Considering the conflicts of interest imbedded like landmines in the tripartite relationship, the Texas Supreme Court has clearly articulated defense counsel’s obligations under Texas law.  Nearly 40 years ago, the Texas Supreme Court addressed these issues in the Tilley case.  Employers Cas. Co. v. Tilley, 496 S.W.2d 552 (Tex. 1973).  The standard is surprisingly simple.  The lawyer appointed by the insurer to defend the insured owes a duty of undivided loyalty to the insured....

This is the second post in a four-part series analyzing the competing interests inherent in the tripartite relationship, which has long been recognized as "a source of unending ethical, legal, and economic tension.”  State Farm Mut. Auto. Ins. Co. v. Traver, 980 S.W.2d 625, 633 (Tex. 1998) (Gonzales, J., dissenting).  This post focuses on conflicts of interest commonly encountered in the tangled relationships between and among defense counsel, the insured, and the insurer.
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The competing interests inherent in the relationship between the insurance company, its insured, and defense counsel—called the “tripartite relationship”—have long been recognized in the defense of lawsuits covered by insurance.  “[This] so-called tripartite relationship has been well documented as a source of unending ethical, legal, and economic tension.”  State Farm Mut. Auto. Ins. Co. v. Traver, 980 S.W.2d 625, 633 (Tex. 1998) (Gonzales, J., dissenting).  This four-post series will examine the inherent tension in the tripartite relationship, commonly-encountered conflicts, defense counsel’s ethical obligations, and best practices for defense counsel....