In March, the Alberta Court of King’s Bench issued a significant decision on conflict‑of‑interest risks in subrogation matters. The Court reversed the application judge’s decision and removed the insurer’s chosen counsel from all subrogated actions after finding that counsel’s dual role—pursuing subrogated claims in the insured’s name while defending the insurer against the insured—created a real and substantial risk of prejudice. This ruling underscores the need for insurers to structure subrogation and defence retainers carefully to avoid compromising recovery efforts.
Issue: Whether counsel acting for an insurer on subrogated claims should be removed as counsel due to defending the insurer against the insured in related coverage and negligence actions
