Small Firms Avoid Insurance Conflict of Interest

June 28th, 2010

The legal industry has been trending towards large, consolidated firms in efforts to provide a broader range of services and save costs with economy of scale. But these large firms face certain difficulties that place them at a disadvantage. And that puts you and your insurance dispute at a disadvantage as well.

Insurance companies use a tactic in lawsuits that protects them from suits by large law firms. They enforce conflict of interest rules that bar attorneys who have represented the insurance company in the past from representing a new case against the insurer. While it is reasonable to say that an attorney cannot fairly represent an individual against an insurance company when he has represented that company in the past, in truth one case has little to do with another. But the rule is still enforced even if the work was for other legal services, like tax law.

The conflicts issue requires that a firm refrain from engaging insurance companies in legal work of any kind. But large firms often hold lucrative tax, corporate and regulatory accounts with insurance companies. Even though these accounts may never enter into coverage issues, they still create a barrier to entry for policy enforcement issues.

No law firm that has done work for an insurance company can represent a policyholder for an insurance dispute without a conflict waiver. Insurance companies can easily waive the conflict of interest but will not do so because it is an easy defense against suits. Many times, attorneys must make concession in the case in order to get the conflict waived, putting the Plaintiff at a disadvantage.

If insurance companies waived conflicts of interest, they would be leaving themselves open to more Plaintiff attorneys with specialized coverage knowledge. Instead of earning their insurance experience in the court, attorneys with insider insurance company knowledge would have a greater advantage in the marketplace.

Insurance companies like keeping coverage experts on their side of the courtroom. So they only waive conflicts when they believe they may get a better deal working with an attorney that may have some loyalty to insurance companies, rather than dealing with a lawyer who solely represents the insured party. Or they may waive the conflict on the condition that attorneys abandon certain causes of action like bad faith. By doing so, insurance companies keep the pool of qualified attorneys for the Insured party small.

Frank Lamothe does not, and will not, represent insurance companies. This saves the firm from conflict of interest problems for its clients. The firm does not have to make concessions in order to get a conflict waived, because no conflict exists to begin with.

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