An attorney may represent the insured in litigation against the insurer despite the fact that the insurer is paying the fee. If the arrangement would prevent the attorney from exercising independent judgment for his client, he should withdraw. A conflict appeared between owner and driver over permissive use of the vehicle with the result that the inquirer continued to represent the owner of the vehicle and, of course, the insurance carrier while other counsel was retained for the driver. Later, the driver on deposition testified so as to bring about a conflict between the owner and the insurance carrier, with the inquirer then representing the owner and the carrier obtaining counsel of its own. Apparently the insurance carrier is paying all of the counsel.
Additional investigation is necessary to evaluate the applicability of such information.
At the inquirer's request, the owner obtained separate counsel to actively pursue the investigation, it being the inquirer's belief he would be violating his duty to the insurance carrier paying his fee to try to prove coverage exists for the owner when the insurance carrier has denied the same. He asks what steps should be taken. The case further held counsel's successful impeachment of the insured to be reversible error. In the event the carrier determines to deny coverage by reason of the insured's conduct or facts ascertained while engaged in the defense of a claim, the conflict arises between the carrier and the owner. At that point, the carrier may deny coverage and withdraw all representation of the owner, defending the claim under a reservation of rights.