The familiar triumverate of client, insurance company and independent defense attorney is a familiar model.  Certainly, there are cracks in the facade.  The attorney has dual roles, and a divided loyalty…  In Texas, a recent ruling permits the insurance company to use in-house attorneys to defend insureds. 

Law and Insurance Blog reports: "Unauthorized Practice of Law Committee v. American Home Assur. Co., #04-0138 (Tex. March 28, 2008) See Law Committee Decision.

The Texas Supreme Court ruled that, despite genuine concerns for potential conflicts of interest, insurers’ use of salaried employee-staff lawyers to defend insureds did not constitute an unauthorized practice of law by an insurance company. However, staff lawyers may be used only where the interests of the insurer and the insured are aligned in defeating the claim against the insured. Also, the insurer must fully disclose the defense attorney’s affiliation with the insurer.

Unauthorized Practice of Law Committee v. American Home Assur. Co., #04-0138 (Tex. March 28, 2008) See Law Committee Decision.

The Texas Supreme Court ruled that, despite genuine concerns for potential conflicts of interest, insurers’ use of salaried employee-staff lawyers to defend insureds did not constitute an unauthorized practice of law by an insurance company. However, staff lawyers may be used only where the interests of the insurer and the insured are aligned in defeating the claim against the insured. Also, the insurer must fully disclose the defense attorney’s affiliation with the insurer. "