The Tripartite Relationship: Minefield or Common Sense?


By: Jeremy W. Rogers

            The tripartite relationship between the attorney, insurance carrier, and the insured, has been the subject of innumerable law review articles, blogs, seminar presentations, and other publications. The vast majority of these publications stress that the tripartite agreement is one that is beset with considerable pitfalls for the attorney and, potentially, the carrier.  The relationship arises when defense counsel is appointed by the carrier to represent an insured in defense of a claim or lawsuit, and it may arise in any type of case where insurance coverage is afforded for the particular type of claim. Ideally, the three parties to the relationship work in concert to reach a favorable and mutually beneficial resolution. However, as is often the case, the relationship does not always work “ideally.” What is the best course of action when a conflict arises between the carrier and the insured? And, if such a situation arises, is the attorney’s course of action that terribly complicated or one simply calling for the application of common sense?

            During a recent mediation conference, I was faced with a difficult situation involving an insured that really did not want to concede on any points and a carrier that wanted the case settled. This was not a case that involved consideration of just the financial cost of resolution.  There were several non-financial considerations dealing with the future relationship of the parties, professional competition, the terms of a prior contract, and a multitude of interpersonal issues. After several hours of negotiation, completing the agreement came down to consent of the insured.  The insured was extremely reluctant to consent to the terms of the preliminary agreement, but the carrier was 100% on board. Obviously, everyone was involved in the negotiations, but the insured had second thoughts when it came down to time to sign off on the agreement.  This brought about the decision of the carrier to have a very frank discussion with the insured.  As the attorney, this made for a very uncomfortable situation.

Fortunately, I anticipated, based on prior dealings with the insured, that there may be some considerable push-back on settling the case despite the carrier’s intent to resolve the matter. I had several conversations with the insured explaining the conflict and why, if this scenario arose, I would not be able to advise her on how to proceed. I also recommended that she consult with separate counsel in the event a disagreement arose with the carrier. With this recommendation, she was able to have personal counsel available to speak with once the carrier explained to her how they intended to proceed in the event consent was withheld. The insured was able to protect her interests, and I avoided any questions by the insured about why I needed to stay away from the conflict.

So is the tripartite relationship truly a minefield, or can it be navigated with the exercise of common sense? If one knows the obligations owed to the carrier and the obligations owed to the insured, the relationship does not have to be complicated.