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Nevada Finds That An Assigned Insurance Defense Attorney Has An Attorney-Client Relationship With Both The Insured Defendant And The Insurer Who Assigned The Case

Taxi Sign Close UpA Las Vegas insurance defense attorney was seeing great success prosecuting plaintiff’s cases.  No surprise that the insurance companies were moving their business to other insurance defense attorneys.  Then came the fateful day as reported in Nevada Yellow Cab Corp. v. Eighth Jud. Dist. Court, 123 Nev. 44, 152 P.3d 737 (2007).

The target defendant was insured by a carrier with whom the attorney had previously done business.  The insurance company took exception.  The company filed a motion to disqualify the attorney.  The insurer argued that because of his former relationship with the insurance company, the attorney had a conflict of interest that would prevent him representing this plaintiff.  The insurer said that the attorney had privileged information about the inner workings of the insurance company and would rely on that information to the detriment of the target defendant.

This attorney claimed that there was no conflict.  He said that his attorney-client relationships were with the insureds themselves and not the insurance carrier.  He also argued that even if he had represented the insurance company, that there was no substantial relationship between the current case and those past cases.  Thus there was no breach of any ethical obligation and that he shouldn’t be disqualified.

The Nevada Supreme Court disagreed.  Following the majority rule, the Court said that an attorney assigned to represent an insured has an attorney-client relationship with both the individual client and with the insurance company that assigned the case.  The Court confirmed that the current case was “substantially related” to the attorney’s prior representation of the company and that he was thereby disqualified.

The Court acknowledged that the attorney’s primary obligation is to the insured.  Even so, the insurance defense attorney owes a duty of confidentiality to both the insured and the insurer.

If you have questions about the duties that your assigned defense counsel owes you, your insured or your insurance company, please contact at Mills & Associates for consultation