Can one lawyer represent both an injured claimant and the health insurer that paid benefits and is subrogated to the claimant's recovery?

Plain-English summary

A lawyer asked whether he could represent, in a personal injury action, both the insureds and a health insurer that had paid them benefits and was subrogated to their rights. The Commission answered that a lawyer may do so, but only after observing appropriate safeguards, applying Rule 3.4(b) (no employment that adversely affects independent judgment or involves differing interests, except as permitted by subdivision (d)) and Rule 3.4(d) (multiple clients allowed if the lawyer can obviously represent each adequately and each consents after full disclosure).

The Commission explained that subrogation substitutes the insurer to the insured's rights, so the insurer's cause of action against the defendant is identical to the injured party's. In the usual case the insured and the subrogated insurer have identical interests in establishing the tortfeasor's liability, and a single lawyer may represent both in that phase, subject to a case-by-case check for conflicts. A conflict will often arise, however, during settlement negotiations or where a verdict is less than the full damages claimed, because the insured and insurer then compete for shares of the recovery (the insurer may take only a pro rata share under 24-A M.R.S.A. section 2729-A); one lawyer could not adequately represent both at arm's length in dividing the money.

The Commission concluded the lawyer can structure the representation in advance to avoid impermissible conflicts, which often serves both parties by avoiding separate trial counsel for the insurer. For example, while representing the insured but before agreeing to represent the insurer, the attorney could negotiate an arm's-length agreement on behalf of the insured specifying how any recovery would be divided, which party conducts the case and decides on settlements, and who handles other decisions; the attorney might then, but not before, represent both after appropriate disclosure. Alternatively, after disclosure, the attorney might represent both except as to settlement or division of proceeds, provided arm's-length negotiation first fixed which party makes which tactical decisions. With these or other adequate safeguards, the rules permit representing both the insured and the subrogated insurer in the same matter.

Currency note

This opinion was issued in 1983, before Maine's replacement of the former Maine Bar Rules with the Maine Rules of Professional Conduct (effective August 1, 2009). 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: Can one lawyer represent both the injured claimant and the subrogated insurer?

A: The opinion concluded yes, but only after observing appropriate safeguards under Rules 3.4(b) and 3.4(d), because their interests align on liability but can diverge on dividing the recovery.

Q: Why is joint representation usually fine for the liability phase?

A: The opinion explained that subrogation substitutes the insurer to the insured's identical cause of action, so the two share identical interests in establishing the tortfeasor's liability.

Q: Where does the conflict arise?

A: The opinion concluded the conflict typically arises in settlement or where a verdict is less than full damages, since the insured and insurer then compete for shares, and the insurer may receive only a pro rata amount under 24-A M.R.S.A. section 2729-A.

Q: How can the lawyer cure the conflict in advance?

A: The opinion concluded the lawyer can negotiate an arm's-length agreement, while representing only the insured, fixing how recovery is divided and who controls settlement and tactics, then represent both after full disclosure and consent.

Background and rules framework

The opinion interprets former Maine Bar Rule 3.4(b) (employment impairing independent judgment or involving differing interests) and Rule 3.4(d) (multiple-client representation with adequate representation and informed consent). These correspond to ABA Model Rule 1.7 (concurrent conflicts of interest, with informed consent where the conflict is consentable). The opinion applies the Maine pro rata recovery provision, 24-A M.R.S.A. section 2729-A.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.7 (concurrent conflicts of interest)
• Maine Bar Rules 3.4(b), 3.4(d)

Statutes:

• 24-A M.R.S.A. section 2729-A (pro rata division of recovery)

See also

• Maine Ethics Op. 63: Insurer-Assigned Defense Counsel
• ISBA Ethics Op. 93-09: One Lawyer for Driver + Passenger

Source

• Landing page: https://mebaroverseers.org/attorney_services/opinion.html?id=89678

Original opinion text

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

Issued by the Professional Ethics Commission

Date Issued: November 22, 1983

A lawyer inquires as to the propriety under the Maine Bar Rules of representing in a personal injury action both insureds and a health insurer which has paid benefits to the insureds and is subrogated to their rights under the insurance conflict.

Opinion

It is the Commission's opinion that a lawyer may represent both an insured and an insurer subrogated to the insured's rights, but only after observing appropriate safeguards.

The relevant parts of the Code of Professional Responsibility ("the Code") of the Maine Bar Rules are found in Rule 3.4, subdivisions (b) and (d). Subdivision (b) provides that:

A lawyer shall not accept employment if the exercise of his independent professional judgment in behalf of a client will be, or is likely to be, adversely affected by the acceptance of such employment, or if it would be likely to involve him in representing differing interests, except to the extent such employment is permitted by subdivision (d) of this rule.

Subdivision (d) of Rule 3.4 provides as follows:

A lawyer may represent multiple clients if it is obvious that he can adequately represent the interests of each and if each consents to the representation after full disclosure of the possible effect of such representation on the exercise of the lawyer's independent professional judgment on behalf of each.

Because of the nature of the relationship between subrogees and subrogors a lawyer may represent both in certain phases of the litigation when those phases will be unlikely "to involve him in representing differing interests. . . ."

In the ordinary course of events, when an insurer is subrogated to the rights of its insured, it succeeds to the same rights against the tortfeasor that the insurer would have. See generally 16 Couch on Insurance 2d, section 61:1, 61:4. Indeed, sometimes the concept of subrogation is known as "substitution." See 73 Am.Jur.2d Subrogation, section 1. The insurer's cause of action against the defendant is identical to the injured party's. While the potential for a conflict of interest must be examined on a case-by-case basis, in the usual case the insured and the subrogated insurer have identical interests in proving the tortfeasor's liability. Thus a lawyer in the usual case may represent both parties in establishing liability.

However, a conflict of interest will often arise during settlement negotiations. The insured and the subrogated insurer are likely to be competing for the larger share of the settlement. Similarly, if the matter goes to trial and the fact-finder returns a verdict for less than the full amount of damages claimed, the insurer may be entitled to only a pro-rata of the recovery. See 24-A M.R.S.A. section 2729-A (Supp. 1983). In such cases, a single lawyer could not adequately represent both insured and insurer at arm's-length in negotiating a division of the money received as damages.

Despite the problems noted above, the lawyer may structure his representation in advance so as to avoid any impermissible conflicts of interest. In fact, it will often be in the best interest of both parties to avoid a separate appearance at trial by counsel for the insurance company. For example, while representing the insured but before agreeing to represent the insurer, the attorney could negotiate an arm's-length agreement with the insurer on behalf of the insured. The agreement could specify, for example, how any recovery would be divided, which party would be responsible for conducting the case and deciding on settlements, and which party would have responsibility for other decisions apt to arise during the case. The attorney might then (but not before) be able to represent both parties after appropriate disclosure. Alternatively, the attorney might agree after appropriate disclosures, to represent both parties except as to settlement or division of the settlement proceeds, provided it was first made clear through arm's-length negotiations which party would be responsible for which tactical decisions.

Given these or other adequate safeguards, the code would permit an attorney to represent both the insured and the subrogated insurer in the same transaction.