Can insurance-defense counsel give the carrier a settlement-value opinion when the claim exceeds policy limits but can be settled within them?
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This page answers the general question as of 1991. Ezel answers yours: whether it's allowed on your facts, under the current Massachusetts Rules of Professional Conduct, with citations.
Plain-English summary
A lawyer was assigned by an insurer to defend its insured in a negligence suit where the claim exceeded the policy limits. The lawyer learned the plaintiff would settle within the policy limits, and the carrier asked the lawyer for an opinion on the insured's liability and the claim's settlement value. The committee considered whether the lawyer could give that opinion.
Citing Opinion 77-16, the committee noted that defense counsel retained by a carrier represents both the insurer and the insured. Where a claim is within policy limits and there is no reservation of rights, their interests usually align and the lawyer can render such an opinion. But where the claim exceeds the policy limits, or the insurer defends under a reservation of rights, the interests are clearly adverse: the insured wants the carrier to settle within limits and wants counsel to advocate that aggressively, while the insurer wants to pay as little as possible and limit precedent. Drawing on Murach v. Massachusetts Bonding and Insurance Co., the committee held that when the lawyer is asked to opine on the merits or settlement value, the lawyer cannot consider the matter objectively for the carrier without compromising the duty to the insured to settle within limits, so DR 5-105(A) prohibits the dual representation.
The committee held that DR 5-105(C) could not save the arrangement, because the conflict is inherent and serious and it is not obvious the lawyer could adequately represent both, even assuming an effective consent (which it doubted, especially from the insured) could be obtained. It limited the opinion to cases where the lawyer knows or has strong reason to believe the claim can be settled within the policy limits, and noted that a conflict does not necessarily arise where excess exposure is merely technical or frivolous; only once the lawyer forms a good-faith belief that the excess claim is not frivolous may the lawyer no longer render the opinion to the insurer.
Currency note
This opinion was issued in 1991, before Massachusetts's adoption of the 2015 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.
Common questions
Q: Does insurance-defense counsel represent the insurer, the insured, or both?
A: The committee, citing Opinion 77-16, said counsel retained by a carrier represents both the insurer and the insured, and their interests usually align when the claim is within policy limits.
Q: When can counsel not give the carrier a settlement-value opinion?
A: Once the lawyer makes a good-faith determination that an award could exceed the policy limits and knows the case can settle within them; at that point DR 5-105(A) bars the lawyer from opining to the carrier on the merits or settlement value.
Q: Can the parties consent to let the lawyer give the opinion anyway?
A: The committee said DR 5-105(C) does not permit it, because the conflict is inherent and serious and it is not obvious the lawyer could adequately represent both, even assuming an effective consent could be obtained.
Background and rules framework
The opinion applied DR 5-105(A) and (C) (declining or limiting representation involving differing interests, absent obvious adequacy and consent), corresponding to Model Rule 1.7, in the insurer-insured tripartite setting where a third party (the insurer) directs and pays for the defense, implicating Model Rule 1.8(f). It relied on Murach and on Hartford Accident & Indemnity Co. v. Foster.
Citations and references
Rules of Professional Conduct:
- Model Rule 1.7 / DR 5-105 (concurrent conflicts; differing interests)
- Model Rule 1.8(f) (compensation and direction of the representation by a third party)
Cases:
- Murach v. Massachusetts Bonding and Insurance Co., 339 Mass. 184 (1959) (insurer's duty to disclose adverse interest on excess exposure)
- Hartford Accident & Indemnity Co. v. Foster, 528 So. 2d 255 (Miss. 1988) (extensive discussion of the conflict)
Other opinions cited:
- MBA Opinion 77-16 (defense counsel represents both insurer and insured)
See also
- MA Bar Ethics Op. 00-4: Insurer litigation guidelines and outside auditors
- MA Bar Ethics Op. 92-3: Dropping one client to take a conflicting representation
Source
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