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Selecting Defense Counsel and Controlling the Defense: Who Makes the Call When Rights are Reserved?
Where an insurer accepts a tender of defense unconditionally, the insurer generally has the right to select counsel to defend the policyholder. There, the policyholder and the insurer share identical interests in seeing the matter resolved in their favor. Logic suggests that that even if a reservation of rights letter were issued to a policyholder, the insurer would still be able to select counsel to defend the policyholder. This is so because the attorney enrolling as counsel for the policyholder, although paid by the insurer, would be ethically obligated to represent the interests of the policyholder ' his client ' to the best of his abilities and to place the interests of the policyholder first. However, many courts have found that when an insurer offers a defense under a reservation of rights, a conflict of interest exists between the insurer and the insured relating to the defense of a suit against the insured. Therefore, the insured may, if he so elects, select independent counsel whose reasonable fees are to be paid by the insurance company. See Todd R. Smyth, Duty of Insurer to Pay for Independent Counsel When Conflict of Interest Exists Between Insured and Insurer, 50 A.L.R. 4th 932.
According to the Alaska Supreme Court, defending under a reservation of rights can create special obligations for an insurer, and various conflicts of interest between an insurer and an insured arise when a defense is tendered pursuant to a reservation of rights. CHI of Alaska, Inc. v. Employers Reinsurance, 844 P.2d 1113, 1116 (Alaska 1993). For instance, if the insurer believes that it can later prevail on a coverage motion, it may only offer a token defense and may not be motivated to seek the best resolution for the client. Second, if only some of the claims are covered, the insurer might control the defense in such a manner as to make the plaintiff's verdict greater under an uninsured theory of recovery. Finally, there is the risk that the insurer may gain access to confidential or privileged information in the process of forming the defense that the insurer may later use to its advantage in litigation concerning coverage. Id.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.