Can a lawyer paid by an insurer prepare the guardianship and settlement-approval petition for an unrepresented minor and parents and appear in court with them?

Plain-English summary

The Committee considered whether, after an insurer negotiated a settlement with the unrepresented parents of an injured minor, a lawyer paid by the insurer could prepare the petition to appoint a guardian and approve the settlement and appear in court with the parents and minor. Calling the question "a difficult one," it adopted the guidance of ABA Informal Opinion 918 (built on Old Canon 6, whose counterpart is DR 5-105) and answered "Qualified yes."

The opinion set out the conditions ABA Opinion 918 required: before acting, the lawyer must fully disclose to the minor's family and guardian that the lawyer's only client is the insurance company and that the lawyer does not advise or represent that the settlement is fair; the lawyer must fully disclose his true relationship to the insurer and the minor to the court; the lawyer must submit to the court all information he or the insurer has about the claim and injuries; the lawyer must not represent, expressly or impliedly (including by merely appearing for the guardian), that the settlement is fair and proper; and the court must examine the matter, make sure the parents have been properly advised, and reserve the right to require the insurer's lawyer to withdraw in favor of independent counsel. The opinion stressed that if any condition is absent, the representation would be prohibited regardless of the guardian's and parents' consent, and that a minor could not give the express consent needed for the lawyer to represent conflicting interests. It added that where separate counsel is retained for the minor in a friendly suit, that counsel must be independent and represent the minor to the best of his abilities, regardless of who selects or pays him.

Currency note

This opinion was issued in 1985 under Kentucky's former Code of Professional Responsibility (in effect 1971 to 1990), before the Kentucky Bar Association's 1990 adoption of the Rules of Professional Conduct (SCR 3.130) and the substantial 2009 revisions to those rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can an insurer's lawyer handle court approval of a minor's settlement when no one represents the minor?

A: Qualified yes. The opinion concluded the insurer's lawyer may prepare the guardianship and approval petition and appear, but only if every disclosure condition from ABA Opinion 918 is met.

Q: What must the insurer's lawyer disclose?

A: That the lawyer's only client is the insurer, that the lawyer does not represent the settlement as fair, and the lawyer's true relationship to the insurer and minor, both to the family and to the court, while submitting all claim information to the court.

Q: Can that same lawyer also represent the minor?

A: No. The opinion concluded a minor cannot give the express consent needed to represent conflicting interests, so it would be unethical for the insurer's lawyer to appear for the minor; any lawyer retained for the minor must act independently.

Background and rules framework

The opinion applied the former Code's conflict provision, DR 5-105 (successor to Old Canon 6), as construed in ABA Informal Opinion 918. The modern analogs are Model Rule 1.7 (concurrent conflicts), Model Rule 1.8(f) (compensation from one other than the client), and Model Rule 4.3 (dealing with an unrepresented person). The analysis turned on full disclosure to the unrepresented family and the court and on the court's supervisory role.

Citations and references

Rules of Professional Conduct:

• DR 5-105 (former Code; successor to Old Canon 6)
• MR 1.7 (conflicts of interest); MR 1.8(f) (third-party compensation); MR 4.3 (unrepresented persons)

Other opinions cited:

• ABA Informal Op. 918 (1966): conditions for an insurer's lawyer to assist in a minor's settlement approval

See also

• KBA Ethics Op. E-331: Insurer-Imposed Limits on Defense Counsel
• KBA Ethics Op. E-340: Insurer in Client Interviews

Source

• Landing page: https://kybar.org/For-Members/Rules-Ethics-Information/Ethics-Opinions
• Original PDF: https://kybar.org/Portals/0/Admin/Ethics%20Opinions/KBA_E-306.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

KENTUCKY BAR ASSOCIATION
Ethics Opinion KBA E-306
Issued: May 1985

This opinion was decided under the Code of Professional Responsibility, which
was in effect from 1971 to 1990. Lawyers should consult the current version of
the Rules of Professional Conduct and Comments, SCR 3.130 (available at
http://www.kybar.org), before relying on this opinion.

Question:

If an insurance company has negotiated a settlement with the parents of a
minor child for an injury caused by the third party insured, and neither the
parents nor the minor child are represented by an attorney, may an attorney
paid by the insurance company prepare the petition for the appointment of a
guardian and approval of the settlement, and appear in Court with the
parents and minor child?

Answer:

Qualified yes.

References:

DR 5-105; ABA Informal Opinion 918 (1966).
OPINION

After noting that this question "is a difficult one", the ABA provided guidance on
this issue in Informal Opinion 918 based on the principles of Old Canon 6, the present
counterpart of which is DR 5-105. The first question addressed by the ABA Committee
was:
"Is it a violation of ethics or good practice for an attorney
representing an insurance company to also represent a minor who was
injured by the company's assured in a suit in equity to remove the
disabilities of non-age of the minor in order that such minor may be in a
position to execute a release without the necessity of a friendly suit or other
procedure?"
The Committee provided the following guidelines in answer to this question, which
we believe provide appropriate guidance under DR 5-105:
... subject to the following conditions:
1.
That before he is given permission to act in the matter, the lawyer fully
discloses to the minor's family and guardian that the lawyer's only client will
be the insurance company and that the lawyer does not advise or represent that
the settlement is a fair one,
2.
That a full disclosure of the lawyer's true relationship to the insurance
company and the minor be made to the court,

3.
That the lawyer submits to the courts all of the information which he or
his insurance company client have concerning the claim and injuries,
4.
That the lawyer does not represent or state to the court, either expressly
or impliedly by merely appearing for the guardian, that in his opinion the
settlement is fair and proper, and
5.
That the court itself examines into the matter and makes sure the parents
have been properly advised, and has and reserves the right to require the lawyer
for the insurance company to withdraw and to substitute entirely independent
counsel if the court desires assistance of such counsel.
We do not believe Canon 6 would be violated by the lawyer for the
insurance company appearing for the minor's guardian. However, if any of
the above conditions were not present, it is our opinion that Canon 6
would prohibit such representation, regardless of the consent of the
minor's guardian and parents. If your procedure, with which we are not
familiar, is such that the lawyer for the insurance company would be
appearing only for the minor, and not for the minor's parents or guardian,
it would be unethical for him to do so, since the minor would be incapable
of giving the "express consent" required by canon 6 before the lawyer
could represent what are clearly conflicting interests.
An additional question posed by the ABA and the analysis thereof, may also be
helpful to the requestor in the present case.
"In the situation where a minor is the injured party and a settlement
has been arrived at between the minor, his parents and the insurance
company, and the vehicle of a friendly suit is instituted in order to
accomplish court approval and an additional counsel is retained to represent
the minor in such suit, what are the duties of such counsel;
(a)
is this attorney independent and obligated to represent the minor to
the full extent of his abilities, experience and knowledge, or
(b)
is his single purpose to accomplish approval of the settlement, good
or bad, regardless of his professional opinion of its sufficiency from the
standpoint of the minor?"
Our answer is that clearly the lawyer must be independent and must represent the
minor to the best of his abilities, regardless of whether he is selected by the insurance
company or its counsel or by whom he is to be compensated for his services.

Note to Reader
This ethics opinion has been formally adopted by the Board of Governors of the
Kentucky Bar Association under the provisions of Kentucky Supreme Court Rule 3.530
(or its predecessor rule). The Rule provides that formal opinions are advisory only.