Here's a link to a little article on the law relating to the possible conflicts of duties faced by a lawyer retained by a liability insurer to act for its insured in the defence of proceedings against the insured. It discusses 3 English cases:

• Brown v Guardian Royal Exchange Assurance;
• TSB Bank v Robert Irvin; and
• Zurich Professional v Karim.

And here's a link to an excellent solicitors' liability publication from Barlow Lyde & Gilbert. It deals with the new professional conduct rules in England, solicitors' liability for mortgage fraud, lawyers' obligations to their opponents, and an unusual case in which liability insurers were ordered by the Court to pay £1 million in legal costs of a failed defence even though the limit of indemnity had been exhausted by the judgment. That was ordered on the basis of these apparently unremarkable circumstances:

'(i) the insurers determined that the claim would be fought; (ii) the insurers funded the defence of the claim; (iii) the insurers had effective conduct of the claim; (iv) the insurers fought the claim exclusively to defend their own interests; and (v) the defence failed in its entirety.'