A law firm cannot sue on behalf of an insured and defend against that same insured at the same time, an Alberta court has ruled.
In a decision filed March 16, the Court of King's Bench of Alberta disqualified a law firm from representing Northbridge General Insurance Corporation in three subrogated recovery actions, finding the arrangement posed a genuine risk of compromised representation for the insured.
The case, Sniper Pressure Services Ltd v Northbridge General Insurance Corporation, 2026 ABKB 193, arose from two roof collapses at a commercial property in Woodlands County, Alberta - the first in March 2020, the second in January 2022. Sniper Pressure Services, which owned the land and building, was insured with Northbridge for both losses. Following the first collapse, Northbridge paid Sniper approximately $2,000,000 and launched subrogated actions against the alleged tortfeasors. Sniper, meanwhile, sued Northbridge for $650,000 it says is still owed under the policy.
The issue: Northbridge had retained the same law firm to pursue the subrogated claims - filed in Sniper's name, as is standard in subrogation — and to defend itself against Sniper's own coverage claims. That meant the same counsel was effectively acting on Sniper's behalf in one set of proceedings while working against Sniper in another, all arising from the same losses.
Justice Kelsey L. Becker Brookes found no formal solicitor-client relationship between the firm and Sniper, which meant the "bright line" rule against concurrent representation of adverse clients did not technically apply.
But the court went further. Applying the "substantial risk" test, the judge concluded the dual role created a real risk. In the subrogated actions, the firm would need to review Sniper's records, identify privileged documents, and prepare Sniper's corporate representative for questioning. In the coverage dispute, that same firm would then cross-examine Sniper's representative, challenge their credibility, and seek admissions harmful to Sniper. The court found Sniper had been placed in an "untenable position" — forced to either hand over confidential information to a firm actively opposing it, or hold back and fail to cooperate as required.
"Northbridge faces no risk; in fact, they benefit from it," the judge wrote. "The party at a disadvantage is Sniper."
The court noted the firm had accepted the dual retainer in good faith, relying on advice from a practice advisor. Still, the judge ordered the firm removed from all three subrogated actions, finding the litigation was early enough that Northbridge would not be significantly prejudiced by retaining replacement counsel.
In a companion ruling issued the same day (Sniper Pressure Services Ltd v Northbridge General Insurance Company, 2026 ABKB 194), the court dismissed Northbridge's bid to force Sniper to provide more detailed particulars of its $650,000 claim, finding the statement of claim was already sufficient for Northbridge to prepare its defence.
For insurers, the takeaway is pointed: when subrogation and coverage disputes run in parallel, keeping the same counsel on both files is not just awkward — a court may step in and pull the plug.
