Insurance Company Entitled to have Counsel Represent its Own Interests and Those of its Insured as Long as Their Interests are Aligned
In Bowers v. State Farm Mut. Auto Ins. Agency, Bowers filed a claim against State Farm Mutual Auto Insurance Agency (“State Farm”), individually and as a purported class representative. In his complaint, Bowers alleged that State Farm insured him under an automobile insurance policy that included general liability coverage. Bowers also alleged that State Farm provided staff counsel to represent him in connection with an unrelated claim brought against him. State Farm moved to dismiss Bowers’ claim, and the trial court eventually granted the motion and dismissed the complaint with prejudice on the ground that Illinois law allowed such an arrangement.
On appeal, Bowers contended that the trial court erred in dismissing his claim that State Farm was engaged in an unauthorized practice of law through a law office where State Farm “holds out to the public generally that is entitled to practice law through these employee attorneys.” Bowers also contended “it is common knowledge that non-lawyers are directors or officers of State Farm and that the claims representatives and others can directly control the professional judgment of State Farm’s employee attorneys.”
The court reviewed whether Bowers sufficiently stated a claim that State Farm’s employment of staff counsel to represent its insured in litigation gives rise to a cause of action for the unauthorized practice of law such that it could withstand a motion to dismiss. The court held that the trial court did not err in dismissing this claim of unauthorized practice of law pursuant to State Farm’s motion to dismiss.
Illinois Insurance Law: An insurance company has a direct pecuniary interest in the underlying third-party action against its insured and, having such an interest, it is entitled to have counsel represent its own interests as well as those of its insured, as long as their interests are aligned.
Bowers v. State Farm Mut. Auto Ins. Agency, 403 Ill. App. 3d 173 (2010).
