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Conflict of interest rule okayed by Supreme Court

The California Supreme Court has approved a State Bar amendment to the Rules of Professional Conduct (Rule 3-310) which will offer guidance to attorneys evaluating possible conflicts of interest in insurance matters.

The amendment was developed by a joint task force of the Judicial Council and the State Bar, after study by the bar's ethics committee. It becomes effective March 3.

At issue were the legal and professional responsibility conflict of interest issues arising from the decision of the California Court of Appeal in State Farm Mutual Automobile Insurance Company v. Federal Insurance Company.

The court held that a law firm should be disqualified for bringing an action against an insurance company while representing a policyholder of that same company in an unrelated insurance defense case. The representation was inconsistent with an attorney's duty of undivided loyalty, the court said.

The language of the new amendment was crafted to offer guidance to lawyers and courts in applying Rule 3-310. It will also aid the State Bar Court in disciplinary matters, the State Bar's Office of Enforcement in exercising prosecutorial decisions and civil courts in deciding disqualification motions and malpractice claims.

The State Bar's amendment request to the Supreme Court can be found on the bar's Web site, www.calbar.ca.gov (Attorney Resources> Ethics Information>Ethics News).

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