Ethics of Insurance Defense Under a Reservation of Rights: Ethical Rules, Conflicts, Right to Independent Counsel

This CLE webinar will discuss how policyholders, insurers, and panel counsel determine whether a reservation of rights (ROR) creates a disqualifying conflict of interest for panel counsel at various stages of the case, and the possible consequences if a conflict exists. We will offer guidance and best practices for insurers, policyholders, panel counsel, and independent counsel. The program will discuss roles in the tripartite relationship, defense counsel's ethical obligation if a conflict arises, and examples of disqualifying conflicts in various jurisdictions.

When an insurer agrees to defend its policyholder under a reservation of its right to later litigate or deny coverage, a particularly delicate and dynamic tripartite relationship is created. Everyone involved in this relationship needs to be aware of conflicts and potential conflicts of interest, and sometimes determine how to use them to their advantage.

What constitutes a conflict within the context of the tripartite relationship is often hotly contested. The case law continues to develop and no less than 50 American jurisdictions have issued rulings on these important issues.

An insurer's reservation of rights will necessitate panel counsel to evaluate many ethical duties: undivided loyalty (Rule 1.7), disclosure (Rule 1.4), confidentiality (Rule 1.6), and limitations on compensation from insurers (Rule 1.8). At the same time, policyholders need to make a determination of whether the convenience and known competence of panel counsel is outweighed by the advantages of independent counsel.

Listen as this esteemed panel examines the scope of the appointed defense counsel's ethical obligations, discusses the insured's right to independent counsel, reviews emerging issues in independent counsel litigation, and offers best practices for policyholders and insurers.