In many situations, an insured and the carrier have conflicts of interest that would require each party to have its own attorneys. But when is an independent counsel a "must have" versus a "nice to have"?
According to a federal district court in California, notwithstanding an insurer's reservation of rights, the issue turns on whether there is an actual conflict with the insurer, not a potential conflict.
The case
On July 5, 2017, the owners of property in Laguna Beach, Calif., filed a lawsuit against the City of Laguna Beach, seeking damages arising from an April 26, 2016, sewer backup. The property owners alleged that the city had "created a dangerous condition of public property and acted with general negligence in managing its property by negligently failing to establish, operate, inspect, manage, maintain, repair, and clean its sewer lines causing a blockage to occur on the [c]ity-owned sewer line on Hillview Drive, Laguna Beach, California."
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