Is Three Company or a Crowd? Conflicts and the Tripartite Relationship

The tripartite relationship is the relationship between the defense lawyer, the insurer, and the policyholder that is created when the defense lawyer is hired by an insurer to defend a suit against the policyholder.  In some jurisdictions, like Minnesota and Alabama, the policyholder and the insurer have been considered dual clients.  Other jurisdictions, like Arizona and California, consider the policyholder the “primary client,” implying that the lawyer at least has a secondary obligation to the insurer.  In Texas, Montana, Michigan, and Connecticut, the law is clear that the policyholder is the only client.  See Safeway Managing General Agency, Inc. v. Clark & Gamble, 985 S.W.2d 166, 168 (Tex.App.-San Antonio 1998) (no attorney-client relationship exists between an insurance carrier and the attorney it hired to defend one of the carrier’s insureds); Bradt v. West, 892 S.W.2d 56, 77 (Tex.App.-Houston [1st Dist.] 1998); State Farm Mut’l Auto Ins. Co. v. Traver, 980 S.W.2d 625-27 (Tex.1998) (the attorney owes unqualified loyalty to the insured).  This paper will provide guidance on how to handle the conflicts that will inevitably arise when an insurer hires staff counsel or outside counsel to defend the insured.

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