USE OF STAFF COUNSEL UPHELD:

A Texas appellate court confirmed the right of insurers to defend their customers with staff attorneys, according to the American Insurance Association (AIA). The insurance trade group, said in the case of American Home & Travelers vs. Dallas County UPLC, the 11th Court of Appeals found the practice of using staff attorneys to be both legal and ethical. AIA, which filed an amicus brief in the case, stated that the court further ruled that this practice is essentially the same as utilizing outside counsel. “This significant decision will help preserve insurers’ freedom to efficiently manage their policyholder litigation,” said J. Stephen Zielezienski, AIA assistant general counsel. “The Travelers victory removes a cloud of uncertainty, and will allow insurers to initiate or expand staff counsel operations in one of the country’s largest insurance markets, saving both insurers and their customers tens of millions of dollars annually.” Several legal challenges to the use of staff counsel have been mounted in Texas since 1998, but this decision is consistent with the nationwide trend of courts and ethics committees upholding the use of staff counsel, the AIA said.