independent counsel
TRANSCRIPT
© 2015 Tressler LLP
Presented by:
One Beacon, Chicago
Todd M. Rowe
INDEPENDENT COUNSEL
April 2016
© 2015 Tressler LLP
San Diego Navy Federal Credit Union v. Cumis Insurance Company, 162 Cal.App.3d 358 (1984)
“CUMIS” Counsel Civil Code §2860 now supersedes Cumis Maryland Casualty Co. v. Peppers, 64 Ill.2d 187, 355 N.E.2d 24.
“CUMIS”/“PEPPERS” COUNSEL
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» Fla. Stat. § 627.426(2). Claims administration.
» Murphy v. Urso, 88 Ill.2d 444 (1981)
» Public Service Mut. Ins. Co. v. Goldfarb, 53 N.Y.2d 392 (1981)
» Employers Cas. Co. v. Scott Elec. Co., 513 S.W.2d 642 (Tex.App. 1974)
INDEPENDENT COUNSEL
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Conflict ALWAYS exists under any ROR at all.
Kansas Bankers Surety Co. v. Lynass, 920 F.2d 546, 549 (8th Cir. 1990) (South Dakota Law); Continental Ins. Co. v. Bayless & Roberts, Inc., 608 P.2d 281, 289 (Alaska 1980); Salonen v. Paaneneu, 320 Mars. 568; 71 NE2d 227, 231 (1947); Moeller v. American Guar. and Liability Ins. Co., 707 So.2d 1062, 1070 (Miss. 1996).
RESERVATION OF RIGHTS
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Conflict exists when Reservation creates a loyalty issue.
“. . . only necessary in cases where the defense attorney’s duty to the
insured would require that he defeat liability on any ground and his duty to the insurer would require that he defeat liability only upon grounds which would render the insurer liable.” Goldfarb.
“ . . . When the facts to be adjudicated in the liability lawsuit are the same facts upon which coverage depends, the conflict of interest will prevent the insurer from conducting the defense.” Northern Country Mut. Ins. Co. v. Davalos, 140 S.W.3d 685, 689 (Tex. 2004)
RESERVATION OF RIGHTS
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ROR not necessarily a conflict. “In Washington, there is simply no presumption . . .
that a reservation of rights creates an automatic conflict of interest. Therefore, the insurer has not obligation before-the-fact to pay for its insured’s indecently hired counsel. Johnson v. Continental Cas. Co., 788 P.2d 598, 601 (Wash.Ct.App. 1990)
RESERVATION OF RIGHTS
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Situations when independent counsel is not required…
» Punitive Damages?
» Damages Exceed Policy Limits?
» Conditions – notice, cooperation, voluntary payments?
» Insured?
» Timing of loss, occurrence, claim, injury?
RESERVATION OF RIGHTS
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Obligation to NOTIFY the Insured of a Conflict situation:
Stoneridge Development Co., Inc. v. Essex Ins. Co., 382 Ill.App.3d 731 (2008) (If the insurer defends the insured without disclosing the conflict of interest in its reservation of rights, the insurer will be estopped from raising coverage defenses).
NOTICE
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» Insured’s right
» Subject to approval by the insurer – Not Unreasonably Withheld:
› Competence
› Experience
› E&O Coverage
› Rates
SELECTION
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REASONABLE AND NECESSARY
» NOT Panel Counsel Rates
» NOT subject to company guidelines (Independent means Independent)
» MUST be established As Soon As Possible!!!
RATES
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» Experience, reputation, ability
» Other attorneys for similar work in similar venue
» Rates charged to other clients
» Relationship with the insured
» Skill needed/provided
» Time limitations
» Amount of work necessary
» Amount at issue
» Rate changes
RATES
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To The Insured:
Complete loyalty to the INSURED as client.
INDEPENDENT COUNSEL OBLIGATIONS
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To The Insurer:
» Reporting
» Provide all materials that are not privileged
» Participation and Cooperation
Insurer has the right to have an attorney of its own choosing participate in all phases of the litigation :
Maryland Casualty Co. v. Peppers, 64 Ill.2d 187, 355 N.E.2d 24.
INDEPENDENT COUNSEL OBLIGATIONS
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