What is the special conflict rule regarding insurance representation?

The special conflict rule regarding insurance representation allows a lawyer to represent both insurers and insureds under specific conditions. This scenario often arises in insurance litigation where the interests of the insurer and the insured may diverge.

The key aspect of this rule is that the dual representation must be founded on informed consent from both parties, and there are safeguards that need to be in place to manage potential conflicts. For instance, if potential conflicts can be identified early, the attorney should advise both parties of the risks and obtain their consent after thorough consultation. This consent must occur after the lawyer has fully disclosed the potential consequences of representing both sides simultaneously.

Generally, under California law, this kind of dual representation is not outright prohibited, as long as the lawyer ensures that there is no conflict of interest that could impair their ability to represent either party zealously. Therefore, the correct answer accurately reflects the nuanced application of conflict rules within the context of insurance representation and the need for informed consent and risk management.