Malpractice actions against law firms continue to proliferate. One group of actions stems from the issues caused when the insurer’s appointed counsel does not meet the insured’s expectations. An unhappy plaintiff may file a complaint alleging its counsel should have litigated differently so the recovery would have been greater, the settlement lower or counsel should have assisted with coverage issues. Once a law firm starts an action for payment of legal fees against the recalcitrant client, the defendant frequently asserts a counterclaim for malpractice, whether warranted or not. A newer species of malpractice action is an action brought by an insurer against a law firm it retained to represent the insurer in a coverage action. In a recent case, the insurer sued its own counsel and claimed the law firm was “unfaithful” and provided “tainted advice” because it was more concerned with another client when it withdrew a subpoena that was essential to the insurer’s defense.
The role of defense counsel appointed by the insurer has always raised issues. Since the insurer is precluded from the practice of law, it must rely on independent counsel to conduct the litigation; and the insurer may not interfere with counsel’s professional judgment in the conduct of the litigation on behalf of the firm’s client. The insurer is not able to establish a valid claim for malpractice against the defense firm since it cannot control the litigation and counsel does not have a fiduciary duty to the insurer.
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