Who do defense lawyers represent, the insurance company, or the insured? Kentucky Court of Appeals is Considering this Issue

George Hofmeister, a Bourbon County horseman and entrepreneur, was in a wheelchair for five months after he was injured in a head-on car crash in November 1998. Unable to oversee dozens of businesses across the world, his net worth declined from $196.7 million to negative $6.5 million, his attorneys say. Hofmeister blamed Cincinnati Insurance Co., which insured the company that employed the driver who hit him, for his financial downfall. In 2002, a Scott County jury awarded Hofmeister $28 million after finding that the insurance company had acted in bad faith by delaying an insurance payment, then misrepresenting the amount of coverage that was available. A judge later reduced the award to $20 million. During oral arguments yesterday, the Kentucky Court of Appeals was posed a question that's being closely watched by the insurance industry: Are the lawyers that insurance companies provide for their customers acting on behalf of the insurance company instead of just the customer? The insurance industry says no. In a brief filed as part of Cincinnati Insurance's appeal, a group of insurance defense lawyers says it's always been Kentucky law that the defense lawyer's only client is the insured driver -- even if the insurance company is paying the bills and is on the hook for the settlement or jury verdict.