On the one hand, business insurance provides in-house counsel with the peace of mind to know that if their company is involved in a covered event, the insurer will be responsible for some or all of the damages and also may be responsible for footing the bill for legal fees and defense costs. On the other hand, insurance carriers usually are incentivized to engage inexpensive attorneys who may not have the industry, business or other expertise which in-house counsel typically desire. Further, even when insurance carriers allow the insured to select defense counsel, the carriers often only agree to reimburse the insured at insurance defense rates – not the actual legal fees paid.

What many in-house counsel are not aware of, however, is that the 2007 decision by Judge Ralph Gants in Watts Water Techs., Inc. v. Fireman’s Fund Ins. Co. gives insureds significant leverage in selecting insurance defense counsel and having the insurance carrier pay all the associated legal fees.

In 2001 Watts Water and its affiliates were named as defendants in hundreds of asbestos lawsuits, and Watts tendered the claims to various insurance carriers. Those carriers responded by disputing coverage, saying that they only had a … Keep reading