In an opinion filed today in the matter of Unauthorized Practice of Law Committee vs. American Home Assurance Co., the Supreme Court of Texas has authorized liability insurers to use in-house staff attorneys to defend their Texas insureds, so long as there is no conflict of interest between the insurer’s and the insured’s interests: "We hold that an insurer may use staff attorneys to defend a claim against an insured if the insurer’s interest and the insured’s interest are congruent, but not otherwise. Their interests are congruent when they are aligned in defeating the claim and there is no conflict of interest between the insurer and the insured. We also hold that a staff attorney must fully disclose to an insured his or her affiliation with the insurer."
The majority opinion may be viewed at http://www.supreme.courts.state.tx.us/historical/2008/mar/040138.htm
The dissenting opinion may be viewed at http://www.supreme.courts.state.tx.us/historical/2008/mar/040138d.htm