A Video Explaining the Defense of an Insured by a Liability Insurer

Use of House Counsel and Requirement that Adjuster & Attorney Work Together to Defend Insured

Challenges to Use of in House Counsel

Defense counsel are sometimes employees of the insurance company. Some attorneys have challenged the use of in-house counsel on the ground that the insurer, as an employer of attorneys, is not licensed to practice law. They claimed that the insurer was engaged in the unauthorized practice of law—a crime. Attorneys in Texas convinced a trial court on the issue but the decision was reversed on appeal.

Attorneys have also raised challenges against house counsel because the employee attorney is alleged to be serving two different masters. As an employee of the insurer (it is alleged) the attorney cannot do justice to both his client, the insured, and his employer, the insurer.

Involvement of the Adjuster

At the moment the suit is assigned for defense the adjuster and the defense attorney must have a clear understanding of the adjuster’s involvement in the preparation of the case for trial. The adjuster must make it absolutely clear that the attorney is required to abide by any guidelines provided by the insurer. If the attorney believes that the guidelines impinge on his or her ethical obligations, he or she will advise the adjuster, and they should work together to modify the guidelines appropriately.

The insurer’s guidelines for case control and billing may change from time to time. The adjuster must keep abreast of such changes made by the insurer’s management and promptly inform the attorney of the changes.