Whether it’s a personal injury claim over a car accident or a malpractice claim against you as a professional, being served with a lawsuit is never a pleasant experience. Your mind may spin with the possibilities of losing your money, assets or professional license.
Your first step is to notify your insurance company of the lawsuit so it can review your coverage. In some cases you will receive a reservation of rights letter, which states the insurer agrees to defend you, but reserves the right to withdraw as to part or all of the claims, and that your insurer retains a lawyer of its choosing and pays for your legal representation.
Should you also hire personal counsel—your own attorney—to represent your interests when that occurs?
As of early 2018, no Colorado court has ruled on the question of whether an insurance company must provide outside counsel for its insured, but, in many situations—even if it’s not recommended to you—yes, you should consider hiring an attorney for the reasons discussed below.
Note that retaining personal counsel is especially important for professionals such as lawyers, doctors, engineers, accountants, etc. who are fighting malpractice claims. In fact, the Colorado Court of Appeals has held that, in professional malpractice claims, the defense counsel provided to them by their insurer must recommend that the client retain personal counsel.
Why hire personal counsel?
An insurance company’s attorney is paid by the insurer to act on behalf of the company’s financial and legal interests, not those of the insured (you). And although these interests often fully overlap, they can sometimes be at odds. With an attorney you have chosen and paid for, you can be sure someone is working hard to protect only you.
Your personal counsel’s duty is to get the best result for you and only you. Your lawyer can monitor every step of the case and inform you if the insurance company’s planned course of action has diverged from your interests. Personal counsel is particularly advisable if your case involves potentially uncovered claims or the insurance company disagrees as to the amount of available coverage.
Moreover, if you are potentially responsible for a verdict in excess of your policy limits, an amount for which you might be personally liable, hiring an attorney now could mitigate that risk as well. Having personal counsel may alos help you preserve the ability to obtain insurance coverage in the future.
Another situation in which personal counsel is useful is if an insurance company attempts to withdraw from defending you in the middle of case. With your own representation already in place, your attorney can step in immediately.
Above all, personal counsel can help preserve your recourse against the insurance company. This personal attorney may record all negotiations and communications between the plaintiff and the insurance company, document all decisions regarding legal motions filed and so on. If the insurance company has acted in a way that results in an adverse outcome for you, your attorney can help you hold the insurer responsible.
Can your business lawyer serve as personal counsel?
Technically, any lawyer can serve as your personal counsel, but an attorney experienced in insurance litigation can make a big difference in the outcome.
As noted above, for professionals involved in malpractice suits, outside counsel is a must. Having an attorney with experience in the highly specialized area of insurance coverage law is essential. With your assets, reputation, and possibly your entire practice on the line, having someone who knows how to best represent your interests is crucial.
If you’re facing a lawsuit and think you might need to retain personal counsel to protect yourself and your interests, send us a message or give us a call at (303) 575-9390.