Panel counsel

Panel counsel is a list of firms named in the policy, at negotiated hourly rates, which the insurer requires or offers. The arrangement runs up against the insured's free choice of counsel. Article L. 127-3 of the French Insurance Code sets the rule for legal expenses insurance. When a lawyer is called in, the insured is free to choose. The insurer may not suggest a name without a written request from the insured. Liability policies fall outside that provision, and the market uses panel counsel there. The panel is a list of firms approved by the insurer, at negotiated hourly rates, often well below published rates. It comes with detailed billing guidelines (a budget per phase, no two partners at the same hearing). In E&O (errors and omissions) and cyber, where the policy carries a duty to defend, the insurer appoints counsel from its list; the breach coach in a cyber policy is almost always a panel firm. Costs incurred off the list without prior consent are not reimbursed, or are reimbursed at the panel rate. D&O (directors and officers) works differently. Most policies carry no duty to defend, the executive picks counsel, and the insurer may not withhold consent to costs without reasonable grounds (consent not to be unreasonably withheld). Some large-risk policies still impose a panel for securities class actions, where specialist firms are few. The sore point is conflict of interest. When the insurer reserves its rights on an exclusion, the lawyer it chose and pays is defending an insured whose coverage is in dispute; after San Diego Navy Federal Credit Union v. Cumis Insurance Society (California Court of Appeal, 1984, 162 Cal.App.3d 358), California codified in Civil Code section 2860 the insured's right to independent counsel at the insurer's expense.