Liability insurers appoint defense counsel to represent their policyholders. If a case turns out badly, the defense lawyer’s conduct may be unfavorably scrutinized. Malpractice claims by insurance companies against defense attorneys are now common. While primary insurers’ right to sue defense counsel for malpractice is well-settled, however, excess insurers are increasingly suing defense counsel when verdicts exceed primary policy limits. These suits raise a number of questions related to defense lawyers’ alleged duties, if any, to excess insurers, and how those alleged duties ought to be enforced, if at all. This emerging malpractice paradigm is critically important to defense lawyers, who surprisingly may find themselves squarely in excess insurers’ crosshairs even though they never shared an attorney-client relationship. But as the author states, “Yet this very detachment may actually encourage malpractice claims, for an aggrieved excess carrier may have no continuing business relationship with defense counsel, such that loyalty and the perspective that comes with judging many cases as compared to one are no bar to litigation. Additionally, as cost-conscious insurers have seen their litigation expenses rise, the possibility of recovering some portion of an excess verdict or settlement from other sources has driven both primary and excess insurers to look to defense counsel in certain circumstances.”

 

The author also addresses the following queries: