Our January 2012 Alert discussed a Texas district court opinion ruling that there was no conflict of interest between a professional liability insurer and the law firm it insured, and thus that the insurance company was entitled to select counsel to represent the law firm in an underlying malpractice suit. Coats, Rose, Yale, Ryman & Lee, P.C. v. Navigators Specialty Ins. Co., 830 F. Supp.2d 216 (N.D. Tex. 2011). Last month, the Fifth Circuit affirmed the decision. Coats, Rose, Yale, Ryman & Lee, P.C. v. Navigators Specialty Ins. Co., 2012 WL 4858194 (5th Cir. Oct. 15, 2012). The Fifth Circuit agreed with the district court that because the insurer and policyholder’s interests were aligned, the reservation of rights did not create an actual conflict of interest sufficient to divest the insurer of its contractual right to select counsel. Under Texas law, there must be an actual (rather than potential) conflict of interest in order to override an insurer’s right to select counsel—a standard that requires more than a mere reservation of rights