Excess Carriers and the Insured's Attorney in Legal Malpractice
Here is an Indiana Case in which the concept of equitable subrogation is attempted in a legal malpractice case. Here, insurer seeking equitable subrogation loses. In Queerey & Harrow LTD v. Transcontinental Ins. Co. two hurdles face the insurer: privity and policy. Attorney represents insured, and not carrier, much less the more distant excess carrier. The Indiana Supreme Court holds that there is not a sufficient relationship between the attorneys and the excess carrier.
The second hurdle is policy. Here the Supreme Court values the "obligations' of loyalty and client confidentiality over the right of a carrier to re-coup its [unnecessary?] losses.
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