Insurer Liability for Retained Counsel's Malpractice: Causes of Action, Standards of Care, and Insurer Remedies

Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Insurance
- event Date
Tuesday, November 7, 2023
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will examine how and when an insurer is liable for the malpractice of defense counsel that an insurer selected to represent its policyholder. The panel will also address when retained counsel's malpractice may lead to claims for extra-contractual bad faith damages. The program will also review when the insurer itself may have direct claims against retained counsel for negligence.
Faculty

Ms. Lippa has over 25 years’ litigation experience, including in the representation of insurers in state and federal courts in insurance coverage and bad faith litigation. She has litigated cases arising under commercial general liability policies in mass tort and environmental claims, among others, and in multi-party coverage disputes involving issues such as contribution, number of occurrences, exhaustion and allocation.

He represents policyholders with claims against insurance companies. His insurance coverage law experience includes handling coverage actions on behalf of insureds relating to bad faith claims, defense obligations, law and ordinance exclusions, breach of health insurance contract, crime coverage, employment liability coverage and coverage for asbestos-related claims and environmental liability.

Ms. Dunham has extensive experience counseling domestic and London-based clients on novel and complex issues involving various coverage lines, including commercial general liability, professional liability, first-party property, commercial auto, public entity, and reinsurance. She also represents insurers in insurance coverage and bad faith disputes and has successfully litigated coverage issues in state and federal courts. Ms. Dunham regularly advises her clients on claims handling strategy and navigating high-exposure matters through to favorable resolution. She also assists clients in drafting policy language, evaluating underwriting issues, and responding to Department of Insurance inquiries.

Mr. DeMarco is a Partner in the firm’s Basking Ridge office. He focuses his practice in the areas of insurance and reinsurance coverage litigation. Mr. DeMarco has litigated matters and counseled insurers with respect to a wide variety of insurance claims and policies concerning first-party property damage, inland marine, general liability, professional liability, directors’ and officers’ liability, pollution liability, employment practices liability, OCP liability, additional insured coverage, and umbrella/excess coverage. He routinely handles all pre-trial litigation activities, including written discovery, depositions, motion practice and the negotiation of settlements. In addition to practicing in federal and state courts in New Jersey and New York, Mr. DeMarco has experience litigating cases in Pennsylvania, the District of Columbia, Texas, New Hampshire, and Vermont.
Description
When an outside lawyer retained by an insurer to represent its policyholder commits malpractice, courts differ about whether the insurer may be vicariously liable for the retained attorney's malpractice, or whether retained counsel is a true independent contractor for which the insurer is normally not responsible. Independent contractor status can disappear, however, if an insurer turns counsel into an extension of itself.
Even if an insurer is not vicariously liable for retained counsel's malpractice, the insurer may be directly liable to the policyholder for breaching its own duty to defend, for example by 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. The standard of care to which an insurer is held remains under debate.
How these issues are resolved affects who can sue and recover from the retained counsel.
Listen as our experienced panel guides counsel for insurers and counsel for policyholders through this complex area of liability.
Outline
- Overview
- Finding a duty to defend
- Rights and duties – three sides to the story
- Breach of duty to defend -- policyholder suits against insurers for malpractice of retained counsel
- Practical considerations
- Policyholder’s perspective
- The tripartite relationship
- Selection of defense counsel
- Who “controls” the defense?
- Independent counsel and private counsel
- Litigation against defense counsel
- Agency and vicarious liability
- Independent contractor
- Section 12 of the Restatement of Insurance Liability
Benefits
The panel will review these and other key issues:
- What is the role of outside counsel guidelines in liability?
- How much control of outside counsel by the insurer is too much control?
- Can the insurer ever be vicariously liable?
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