Cumis counsel
The 1984 California Court of Appeals decision in
San Diego Federal Credit
Union v. Cumis Insurance Society, Inc., held that where an insurer is defending
under a reservation of rights, a conflict of interest exists between the economic
and litigation interest of the insurer and the insured. Under these circumstances,
the traditional right of the insurer to select counsel and control the defense
effort is lost. As a result, the insured selects counsel and controls the defense,
but the insurer must pay the defense costs. Such counsel, selected and controlled
by the insured at the expense of the insurer, is known as
Cumis counsel.