AIA Applauds Fla. Supreme Court Confirmation of Key Litigation Management Practices

In an opinion released Thursday, the Florida Supreme Court reconfirmed two key principles of insurers’ litigation management practices: the insurer’s status as co-client with the policyholder, and the right of insurers to use staff attorneys to defend the interests of policyholders and insurers in defending covered claims.

“The Court’s action is the final step of a long battle AIA waged in Florida to preserve insurers’ ability to effectively manage the legal representation that is provided to policyholders under liability insurance policies,” Stef Zielezienski, AIA assistant general counsel, said. “The opinion confirms the insurer’s co-client relationship with defense counsel, as well as insurer’s ability to use staff counsel. We hope that other states considering limits on insurers’ litigation management practices will look to the outcome in Florida for guidance.”

The Court’s opinion formally adopts amendments to current Bar rules that were recommended in 2002 by the Florida Bar’s Special Commission on Insurance Practices II (SCIP). The SCIP report was approved after almost three years of study of insurance defense practices, including an intense six-month concentration in the area of staff counsel. The staff counsel issue became a primary focus after a Miami, Fla. Judge issued a series of orders prohibiting insurance staff attorneys in his circuit from practicing under law firm-type names. The SCIP report reconfirmed insurers’ use of staff counsel, but recommended that the Court amend Bar rules to provide minimum standards that are necessary for the staff counsel operation to use a name different than that of the insurer.

A related issue resolved by the Court with its adoption of the SCIP report affirms the tripartite relationship among the policyholder, insurer and insurance defense attorney. In order to avoid any misunderstanding as to an insurer’s client status, the Court’s amended current Bar Rules require that, upon undertaking representation of an insured client at the expense of the insurer, the lawyer determine whether both the policyholder and insurer will be clients or only the policyholder.

The new Bar rules will be effective July 1.