Barger & Wolen Partners Author "Insurance Practices and Coverage in Liability Defense"

Barger & Wolen partners David McMahon, Robert Levy and John (Jack) Pierce authored the second edition of Insurance Practices and Coverage in Liability Defense (formerly Defending the Insured). 

Intended for legal practitioners, researchers, courts, and other insurance industry professionals, the book provides the first comprehensive and objective analysis of the various duties and potential pitfalls confronting each party in a three-way relationship between insurance carrier, insured, and the appointed counsel in insurance defense.

Through national study and state-specific analysis, the book offers a detailed discussion of topics engendered by the duty to defend and the consequent obligations of each of the parties. Reference tables and appendices then survey the law in each state on those topics.

Our approach to writing this book was to provide our unique perspectives from our day-to-day knowledge of the laws and our industry experiences through our firm’s insurance defense practice,” said David McMahon. “We are confident it will be a valuable resource to the legal and insurance industries.”

David McMahon, the Managing Partner in Barger & Wolen's San Francisco office, is a co-editor of the firm’s Litigation Management & Attorney Fee Analysis blog, and a California State Chair for the Council on Litigation Management.

Jack Pierce is a nationally recognized author and an expert witness in the areas of legal fee disputes, fee and cost allocation, legal ethics, and issues related to legal and ethical responsibilities of lawyers that arise from the tripartite relationship between insurers, insureds and defense counsel.

Robert Levy is a frequent author and has more than 33 years of experience encompassing coverage and defense litigation on behalf of major commercial general liability and professional liability insurers throughout the United States

Insurance Practices and Coverage in Liability Defense, Second Edition, published by Wolters Kluwer Law & Business is available for purchase through Wolters Kluwer website here.

Tripartite Attorney-Client Relationship Arises when Insurer Hires Law Firm to Prosecute Action on Behalf of its Insured

It is well settled that a tripartite attorney-client relationship arises when an insurer retains counsel to defend an action against its insured. As a consequence, confidential communications between counsel and the insurer or the insured are protected, and both the insurer and the insured are holders of the privilege.  

The California Court of Appeal for the Fourth Appellate District clarified that a tripartite attorney-client relationship also can exist where the insurer hires a law firm to prosecute an action on behalf of its insured. See Bank of America v. Superior Court of Orange County (Pacific City Bank), 2013 DJDAR 654 (2013). 

In Pacific City Bank, Fidelity National Financial (Fidelity) was the insurer and Bank of America was the insured under a lender's title policy insuring a deed of trust. Pacific City Bank (PCB) had recorded a deed of trust on the same property and sent a notice of trustee sale. Bank of America tendered the claim to Fidelity, which hired a law firm to institute an action on behalf of its insured, Bank of America, to protect its security interest. In the ensuring litigation, PCB served subpoenas on Fidelity seeking communications between the law firm and Fidelity. Bank of America moved to quash the subpoenas to exclude communications between the law firm and Fidelity on the grounds of privilege. The trial court held that the tripartite attorney-client doctrine did not apply because the law firm was retained to prosecute the underlying action rather than defending litigation. According to the trial court, Fidelity did not have a "favored position" or "sacred role" in the litigation.

The Court of Appeal reversed, holding that the trial court erred as a matter of law in making this artificial distinction. The court's holding turned on an analysis of the title insurer's duties to its insured. The court reasoned that a title insurer's obligation to defend a lawsuit and to take other appropriate action, such as prosecuting an action to protect the integrity of an insured's title, are "kindred duties" addressing the "same fundamental concern" and that there is no logical reason why a tripartite relationship should exist in one situation but not the other. 

The court rejected PCB's arguments that no tripartite relationship arose because there was no formal retainer agreement between the insurer and counsel hired to protect its insured's interest. The mere retention of the law firm was sufficient to establish the tripartite relationship. It also did not matter that Fidelity had reserved rights. The law firm was not acting as Cumis counsel, and, even if it were, the privilege would still apply to all confidential communications among the insurer, insured and law firm except those pertaining to coverage.

PCB maintained that Fidelity waived any right to object to the production because it did not bring its own motion to quash the subpoena. The court rejected this argument as well, noting that Bank of America was a holder of the privilege and thus had standing to assert the privilege itself.

Originally posted to Barger & Wolen's Litigation Management & Attorney Fee Analysis blog