The Urban Legend of An Insurer’s Duty to Provide The “Best Defense Possible” for An Insured

When I was in-house several years ago, I met with a lawyer and the regional claims manger to go over the reductions taken in the lawyer’s legal bills.  Most of the reductions were for an “over the top” defense we did not think was reasonable.

As we went over each deduction, I patiently told him the reason for each reduction.  Nevertheless, the lawyer was clearly becoming exasperated.  Finally, he asked, “doesn’t your company believe in providing your insureds with the ‘best defense possible’?!”

I would like to have replied, “No.  And if we did, we wouldn’t have hired you!”  But, I held my tongue and didn’t do so.  What I did do was to patiently explain to the lawyer that no insurer has an obligation to provide an insured with the “best defense possible” (manuscripted policies notwithstanding).

For every appellate court in the U.S. that has ever considered the issue of an insurer’s defense obligation – even in a conflict situation – has held that an insurer’s defense obligation is not to provide the “best defense possible,” but only to pay “reasonable” defense costs.  See, e.g., Boyd Bros. v. Fireman’s Fund, 729 F.2d 1407 (11th  Cir. 1984)(The insurer fulfills its “contractual obligation to the insured by permittinthe insured to choose his own counsel and by paying the reasonable fees of that counsel.”) (emphasis supplied).

I went on to tell the attorney that if an insurer’s obligation were to provide the “best defense possible,” then it would naturally flow that an insurer also would be obligated to hire only the best defense lawyers and the best experts possible.  In other words, just being a good local attorney or local expert would not be good enough   under a “best defense possible” obligation.  (Thus it would have been very likely that we would not have hired that lawyer as he just possessed average legal skills and abilities.)

Since the insurer’s defense obligation springs from the insurance contract and settled appellate court law, it is hard to see how this legend of the best possible defense got started. However, this legend does persist.

The legend seems to be perpetuated mainly by “independent” counsel determined to get a blank check from an insurer to go along with an expensive, over the top plan of defense for their insured clients.  In so doing, these defense counsel will often cite to this mythical duty of insurers to provide the “best defense possible.”

If you are experiencing billing issues with insured’s chosen counsel, please call upon me for help.  Drawing upon my expertise in legal ethics (which few legal billing consultants possess), I have helped insurers work with independent counsel to help them understand what the ethics of the legal profession say they can and cannot do when billing an insurer for fees and costs.

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