Being sued is not a pleasant experience. In some instances, the lawsuit triggers a requirement by the defendant’s insurance company to provide the defendant with a defense (i.e., hire and pay an attorney/law firm). This means that the insurance company will assign either an in-house attorney or one of its outside law firm panel counsel to represent the defendant in the lawsuit. While panel counsel has reporting obligations to the carrier with regard to evaluation of potential liability, defenses, and damages, their primary responsibility is to defend the insured in the litigation.
An inherent tension can arise between the carrier’s obligation to protect the insured by resolving the litigation and the desires of the defendant, who quite understandably may feel that they have been wrongly sued and would prefer to see justice carried out rather than to pay and settle the case. It is not uncommon for the defendant to hold the strong belief that the plaintiff does not deserve “one red cent.” This tension can cause a myriad of problems for the assigned panel counsel, especially when the lawsuit includes claims that are both potentially covered and/or potentially or clearly uncovered claims.