When an insurer accepts an insured’s tender and agrees to provide a defense, it is often an afterthought as to whether the insurer can actually recoup those defense costs or indemnity payments from the insured or defense counsel if things go south. But in certain circumstances, insurance carriers can, and sometimes do, seek to recoup defense costs—and occasionally even attempt to pursue defense counsel for malpractice.
Part I of this two-part article, published by the ABA’s Insurance Coverage Litigation Committee (ICLC), addresses how and where an insurer may directly pursue malpractice claims against defense counsel. While the majority of courts that have addressed the issue allow insurers to bring claims against defense counsel, there is a split between jurisdictions over the legal bases for those claims, which can also affect the likelihood of success. The three primary vehicles, discussed below, are (1) the tripartite relationship, (2) as third-party beneficiaries, and (3) contractual or equitable subrogation.Continue Reading When Can an Insurer Pursue a Malpractice Claim Against Defense Counsel Retained for an Insured