A Video Explaining The Law of Unintended Consequences & the Right to Independent Counsel

Ethical Lawyers Should Not Take Advantage of Right to Independent Counsel

Consider Center Foundation v. Chicago Insurance Co., 227 Cal. App. 3d 547, 278 Cal. Rptr. 13 (Cal.App.Dist.2 02/05/1991) The Center for Feeling Therapy and its therapists were sued for medical malpractice and on various intentional tort theories. One of the Center’s insurers, Chicago Insurance Company, following a partially directed verdict in favor of the insureds sued to avoid payment of independent counsel selected by the insured.

The Center and its therapists were sued by at least 50 former patients in over a dozen lawsuits alleging a variety of intentional torts and professional malpractice. The former patients claimed they had been subjected to violence and psychological coercion to compel them to donate their services and their money to the Center and they sought more than $300 million in damages for the harm done to them. Because of the conflict created by the carriers= reservation of rights, many of the defendants retained their own attorneys.

Following the Cumis decision in December 1984 (San Diego Federal Credit Union v. Cumis Ins. Society, Inc., supra, 162 Cal. App. 3d 358), the Woldenberg group renewed its demand for a defense under the control of Barash & Hill. The Woldenberg group, acting through Barash & Hill, concurrently Adischarged@ Fonda & Garrard, the firm retained by Chicago, and demanded that Fonda & Garrard cease all work on the Rains cases.

Barash & Hill=s fees included billings by a single attorney for more than 24 hours in a day and for 78 hours over a four‑day period. Paralegals and secretaries were sometimes billed as attorneys, at attorney rates.

Time spent on noninsured cases was billed to Chicago. Several witnesses described Barash & Hill's bills as "unconscionable," "unreasonable," "utterly inconceivable," "absolutely outrageous" and "way out of bounds."

In the appellate court’s view, the duty of good faith imposed upon an insured includes the obligation to act reasonably in selecting as independent counsel an experienced attorney qualified to present a meaningful defense and willing to engage in ethical billing practices susceptible to review at a standard stricter than that of the marketplace.

© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts; and Read last two issues of ZIFL here.