Invariably, during the representation of a professional, defense counsel may be asked by his or her adversary: who hired you? For a variety of reasons, opposing counsel may be interested in whether you were retained directly by the professional or you were appointed as defense counsel by an insurance company. A perfectly reasonable and appropriate response to this question could be: it’s none of your business.
In most scenarios, the identify of who pays an attorney’s invoices is not considered privileged information. In other words, the fact that counsel was retained on an insured’s behalf pursuant to a professional liability insurance contract and is not paid directly by the insured is ultimately discoverable. Nonetheless, absent a formal request during discovery, this information need not be shared voluntarily unless there is a clear benefit to the professional in doing so.
Why not share this information? Particularly in pre-lawsuit matters, subpoena compliance or initial discussions, you may be providing a disservice to your client by voluntarily disclosing the fact that you were retained pursuant to a professional liability insurance agreement. Simply by confirming that you are “insurance defense” counsel provides your adversary with considerable, important information such as: (a) your client maintains professional malpractice insurance; (b) your client is concerned about this issue to the point that she put her insurer on notice; and, (c) there are insurance dollars that cover the professional in this situation.
Moreover, opposing counsel might smugly consider it to be advantageous that they are dealing with panel counsel as opposed to “private counsel,” given the unfair but not uncommon stereotype of panel counsel as: overworked, underpaid, less of a specialist, and less interested in the defense of the professional because “other people’s money” is at stake. Such idle and ignorant speculation has no place in our practice or our profession, and should not be condoned.
Most liability insurance markets have settled on contract terms that provide for the insurer to “manage” the defense including the selection of defense counsel. Standard professional malpractice policies give the “insurer the right to control the defense of the claim” and “the insured has no right to interfere with the insurer’s control of the defense.” Pursuant to the so-called “tri-partite relationship,” absent a conflict of interest, the law in most jurisdictions recognizes that both the insurer and insured are considered clients of defense counsel.
Accordingly, both as a client and pursuant to the insurance contract, the insurer usually has the right to make expenditure and strategic decisions with the input of the insured. Since the insured is indisputably the attorney’s client, the fact that counsel was selected and paid by the insurer is of no moment. Thus, although this fact is technically discoverable, there are few exceptions to the general rule that “insurance defense counsel” should not feel compelled to voluntarily divulge this information.