Subrogation places insurer and insured on the same side of a recovery action, but that alignment can disappear when they are also fighting over coverage. Sniper Pressure Services Ltd v Northbridge General Insurance Corporation, 2026 ABKB 193, deals with what happens when one law firm is asked to work on both sides of that divide.
Sniper Pressure suffered two roof collapses at a commercial property. Northbridge paid roughly $2 million and then pursued three subrogated recovery actions in Sniper's name against parties said to be responsible for the losses. Sniper separately sued Northbridge for additional coverage of about $650,000.
The same law firm was involved in the subrogated actions and in defending Northbridge against Sniper's coverage claim. Sniper asked the Court to remove the firm.
The Court concluded that the arrangement created a substantial risk of impaired representation. Even though the conventional bright line rule for two current clients did not fit perfectly, the practical conflict was hard to avoid. In the subrogated actions, counsel would handle information and advance positions for a claim brought in Sniper's name. In the coverage action, the firm would challenge Sniper's entitlement and could need to attack the same evidence or interests.
The problem was not merely appearance. The structure put the firm in a position where work for the insurer could materially affect the insured whose name and rights were being used in the recovery litigation.
The law firm was disqualified from the three subrogated actions. The Court did not decide whether Northbridge owed the disputed additional coverage or whether the recovery actions would succeed.
For insurers, Sniper Pressure is a useful reminder that subrogation counsel cannot be chosen in isolation from the broader claims relationship. Once coverage becomes adversarial, conflicts need to be reassessed rather than assumed away because the insurer controls the recovery file. Separate counsel may be necessary to protect both the recovery strategy and the integrity of the coverage dispute.