“Courtesy defense” of a common interest development: legal?

Recent rulings by Alameda County, California, judges prohibited an insurance company from offering a “courtesy defense” to a corporation by the same attorney that it had appointed to represent the individuals accused of wronging the corporation, because the shareholders who had been asked to waive the conflicts of interest in this dual representation had not been given the disclosures required by the Rules of Professional Conduct of the California bar.

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