A more thorough explanation:

A conflict of interest occurs when there is a problem with the ethical relationship between two parties who have a preexisting connection. This can happen in law when an attorney's interests conflict with those of their client, another client, or a third-party. Attorneys have a responsibility to represent their clients' interests, but when they have multiple clients, their duties can conflict, making it impossible to fulfill both at once.

For example, if an attorney represents both the plaintiff and defendant in a case, advocating for one will inherently be advocating against the interests of the other. Attorneys must check for potential conflicts before accepting a client. If they believe there is a potential conflict of interest, they must notify their client and obtain written, informed consent from all affected parties before proceeding.

Conflicts of interest are particularly relevant in the field of insurance, where the insurance company may represent both the policyholder and the insurer. This creates a potential conflict of interest because the insurance company may take actions that harm the interests of the policyholder. For example, if the insurance company declines an early settlement offer, it may expose the policyholder to greater liability if they lose at trial.

To resolve conflicts of interest in insurance, some states require insurance companies to appoint separate counsel, known as cumis counsel, to exclusively represent the interests of the policyholder. For example, California Civil Code §2860 requires insurance companies to pay for the policyholder's choice of cumis counsel if they wish to reserve their right to contest whether the harm in question is covered by the policy.