Conning the IADC Newsletters

In recent years, a number of "insurance defense" law firms and lawyers have "gone to the dark side" owing to dissatisfaction with the hourly rates, litigation guidelines and other restrictions imposed by certain insurance companies. Some of these lawyers are now representing policyholders in coverage litigation and, in a few cases, have sued former clients claiming bad faith. These cases have required courts to consider whether a "substantial relationship" exists between the past and current representations and, in particular, what sort of identity must exist between the issues in the cases to warrant disqualification. Recent decisions of the California Court of Appeal illustrate the restrictions that courts are now imposing to limit successive representations in the coverage context. As yet, none of these cases has found its way to the California Supreme Court. Nor does it seem probable that insurer efforts to disqualify coverage counsel in cases such as Farris v. Fireman's Fund Ins. Co. (2004) and Brand v. 21st Century Ins. Co. (2004) will spark the same sort of controversy that arose a few years ago as the result of insurer efforts to disqualify insurance defense counsel who had represented their policyholders in cases such as State Farm Mutual Auto Ins. Co. v. Federal Ins. Co., (1999). On the other hand, it seems unlikely that this is the last that will be seen of this issue, whether in California or in states that have yet to come to terms with Rule 1.9 in the context of insurance coverage and bad faith claims.