Opinion ID: 2334690
Heading Depth: 3
Heading Rank: 2

Heading: relationship of the insured to counsel hired by an insurer

Text: The issue of whether the insured may be held vicariously liable for the tortious acts of his or her hired attorney also presents an issue of first impression in this state. In this case, McElwaney argues, similarly to Allstate, that the retained attorney stands in the role of an independent contractor vis-à-vis the insured, and that as such, the insured cannot be held vicariously liable for the tortious actions of that attorney. McElwaney further argues that, practically speaking, an insured has no right of control in this context because the insurance contract itself typically delegates many aspects of control to the insurer. Following our decision in Youngblood, no doubt can exist that the insured is the sole client of an attorney hired by an insurer pursuant to its contractual duty to defend, see 895 S.W.2d at 328, [6] and in the typical attorney-client relationship, the client maintains a significant right to control the objectives of the representation. Indeed, Ethical Consideration 7-7 states that the client retains exclusive authority to direct all areas of the representation that affect the merits of the cause or substantially prejudice his or her rights. See also Zagorski v. State, 983 S.W.2d 654, 658 (Tenn.1998) (Generally, the client has exclusive authority to make decisions about his or her case, which are binding upon the lawyer if made within the framework of the law.). Despite the wide range of authority and right of control possessed by the client, however, the client does not have a general authority to control the time, place, methods and means of the representation. Importantly, Ethical Consideration 7-7 allocates to the attorney the authority to determine the specific means of achieving these objectives, and this authority is not generally subject to the control of the client. Therefore, although the line separating the sphere of client control from that of the attorney's can never be marked with the precision of a bright-line rule, there can be no question that the attorney retains substantial independent authority regarding the day-to-day aspects of the representation. Moreover, in the unique context of insurance defense, whatever right of control the client would otherwise possess over the time, place, methods and means of the representation is often practically superseded by the insurance contract itself, which typically delegates much of this right of control to the insurer. Given that the insurer usually retains the right to select counsel, to guide the course of litigation, and to compel the cooperation of the insured, the insured generally has little practical authority to control the actions of his or her attorney. As the California Court of Appeal has recognized in one of the leading cases in this area, The assured is not in a position to exercise effective control over the lawsuit or to further his own interests by independent action, even when those interests appear in serious jeopardy. The assured may face the possibility of substantial loss[,] which can be forestalled only by action of the carrier. Thus the assured may find himself and his goods in the position of a passenger on a voyage to an unknown destination on a vessel under the exclusive management of the crew. Merritt v. Reserve Ins. Co., 34 Cal.App.3d 858, 110 Cal.Rptr. 511, 519 (1973). Therefore, because the client does not generally possess the right to control the the time, place, methods and means by which the representation is accomplished, or often even possess any right to control the objectives of the representation in the insurance context, an attorney retained by an insurer must be deemed to be an independent contractor vis-à-vis the client insured. [7] However, as we recognized above, the attorney's status as an independent contractor does not vindicate the client insured in the face of all claims of vicarious liability, because a principal can be held liable for the harm caused by the directed acts of an agent, despite whether that agent would otherwise be considered an independent contractor in the absence of such directions. Accordingly, for the reasons stated above, we hold that a client insured can also be held vicariously liable for the acts or omissions of his or her attorney when those acts or omissions were directed, commanded, or knowingly authorized by that client. The Court of Appeal in this case held that because the law presumes an attorney to act with the authority of the client, then the client must be vicariously liable for the tortious actions of that attorney. We respectfully disagree. While the presumption regarding the apparent authority of an attorney was accurately stated by the intermediate court, its use below effectively grounds vicarious liability in tort solely on the basis of the attorney-client relationship. We conclude that this approach is too broad because it exposes the client to tort liability for virtually every action taken by the attorney during the representation, irrespective of whether the client actually directed or knowingly authorized those actions. As the Texas Court of Appeals has recognized, Unless a client is implicated in some way other than merely being represented by the attorney alleged to have committed the [tortious] conduct, the client cannot be liable for the attorney's conduct. A contrary holding would in effect obligate clients to monitor the actions taken by their attorneys when their attorneys are representing them, and require the clients to seize the helm of their representation at the slightest hint of [tortious] conduct. Most clients cannot possibly monitor their attorneys to the degree that would be required to meet such an obligation, and most, clearly, are not qualified for such monitoring, anyway. Bradt v. West, 892 S.W.2d 56, 76-77 (Tex.App.1994). We agree with this assessment, and because the basis of liability adopted by the intermediate court does not properly consider the general independent contractor status of the attorney or the unique circumstances surrounding the insurance contract itself, we decline to adopt a similar theory to impose vicarious tort liability on a client for the actions of an attorney. [8]