Lawful for Insurance Carriers to Employ Attorneys or Law Firms to Defend their Policyholders
Plaintiff sued State Farm, alleging he was insured by State Farm under an automobile policy which included general liability coverage. Plaintiff alleged the unauthorized practice of law, stating that State Farm used employee attorneys on staff at a law office to represent State Farm’s insured.
The trial court dismissed the complaint, holding that State Farm’s use of staff attorneys was legal and permitted under Illinois law. On appeal, Plaintiff continued to argue that State Farm engaged in the unauthorized practice of law by using the attorneys from another law office. Plaintiff’s argument is based upon Section 1 of 705 ILCS 220/1, which states that insurance carriers are prohibited from practicing law. However, the court pointed out that Section 5 of 705 ICLS 2011 provides an exception to the rule in Section 1. Section 5 permits an insurance carrier to employ an attorney for any litigation to which it is or may be a party. Therefore, it is completely acceptable for an insurer to employ an attorney in any litigation in which it may be interested by reason of any insurance policy.
Bowers v. State Farm Mut. Auto. Ins. Agency, 932 N.E.2d 607 (Ill.App. 1 Dist., 2010).
