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Insurance Defense Lawyers: Who’s Your Daddy?

We are handling a red light/green light auto accident case that occurred in Towson, Maryland a few years ago that resulted in substantial permanent injuries to our client. Trial is a few months away. The insurance company for the Defendant is the Maryland Automobile Insurance Fund (MAIF). Their attorneys recently moved to bifurcate the trial into two separate trials for liability and damages.

The Defendant’s attorneys would not seem to benefit if the case is bifurcated. Their concerns–the cost and effort of the liability case–is of no consequence to their client. So, practically, why was this motion filed?

If the case is bifurcated, the chance of a bad faith claim against MAIF evaporates; it would offer its $100,000 (a large policy for MAIF, parenthetically) policy limit in the event Plaintiff prevailed on liability because, as Defendant’s motion tacitly concedes, this case’s value exceeds MAIF’s coverage. While bifurcation would be a loss for Plaintiff, it would also be a loss for the insured Defendant who will lose any leverage that he has to encourage MAIF to settle or any claim he has against them for bad faith should they not make reasonable efforts to settle. Should the case be bifurcated and Plaintiff prevails on liability, Plaintiff will proceed on with the damages trial that will probably result in an excess verdict. This would leave MAIF in fine shape, fully insulated from a bad faith claim and protected from allegations it failed to properly defend their insured by, for example, having a defense medical examination performed on the Plaintiff. The defendant would be left holding the bag.

This takes us back to the flip title of this post: Who’s your daddy? What are the chances the Defendant’s lawyer, who MAIF paid and hired, advised his client of these personal risks to him when seeking bifurcation? When defense lawyers serve two masters or sticking with the pop culture theme, two daddies, conflicts are abounded. Every defense lawyer in Maryland knows that these conflicts have to be resolved in favor of the client, not the insured.

Our attorneys work with most insurance companies that walk this delicate balance well. Obviously, I do not have all the facts and there could be facts of which I may not know that would change the analysis, most notably the unlikely event that MAIF told the client or his attorney that it would cover any verdict exceeding the policy limits. But somehow, I doubt it. The tripartite relationship between the insured insurance company and the insurance defense lawyer is complicated. But the insurance defense lawyer owes a paramount duty to his client, even if the insurer hired him and pays his bill. While most insurance lawyers are mindful of this duty, it is still way too often forgotten.

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