Conflict Where Insurance Company Uses Same Firm to Defend Insureds & Litigate Coverage?

By |2017-09-21T14:41:06-05:00September 22, 2017|E&O, Fiduciary|0 Comments

The Washington State Supreme Court addressed in Arden v. Forsberg & Umlauf, P.S., --- P.3d --- 2017 WL 4052300 in a decision issued on September 14, 2017, the potential conflict where the same firm is hired by the same insurance company to defend insureds in litigation and handle coverage dispute matters. The Court ruled that a firm who previously represented an insurer on a coverage matter and currently defends its insured is not disqualified per se from representation under RPC 1.7(b), that a claim by the insured that prior consent should have been obtained does not give rise to damages regardless of whether the insured is being defended under a reservation of rights but cautions that where coverage is disputed, an attorney with an established relationship with the insurer could be “materially limited” in his or her ability to represent solely the interests of the insured.