

Benefits

The panelist will review these and other key issues:

  • When is affirmative relief inextricably intertwined with defense?
  • What are the different approaches across jurisdictions?
  • What is the standard of care in representing policyholders?
  • What can policyholders learn from Fortune 50 businesses about harnessing the duty to defend?
  • How can insurers benefit from seeking affirmative relief?

Faculty

Gauntlett, David
David A. Gauntlett
Principal
Gauntlett Law

Mr. Gauntlett is lead counsel in intellectual property antitrust coverage disputes pending in over 30 states throughout...  |  Read More

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