TABLE OF CONTENTS

• I. PREFACE
• II. WHAT IS A CLIENT?
• A. Rule 503, Texas Rules of Evidence
• B. Section 26, Formation of Client-Lawyer Relationship
• III. WHO IS A CLIENT?
• A. Duty of Loyalty
• B. Duty of Confidentiality
• C. Duty to Advocate
• IV. INSURER AS CLIENT
• V. INSURED AS CLIENT
• VI. POLICY LANGUAGE
• A. Insurer is Agent of Insured
• VII. CASE LAW
• A. Ranger County v. Guinn
• B. Employer's Casualty v. Tilley
• VIII. CONFLICT OF INTEREST
• A. DR 1.08(e) Conflict of Interest:Prohibited Transactions
• B. DR 1.06 Conflict of Interest General Rule
• IX. THE RESTATEMENT (3RD) OF THE LAW GOVERNING LAWYERS (MARCH 29, 1996)
• A. Section 26
• B. Section 215
• C. Comment f. of Section 215
• X. COMPARISON OF TILLEY, THE RESTATEMENT, AND THE TEXAS DISCIPLINARY RULES OF PROFESSIONAL CONDUCT
• XI. DEFENSE COUNSEL OPTIONS
• XII. WHO CAN SUE DEFENSE LAWYER?
• A. General Rule
• B. Insurer Has Authority
• C. Insurer May Have Standing
• D. Excess Carrier May Have Standing

This paper addresses the issues that occur when a contractor or an owner with a liability policy has an accident on a construction site and gets sued. In that situation the most common liability policy would provide that the carrier is obligated to provide a defense, if the allegations indicate the suit is covered, and to retain exclusive control over settlement decisions. In addition to that common clause, there are many other policy provisions that may govern. Therefore, the liability insurance policy should be consulted immediately because some policies do not obligate the liability carrier to provide a defense, some obligate the liability carrier to indemnify the insured when the insured provides a defense, some allow the insured to select counsel or make the insured responsible for the first several thousand dollars of defense costs, or vary in some other material respects from the traditional clause. The following comments are, unless otherwise noted, directed to a traditional situation where the liability carrier owes a duty to defend and has a right to select counsel.

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