Definition:Independent counsel
⚖️ Independent counsel refers to a lawyer selected and controlled by the insured — rather than appointed by the insurer — to defend a liability claim when a conflict of interest exists between the two parties. Often called "Cumis counsel" after the landmark California decision San Diego Navy Federal Credit Union v. Cumis Insurance Society, the right to independent counsel arises most frequently when the insurer issues a reservation of rights letter indicating it may later deny coverage for some or all of the allegations while simultaneously defending the case.
🔧 The mechanism works as follows: once a qualifying conflict is identified — for instance, a CGL policy may cover some counts of a lawsuit but not others — the insured selects its own attorney, and the insurer generally remains obligated to fund the defense up to reasonable fee limits established by statute or case law. The independent counsel owes its professional duty solely to the insured, eliminating the risk that defense strategy could be shaped by the carrier's coverage interests. Jurisdictions vary significantly on when the right attaches and how fee disputes are resolved, making this a frequent intersection of policy interpretation and professional responsibility rules.
📣 For insurers, independent counsel obligations can substantially increase defense costs and complicate claims management, since the carrier loses direct oversight of litigation strategy while still bearing financial exposure. Claims teams must carefully evaluate each reservation of rights scenario to determine whether independent counsel is legally required, as failing to offer it when owed can trigger bad faith liability. On the insured's side, the right represents a vital protection — ensuring that the defense of their business or personal interests is not compromised by the same entity deciding whether to pay the claim.
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