Independent Counsel "Cumis" (Cal. Civ. Code § 2860)

With over 25 years experience litigating insurance defense matters, we serve as independent counsel when an insurance company offers "Cumis" counsel pursuant to Cal. Civ. Code § 2860 in cases where insureds are facing liability claims that exceed or are not covered by the insurance policy. We regularly defend property owners, contractors, and insureds involved in multi-party litigation claims where a carrier has assigned defense counsel pursuant to a liability policy and the insurance company’s interest may conflict with that of the insureds. As personal or private counsel we stand in the shoes of the insured and help with strategy calls before and during litigation to ensure that defense counsel is prioritizing the insured's best interests over the carrier’s. Our goal is to resolve matters as quickly as possible so our clients can go on with their lives without fearing the loss of their own personal assets when an accident or other liability claim arises.

Why Retain Private Counsel or Personal Counsel as opposed to Independent Counsel or "Cumis" Counsel (Cal. Civ. Code § 2860) ?

While the terms “private counsel,” “personal counsel” and “independent counsel” are often used interchangeably, "Cumis" counsel or independent counsel refers to the retention of a lawyer selected by an insured but paid for by an insurer as required by Civil Code section 2860 after the decision in San Diego Federal Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358.  This statute essentially uses the phrase “independent counsel” to describe the situation where an insurer pays for a separately appointed counsel in addition to the defense counsel appointed. In the context of insurance liability cases, an insurer is entitled to control the defense of its insured pursuant to the terms of the insurance policy.  While the insurance company appoints counsel to defend an insured while reserving rights on the uncovered claims, because the insured remains financially exposed to any uncovered or claims beyond the policy limits, insureds often elect to hire private counsel or independent counsel to protect their uncovered risks. 

The relationship between the insured, insurer, and insurer-retained defense counsel is referred to as the “tripartite relationship.” Defense counsel has an obligation to defend the insured on all claims-- whether or not covered by the policy but private counsel or personal counsel assists in making sure the uncovered risks are not ignored while the insurance company makes the decision on whether to settle or try the case.  Because defense counsel has duties owing to both the insurance company and the insured, a conflict of interest can arise when the insurance company has reserved rights to later deny coverage or seek reimbursement for claims not covered under the policy as these risks could far exceed the amount the insurance company is obligated to pay. In these cases, the insured may have an option to obtain “Cumis” counsel our independent counsel pursuant to California Civil Code section 2860 at the insurer's expense or can retain private counsel or personal counsel at their own expense. Both monitor the activities of the insurance company’s appointed defense counsel but there may be advantages in declining Cumis as private counsel or personal counsel has no obligation to the carrier unlike Cumis counsel who maintains certain reporting obligations to the carrier.

Defense attorneys assigned by a carrier to defend an insured are obligated to follow the California Rules of Professional Conduct but they have two clients with potentially differing interests. Defense counsel cannot become involved in coverage disputes between their two clients, the carrier and the insured. The decision to retain private counsel or personal counsel or to accept Cumis or independent counsel involves the weighing of risks which are dependent upon many factors. Determining if a potential conflict exists to warrant the costs associated with retaining private counsel or personal counsel is also dependent on the facts and allegations of the specific case.  The ultimate job of private counsel or personal counsel is to ensure that no steps are taken in the litigation of the case to hurt the best interests of the insured and to remind defense counsel that there true client is the insured-- not the carrier paying defense counsel's fees.

California Code, Civil Code - CIV § 2860

California has statutorily defined the situations where Cumis counsel may be appropriate as codified under California Civil Code section 2860 which provides as follows:

(a) If the provisions of a policy of insurance impose a duty to defend upon an insurer and a conflict of interest arises which creates a duty on the part of the insurer to provide independent counsel to the insured, the insurer shall provide independent counsel to represent the insured unless, at the time the insured is informed that a possible conflict may arise or does exist, the insured expressly waives, in writing, the right to independent counsel. An insurance contract may contain a provision which sets forth the method of selecting that counsel consistent with this section.

(b) For purposes of this section, a conflict of interest does not exist as to allegations or facts in the litigation for which the insurer denies coverage; however, when an insurer reserves its rights on a given issue and the outcome of that coverage issue can be controlled by counsel first retained by the insurer for the defense of the claim, a conflict of interest may exist. No conflict of interest shall be deemed to exist as to allegations of punitive damages or be deemed to exist solely because an insured is sued for an amount in excess of the insurance policy limits.

(c) When the insured has selected independent counsel to represent him or her, the insurer may exercise its right to require that the counsel selected by the insured possess certain minimum qualifications which may include that the selected counsel have (1) at least five years of civil litigation practice which includes substantial defense experience in the subject at issue in the litigation, and (2) errors and omissions coverage. The insurer's obligation to pay fees to the independent counsel selected by the insured is limited to the rates which are actually paid by the insurer to attorneys retained by it in the ordinary course of business in the defense of similar actions in the community where the claim arose or is being defended. This subdivision does not invalidate other different or additional policy provisions pertaining to attorney's fees or providing for methods of settlement of disputes concerning those fees. Any dispute concerning attorney's fees not resolved by these methods shall be resolved by final and binding arbitration by a single neutral arbitrator selected by the parties to the dispute.

(d) When independent counsel has been selected by the insured, it shall be the duty of that counsel and the insured to disclose to the insurer all information concerning the action except privileged materials relevant to coverage disputes, and timely to inform and consult with the insurer on all matters relating to the action. Any claim of privilege asserted is subject to in camera review in the appropriate law and motion department of the superior court. Any information disclosed by the insured or by independent counsel is not a waiver of the privilege as to any other party.

(e) The insured may waive its right to select independent counsel by signing the following statement: “I have been advised and informed of my right to select independent counsel to represent me in this lawsuit. I have considered this matter fully and freely waive my right to select independent counsel at this time. I authorize my insurer to select a defense attorney to represent me in this lawsuit.”

(f) Where the insured selects independent counsel pursuant to the provisions of this section, both the counsel provided by the insurer and independent counsel selected by the insured shall be allowed to participate in all aspects of the litigation. Counsel shall cooperate fully in the exchange of information that is consistent with each counsel's ethical and legal obligation to the insured. Nothing in this section shall relieve the insured of his or her duty to cooperate with the insurer under the terms of the insurance contract.