Articles Tagged with “Retained Counsel”

When an insurance company provides liability coverage, in New York or elsewhere, it most often provides an attorney to defend its insured against lawsuits for risks covered under the policy it issued. This is true whether the insured is covered by an automobile policy, homeowner’s policy, business-owner’s or BOP policy, or title insurance policy; if the allegations against the insured are covered by the policy, the insurer will retain counsel to defend the insured against those same claims. The attorney can be in-house counsel or outside counsel retained by the insurance company on a case by case basis. Who this counsel, often called “retained counsel” or “assigned counsel” represents, may surprise you. The answer is something every carrier, claims adjuster, and policyholder in New York should remember: The insured. In assigning counsel to defend an insured, the insurance company should be careful to select one that knows, and follows, this rule.

The case law in New York is clear. The Court of Appeals, in Feliberty v. Damon, 72 N.Y.2d 112, 120, 527 N.E.2d 261, 265 (1988), stated it best:

First, the duty to defend an insured is by its very nature delegable, as all the parties must know from the outset, for in New York–as in California–an insurance company is in fact prohibited from the practice of law (Judiciary Law § 495). Accordingly, the insurer necessarily must rely on independent counsel to conduct the litigation. Second, the paramount interest independent counsel represents is that of the insured, not the insurer. The insurer is precluded from interference with counsel’s independent professional judgments in the conduct of the litigation on behalf of its client (Trieber v. Hopson, 27 A.D.2d 151, 153, 277 N.Y.S.2d 241; American Employers Ins. Co. v. Goble Aircraft Specialties, 205 Misc. 1066, 1075, 131 N.Y.S.2d 393; see also, Code of Professional Responsibility EC 5-17, 5-21, 5-23).