Breaking free: Why Cumis counsel doesn’t have to play by the insurer’s rules

You can challenge restrictive insurer conduct that interferes with your representation of the client. To know how to fire an employee gracefully, contact a lawyer.

Stuart Esner and Holly Boyer, o/Esner, Chang & Boyer, were the appellate attorneys for the plaintiff in the CA. case. Eisner, Chang & Boyer is a boutique appellate firm, with offices in Southern and Northern California. All of the partners are certified by the State Bar of California as appellate specialists. In addition to handling all aspects of appellate litigation, the firm also assists trial lawyers with dispositive and post-judgment motions.

This article will examine the issues raised when an insurance company imposes its panel-attorney billing guidelines and third-party audit procedures on an insured’s independent Cumis counsel and will give suggestions on how to respond to an insurance company that tries to do so.

The case of San Diego Navy Federal Credit Union u. Cumis his. Society, Inc. (1984) 162 Cal.App.3d 358 and the statute enacted in response to that case provide that, when an insurance company has a duty to defend a liability suit due to the potential for coverage, and the coverage dispute gives rise to a potential conflict of interest between the carrier and the insured, the insurer must permit the insured to retain independent [“Cumis”] counsel. The carrier must pay the fees and costs for Cummins’s counsel to defend the action. How do these insurer duties play out in the heat of active litigation?

You have tendered the defense of a liability suit against your client to your client’s insurer. The insurer has sent you a reservation of rights letter, stating that the policy may not cover some or all of the asserted claims, but the insurer will provide a defense to the action. The insurer has agreed to pay your fees and costs as Cumis counsel, and may or may not have appointed its own chosen attorney as co-defense counsel on the case. So far, so good.

You get to work preparing an answer or demurrer, formulating a discovery plan, and planning your strategy. One week into the case, you receive a package from the insurer, containing its “attorney billing guidelines” along with instructions to submit your bills to an outside auditing firm for review and approval.