Insurance plays a crucial role in civil litigation by protecting policyholders (insured individuals or businesses) from financial losses and providing legal defense when they face lawsuits. 

When a claim is filed against an insured party, the insurance company (insurer) usually covers the costs of legal defense and any settlements or judgements, depending on the policy terms. 

   In civil litigation, a tripartite relationship is formed between three key parties: 

1. The insured (Policyholder): The individual or business covered by insurance policy, seeking protection from claims. 
2. The insurer (Insurance company): The company that provides legal defense and may control certain aspects of the case, such as settlement negotiations. 
3. The defense attorney: A lawyer hired by the insurer to represent the insured in court. 

Although the defense attorney is chosen and paid by the insurer, their primary responsibility is to protect the legal interests of the insured. Their main duties includes: 

• Providing a strong defense: representing the insured effectively in court to fight or settle claims.
• Managing conflicts of interest:  balancing the interests of both the insured and the insurer, especially when they have different goals (for example : the insured wants to fight the claim , but the insurer prefers a quick settlement). 
• Maintaining confidentiality: protecting sensitive information from the insurer if it could affect the insured’s coverage.

The tripartite relationship can present ethical challenges, particularly when the interests of the insurer and the insured diverge. For example, if an insurer defends under a reservation of rights, conflicts may arise regarding the control of the defense and the flow of information. 

Attorneys must navigate these situations carefully, ensuring compliance with professional responsibility obligations and prioritizing the insured’s interests. 

Moreover, the nature of the tripartite relationship varies across jurisdictions. In Minnesota and Alabama, for example, the policyholder and the insurer have been considered dual clients. While in Montana, Michigan, and Connecticut, the policyholder is considered the only client.  

In California, the insured is deemed the primary client of the defense attorney. This means the attorney’s foremost duty is to the insured, even though the insurer selects and pays for the attorney. California law recognized that conflicts of interest can arise, particularly when the insurer’s interests might compromise the quality of the defense. In such cases, under California Civil Code 2860, the insured is entitled to independent counsel, to ensure unbiased representation.