Three’s a Crowd?: Balancing the Tripartite Relationship

June 20, 2024

Reading time: 3 minutes

Insurance defense lawyers learn about the importance of the tripartite relationship with the insurer and its insured as soon as they start practicing law. After all, it is critical to offering the effective legal services for which you were hired. In this triad, a lawyer is tasked with maintaining their duty of loyalty to the client while upholding their fiduciary duty to the insurance company. This form of dual loyalty can lead to tension, real or perceived.

Unfortunately, Ames & Gough’s most recent legal malpractice claims survey revealed a growing number of claims against insurance defense attorneys. Although states vary on the basis for allowing such a malpractice claim, three legal theories support recovery: 1) the tripartite relationship between insurers, insureds, and retained defense counsel; (2) the insurer as a nonparty beneficiary of the relationship between the insured and retained defense counsel; and (3) subrogation. So, how can you avoid a malpractice claim in the insurance defense context? Consider these tips when you are hired to represent an insured: 

  • Know and follow the insurer’s guidelines – Strict adherence to the insurer’s case management guidelines is critical to effective representation of the insurer and insured. The insurance company will calendar these dates and expect reports and budgets on or before the deadlines. Make sure you are moving the litigation forward between reports and doing what you report you plan to do.
  • Communicate (maybe more than you think you should) – Most jurisdictions have ruled that the insurance company and its insured are both your clients. As such, keep your clients well-informed and remember your duties to promptly inform them of any decisions or circumstances requiring their informed consent and comply with reasonable requests for information in accordance with Model Rule 1.4.
  • Manage your caseload – Claims adjusters often have a relationship with one senior partner who most likely has a heavy caseload. If you are that partner, be sure to properly supervise the associates assisting you on each case. If your name is on the pleading, it goes without saying you should review it before it is filed. If you are an associate assisting a busy partner with a lengthy file list, keep them apprised of all developments, upcoming dates and deadlines, and help them comply with the insurer’s guidelines.

Insurance defense is often a numbers game. With competitive hourly rates, a high volume of cases is necessary to meet your financial goals. However, high volume can also mean high pressure to meet seemingly never ending deadlines, creating circumstances ripe for a malpractice claim should something fall through the cracks. Allow yourself time to review the guidelines for each new case that comes in and double check the deadlines on your calendar once entered.  Give yourself a reminder a couple days before a report is due to sit down with the file and write a thoughtful update. And, train your associates and staff to help and support you so you can effectively carry that heavy caseload.

By reframing your duties and obligations to the insurer and its insured as service opportunities – rather than mere billing entries – you will provide the robust defense they deserve.  As the saying goes, two’s company and three’s a crowd. But when you are an insurance defense attorney, take care to embrace your role in this unique trio to avoid a potential malpractice claim.

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Information provided by AttPro Ally is not intended as legal advice. This publication provides best practices for use in connection with general circumstances and ordinarily does not address specific situations. Specific situations should be discussed with legal counsel licensed in the appropriate jurisdiction. By publishing practice and risk prevention tips, Attorney Protective neither implies nor provides any guarantee that claims can be prevented by the use of the suggested practices. Though the contents of AttPro Ally have been carefully researched, Attorney Protective makes no warranty as to its accuracy, applicability, or timeliness. Anyone wishing to reproduce any part of the AttPro Ally content must request permission from Attorney Protective by calling 877-728-8776 or sending an email to [email protected].

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