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There are times when certain situations require the use of independent counsel. Knowing how to effectively navigate this relationship can minimize bad-faith risks and runaway legal fees. (Photo: Shutterstock)

Conflict of interest allegations frequently arise in insurance claims when adjusters hire attorneys to defend insureds who face suits from third parties.

When files include insurance coverage questions and carriers reserve rights, many authorities hold that the defense attorney in the tripartite relationship has a conflict of interest. Defense attorneys rely on insurers for business and to pay their bills. On the other hand, defense attorneys typically owe their main allegiance to their policyholder or client. Those policyholders’ interests lie in having the coverage that the carrier may be contesting. Failure to recognize and navigate around this touchy issue can expose adjusters, insurers and TPAs to bad faith. How can one navigate around this minefield?

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