Opinion ID: 1793652
Heading Depth: 1
Heading Rank: 7

Heading: the attorney's duty

Text: We now turn to the difficult questions and serious ethical problems which must be faced by an attorney employed by an insurance carrier to represent the insured. There can be no question but that the lawyer owes his client absolute loyalty, and is required to devote his professional ability solely in the interest of that client. The fact that the insurance contract authorizes the insurance company to employ an attorney to handle the defense of a case in no way impairs or diminishes the duty of the lawyer to the insured client. See: Mallen, Insurance Counsel, 45 Insurance Counsel 244 (1978), p. 245 and cases cited, Footnotes 7-11. A contract which authorized any dilution of the ethical obligation of an attorney to the client would be void as against public policy. There is nothing wrong with a lawyer representing two clients in the same cause of action so long as the interests of the clients in that cause parallel each other. Where the objectives of the clients are adverse to one another, however, the attorney will almost certainly be faced with a conflict of interest problem. Conflict of interest occurs when a person charged with looking after the interest of A and B is faced with an option whereby if he makes one choice it will of necessity hurt A and help B, and if he makes the other choice he will of necessity help A and hurt B. Pearl River Valley Water Supply v. Hinds County, 445 So.2d 1330, 1356, note 25 (Miss. 1984). Where the interests of the two parties are in some manner antagonistic to one another, before any lawyer is authorized to assume dual representation (or continue if the adversity appears after he has been retained), he must first satisfy himself that there is no objective reason why he cannot, despite such divergence of interest, faithfully represent them both. If this cannot be met, the lawyer should not accept employment in the first place (or terminate it, if begun). Secondly, even if the lawyer reasonably (and from an objective point of view) believes he can faithfully represent dual parties with adverse interests, he still must fully explain all implications of the advantages as well as the risks of his representation to both parties, and assure himself that they both have given knowing and informed consent. Rule 1.7 Conflict of Interest: General Rule, Mississippi Code of Professional Conduct, and Comment thereunder. [6] Although a lawyer may ethically in some circumstances, and with his client's consent, limit the objectives of his representation, Rule 1.2 Scope of Representation, par. (c), [7] this can never authorize the attorney to engage in dual legal representation entailing professional decisions on his part which stand to benefit one client at the expense of the other. Rule 1.7, supra. [8] Any lawyer who attempts to represent two adverse masters places himself in a precarious, perilous position. These Professional Code statements are distilled principles of ancient, time-honored, and judicially-enforced conduct on the part of lawyers in representing clients. Without them our system of justice would be doomed. A liability insurance policy undertakes to insure a person up to a specified sum of money caused by his negligence. The policy requires the company to defend any lawsuit charging negligence, and also authorizes the company to select the attorney and conduct the defense of the action. The insured is required to fully cooperate with the company in undertaking the defense. Because the company is footing the bill for the defense, and will be obligated to pay any judgment rendered (if it does not settle the case), it is clearly entitled to select the attorney and conduct the defense. This does not, and indeed could not, authorize the company to undertake or pursue any defense prejudicial to the monetary interest of the insured. It hardly needs to be added that no insurance policy can validly diminish a lawyer's duty to his insured client. See: Allstate Ins. Co. v. Keller, 17 Ill. App.2d 44, 149 N.E.2d 482 (1958); Fidelity and Cas. Co. of N.U. v. McConnaughy, 228 Md. 1, 179 A.2d 117 (1962). The insurance company's selected lawyer is rarely employed until a lawsuit has been filed. Generally speaking, it will be a firm with many years experience defending such types of action. If the damages claimed are within the policy limits, and there is no question of coverage, no potential problem to the lawyer exists. When there is a demand in excess of the policy limits, however, it is the customary practice of the insurance company to notify the insured of such demand, and that he consider employing his own attorney to protect his individual interest. Mallen, Insurance Counsel, 45 Insurance Counsel Journal, 244, 260 (1977); Mallen and Levitt, Legal Malpractice, (2nd Ed.), # 539, p. 661; also, Hartford's Manual, supra. The prudent defense lawyer will assure himself the insured has indeed been notified of his potential need for independent counseling. Yet, a damage claim beyond policy limits in and of itself presents no ethical problem to the lawyer employed to defend the case, because his employment is for one of two purposes: either win the case outright, or keep the damages as low as possible. Everything he does in fulfillment of either objective must of necessity benefit both clients. See: Merritt v. Reserve Insurance Co., 34 Cal. App.3d 858, 868, 110 Cal. Rptr. 511 (1973). The lawsuit must be defended forthwith, professional decisions and actions must be timely made. When there is a question of coverage, however, and the insurance company notifies the insured that it will fulfill its obligation to defend the suit, while at the same time reserving a right to deny coverage of the insured's conduct, the insurance company-employed defense lawyer is presented with an ethical question up front. Also, in the course of preparation for trial or his representation, if there develop facts which may exclude coverage, leaving his insured client high and dry, he is again presented with an ethical dilemma. The lawyer may be required to withdraw from the case altogether, or restricted in his continuing representation with the insurance company furnishing at its expense an independent counsel chosen by the insured to represent his own interests. When any such situation is presented or arises, it is the professional and ethical obligation of the lawyer to recognize it, and take the appropriate action to see that the interests of both clients are preserved. He certainly is prohibited from taking any action which may injure either client. This is basic to the duties of any attorney representing clients in litigation. [9]