A vast literature exists on the ethical obligations and problems of lawyers defending policyholders on behalf of insurers. A smaller, but still substantial, literature deals with whether and when a policyholder is entitled to independent defense counsel at insurer expense. Very little published writing addresses the ethical obligations and problems of lawyers serving as independent counsel for policyholders. Of course, those duties include all of the usual duties of a lawyer retained by the policyholder to defend a suit. But independent counsel do have their own special ethical issues, which deserve our attention.
As used here, the term “independent defense counsel” means counsel who defends a suit in discharge of an insurer’s duty to defend under a liability insurance policy, where a coverage issue or other conflict has divested the insurer of its usual contractual right to control the defense. Although counsel are independent, insurers do have some rights in dealing with them. The existence of those rights helps define the scope of counsel’s ethical duties.