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Ethics Opinion

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CI-1146

June 19, 1986

SYLLABUS

    A lawyer retained by an insurance company may also represent the insured, provided that the interests of the insurer and the insured do not conflict. If improper influences are exerted by the insurer which interfere with the independent judgment of the lawyer, the lawyer must withdraw as counsel for the insured. Once counsel has withdrawn, communications with the insured should not continue.

    A lawyer must advise an individual of the grievance procedure if so requested.

    References: MCPR DR 2-110(A)(2), DR 5-105, DR 5-107(B); C-334, CI-876, CI-866.

TEXT

A lawyer employed by an insurance company asks whether the lawyer may also represent insureds. The lawyer also asks whether he is required to provide members of the public with information regarding how to file complaints against lawyers.

A staff lawyer employed by an insurance company representing insured is subject to the control and direction of senior lawyers regarding the lawyer's judgment. Such internal communication and control is not only permissible but salutary. C-334. However, the degree and extent of control exerted upon the lawyer should always be consistent with the Code of Professional Responsibility. It is mandatory for a lawyer to adhere to the Code of Professional Responsibility, and if a situation arises whereby independent judgment cannot be exercised pursuant to MCPR DR 5-105 and DR 5-107(B), withdrawal is proper and necessary as to the insured. CI-876 addressed the matter of potential conflicts arising from simultaneously representing the insurer and its insured and stated:

    "When a claim is brought against the insured under the liability policy, differing interests may arise. The insured wants the dispute settled without liability to him, whatever the cost may be to the insurance company. On the other hand, the company wishes to pay as little as possible in resolving the case whether in the form of payment to the opposing party or in its costs of litigation. Despite these potential conflicts, the insurance company's furnishing an attorney to defend the insured is an essential ingredient of liability insurance and is deemed socially useful. Hence, it is both proper and quite common for the attorney selected by the insurance company to represent both its interest and that of the policyholder. However, the attorney selected by the company to represent the insured still has a professional obligation to avoid conflicting interests and impaired loyalty. He may be subject both to disciplinary action and civil liability if he fails to do so." See also EC 5-23

MCPR DR 5-105 permits the representation of multiple clients provided the lawyer can adequately represent the interests of each. CI-866 emphasizes precautionary measures by saying:

"The obligation of the attorney runs to the insured party rather than the insurer in such case as the attorney has appeared for and represents the insured in pending litigation, notwithstanding that the insurer is paying for such representation . . . . Consistent with this view the insured party would and should maintain complete control over the course of the litigation . . . . If the interest of the insurer and insured in such case are in conflict, the attorney must advocate and represent the interest of the insured in accordance with the Code of Professional Responsibility or withdraw."

As to whether a lawyer can fairly and adequately protect the interests of multiple clients depends upon an analysis of each case, ABA Model Code of Professional Responsibility EC 5-17 provides:

    "In certain circumstances, there may exist little chance of the judgment of the lawyer being adversely affected by the slight possibility that the interests will become actually differing; in other circumstances, the chance of adverse effect upon his judgment is not likely."

Each set of facts must be individually analyzed and the ensuing conduct of the lawyer must be based on the particular set of circumstances. MCPR DR 5-107(B) and DR 5-105 should be taken into consideration in rendering a decision, along with ABA Model Code of Professional Responsibility EC 5-14, EC 5-15, EC 5-16, EC 5-21, EC 5-22, and EC 5-23.

If a lawyer determines a conflict exists requiring withdrawal, the lawyer may not continue to communicate directly with that client and the client has no authority to "waive the conflict" for the purpose of continuing those communications. However, to keep within the purview of MCPR DR 2-110(A)(2), an obligation does exist to assist substituted counsel by delivering all papers and property to which the client is entitled to and to further apprise new counsel of the case for the purpose of avoiding prejudice to the client.

A lawyer must advise a member of the public regarding lawyer grievance procedure upon request, MCR 9.103(B).

 
     

 

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