Policyholder Should Sign Correspondence – PP


Authors of correspondence intended to be offered as admissible evidence must seek to resonate with the judge and jury – not the addressee of a letter.

            When a plaintiff sues a policyholder, who notifies a carrier, the liability insurer must respond with a with Yes, No, or Maybe.[1] Regardless of the insurer’s initial coverage position, uncertainty persists because there is no deadline for an insurer to deny coverage[2] so the insurer can change its mind, almost at any time. The policyholder, the plaintiff, the insurer, and their respective counsel should protect their interests from one another.

Surprisingly, the policyholder, the plaintiff, and their counsel usually opt to do nothing in response to this uncertainty.[3] For those who opt to do something – anything, it is critically important to develop admissible evidence creating a record that accurately documents whatever it is that is actually happening among the policyholder, the plaintiff, the insurer and their respective counsel.[4] When developing such evidence, remain mindful that the ultimate audience is a judge and jury.


The attorney-client relationship[5] is created by contract but is augmented by statutes, canons of ethics, and case law that obligates an attorney “to protect his client in every possible way . . . preclude[s him or her] from assuming any relation which would prevent him from devoting his entire energies to his client’s interests[, and precludes] the honest practitioner from putting himself in a position where he may be required to choose between conflicting duties.”[6] Dependent counsel owes many well known duties to the policyholder/client.[7]

It is fundamental that dependent counsel’s duties runs directly to the policyholder/client, not to a client’s other lawyer. Indeed, the very fact that a client has another lawyer is often perceived as exonerating dependent counsel of ethical obligations.

In contrast, the attorney-attorney relationship is adversarial. Some scholars trace this relationship back to mediaeval trial by combat.[8] Some lawyers behave as thought it is still trial by combat. Dependent counsel has no duty[9] toward independent counsel that is comparable to attorney-client duties. While it may be rude for dependent counsel to treat independent counsel roughly, few consequences flow from doing so. But, dependent counsel who treats a client with equal disdain may breach fiduciary duties that could expose dependent counsel to discipline, malpractice liability, and ostracism from court.[10]

Neither judges nor juries are likely to empathize with either side of correspondence between two bickering lawyers. Indeed, some trial judges may exclude such letters as mere colloquy of counsel. In contrast, both judges and juries are likely to respond emotionally and to favor the client when reviewing correspondence evidencing a contest between a highly skilled attorney and a vulnerable client – a lay person just like the jurors listening attentively in the jury box at trial.


The insurer-policyholder relationship is created by contract but is augmented by statutes, regulations, case law, especially an implied covenant of good faith and fair dealing that obligates an insurer to do nothing that “will injure the right of the [policyholder] to receive the benefits of the”[11] insurance policy. Again, it is essential to recognize that an insurer’s duty runs directly to the policyholder, not to the policyholder’s lawyer.

Judges and juries are likely to assume that a policyholder who is represented by a capable lawyer is adequately protected. Indeed, the fact that a policyholder has counsel excuses some insurer obligations.[12] Correspondence between an insurer and independent counsel is likely to evoke little sympathy simply because the policyholder does not appear to be hapless. However, juries are more likely to identify with and respond favorably to correspondence evidencing a contest between a rich, powerful, and regulated insurer and a vulnerable policyholder.


Correspondence drafted to develop admissible evidence that will be read and evaluated by a judge and jury should be signed by the policyholder/client, not by independent counsel.


Correspondence should be polite, conciliatory, and seek resolution of disputes. It should not be rude[13] or threaten[14] that insurers must yield to bad faith law.

[1] “[E]very insurer shall immediately accept [Yes] or deny the claim, in whole [No] or in part [Maybe].” (Cd. Reg. §2695.7(b).) Hyperlink to YES – NO – MAYBE.

[2] See, Article: There Is No Deadline to Deny Coverage.

[3] See, Practice Pointer: Acquiescence Is Dangerous.

[4] See, Practice Pointer: Develop Admissible Evidence.

[5] See, Article: Attorney-Client Relationship.

[6] Anderson v. Eaton (1930) 211 Cal. 113, 116 (citations and ellipses omitted).

[7] See, Articles: Duty of Disclosure, Duty to Advise, Duty to Analyze Conflicts ,Duty to Comply with Rule 3-310, Duty to Respond to Inquiry, Duty of Undivided Loyalty, Duty of Competent Representation, Duty of Confidentiality, and Disqualifying Conflicts of Interest.

[9] Rules of Court require basic civility.

[10] “Corruptly or wilfully and without authority appearing as attorney for a party to an action or proceeding constitutes a cause for disbarment or suspension.” (Bus.&Prof. Cd. §6104 (emphasis added).) The requisite authority must come from the client.

[11] Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658; see, Article: Duty of Good Faith.

[12] “[A]n insurer shall not be required to provide the above explanation or disclosure to a [policyholder] who is represented by an attorney.” (Cd. Reg. §2695.4()(1).)

[13] “The insured’s unseemly haste to resolve a dubious Cumis situation reminds us of the farmer who pulled up his crops each night to see how they were growing. [Cumis counsel] refused to accept the defense [and] turned nasty in his reply. He accused [dependent counsel] of acting in bad faith [and] refused to speak or meet with [dependent counsel], acerbically noting ‘there is no point in even calling my office to schedule it.’ [Cumis counsel] responded by filing suit. [Cumis counsel] refused these requests [for a personal meeting.] No reason exists to allow insureds to ‘set up’ insurers. The best way to achieve this common purpose is to allow both insurer-appointed defense and independent counsel to participate in the settlement negotiations. [O]verly aggressive insureds’ attorneys [should not engage in gamesmanship] who ‘spend their wits and energies trying to maneuver the insurers into committing acts which the insureds can later trot out as evidence of bad faith.’ ‘What we have here, at bottom, is an effort by [the insured] to concoct a bad faith claim out of whole cloth . . . with the ‘ingenious assistance of counsel.’ Bad faith litigation is not a game.” (Dynamic Concepts, Inc. v. Truck Ins. Exchange (1998) 61 Cal.App.4th 999, 1000-12 (ellipses omitted).)

[14] “[The insurer] informed the [policyholders] that it had determined the settlement offer was reasonable. [Cumis counsel responded] ‘The simple answer to your letter is no. [T]he [policyholders] will not consent to settlement. Moreover, . . . [the insurer must] accept that settlement demand or face the prospect of having “blown” its policy limits. The fact that the [policyholders] would not consent to your settlement will not be a defense in an action for a wrongful refusal to settle. [The insurer] has no right to settle a claim, absent an agreement with its insured. The [policyholders] are unwilling to give [the insurer] that agreement.’ [Cumis counsel] sent another letter, noting ‘If [the insurer] does not accept this settlement offer, it does so at its own risk.’” (Blue Ridge Ins. Co. v. Jacobsen (2001) 25 Cal.4th 489, 494-96 (ellipses omitted).) On this record, the Court recognized an insurer’s right to recover reimbursement of a settlement from an non-consenting policyholder. Cumis counsel rudely stated that existing law put the insurer in a difficult position, so the Supreme Court changed the law.

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