Conflicts of interest can involve difficult issues where the judgement of experienced lawyers comes under question; the Freshfields Bruckhaus Deringer/M&S dispute being but one recent example. In the area of insurance practice, conflicts can emerge between the interests of the solicitor’s insurer and insured clients. Usually there is a commonality of interest in the defence of the claim. However, difficulties can arise where policy cover has not been confirmed and coverage issues remain under investigation pending the ongoing defence of the claim. While case law on this issue has helped clarify the court’s approach, there remains a marked variance in approach between practitioners. By way of example, where a solicitor, perhaps concentrating on the interests of its insurer client, is reckless as to the potential conflict of interest, an opportunity for breach of confidentiality on the part of the solicitor can arise. On the other hand, where a solicitor is unduly cautious, insurers face incurring the unnecessary costs of instructing two firms of solicitors, one to advise on the defence of the claim and the second to provide coverage advice.
The starting point will always be the terms of the insurance policy. However, it is necessary to consider the particular facts in each case within the framework provided by the common law and we highlight the key authorities below.
