Can an insured direct the lawyer hired by their liability insurer to refuse to defend a claim, and what must the lawyer do if the client wants to feign a defense?

Plain-English summary

A liability carrier retained a lawyer to defend its insured, the husband, against a personal-injury claim by the plaintiff, his wife, who was a passenger in a car the husband was driving. The lawyer thought the wife's claim might fail (extreme weather and the possible bar of the Workers' Compensation Act), but the husband, whose policy limits exceeded any likely verdict, told the lawyer the wife's claim should be paid regardless of any available defense.

Following Opinion No. 63, the Commission treated the insured (the husband) as the lawyer's client for all purposes, including the duty to protect his confidences. The question was whether the lawyer must honor the client's chosen result and strategy. The Commission concluded the client may decide not to defend, may insist the lawyer refuse to cooperate with the insurer (whatever the effect on coverage for liability or defense costs), and may direct a strategy that refuses cooperation while asserting every honest justification the policy and the law allow.

The Commission drew the line at deception. The client may not require the lawyer, regardless of who ultimately pays the lawyer, to create the appearance of cooperation, so as to avoid jeopardizing coverage, while in fact working to produce an unsuccessful defense and a recovery for the wife, nor to bill the insurer for services inconsistent with the company's legitimate expectations under the policy. That conduct would be a fraud on the insurer. The lawyer is forbidden by Rule 3.2(f)(3) from engaging in fraud; Rule 3.6(c) requires disclosure of a client's fraud unless the information is privileged (probably not so as to the accident circumstances); Rule 3.5(b) requires withdrawal where continued employment would result in a rule violation; and Rule 3.5(c) permits withdrawal where it would likely result in a violation or where the client seeks an illegal course. So if the client asks the lawyer to feign cooperation while suppressing or ignoring facts that would establish a defense, the lawyer should ask the client to amend his instructions and, failing that, ask leave to withdraw.

Currency note

This opinion was issued in 1986, 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: Who is the client when an insurer hires a lawyer to defend its insured?

A: The opinion concluded the insured is the client. Following Opinion No. 63, the lawyer represents the insured (here, the husband) and not the carrier, and owes him the full duties of the client relationship, including protection of confidences.

Q: Can the insured tell the lawyer to refuse to cooperate with the insurer?

A: The opinion concluded yes. The insured may decide not to defend, may insist the lawyer refuse cooperation whatever the effect on coverage, and may direct a strategy that refuses cooperation while asserting every honest justification the policy and law provide.

Q: Can the client direct the lawyer to fake a defense so coverage is not lost?

A: The opinion concluded no. The client may not require the lawyer to create the appearance of cooperation while in fact working to produce a recovery for the plaintiff, or to bill the insurer for services inconsistent with the policy; that would defraud the insurer.

Q: What must the lawyer do if the client insists on the deception?

A: The opinion concluded the lawyer should call on the client to amend his instructions, and if the client refuses, should ask for leave to withdraw, citing the mandatory and permissive withdrawal provisions of Rules 3.5(b) and 3.5(c).

Background and rules framework

The opinion interprets former Maine Bar Rule 3.2(f)(3) (a lawyer may not engage in fraudulent conduct), Rule 3.6(c) (disclosure of a client's fraud unless the information is privileged), Rule 3.5(b) (mandatory withdrawal where continued employment would result in a rule violation), and Rule 3.5(c) (permissive withdrawal). These correspond to ABA Model Rule 1.2 (allocation of authority between lawyer and client), Model Rule 4.1 (truthfulness and avoiding assisting client fraud), Model Rule 1.16 (declining or terminating representation), and Model Rule 1.6 (confidentiality). The opinion relies on Maine Opinion No. 63 for the proposition that insurer-retained counsel represents only the insured.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.2 (scope of representation; allocation of authority); Model Rule 4.1 (truthfulness; client fraud); Model Rule 1.16 (withdrawal); Model Rule 1.6 (confidentiality)
• Maine Bar Rules 3.2(f)(3), 3.6(c), 3.5(b), 3.5(c)

Other opinions cited:

• Maine Professional Ethics Commission Opinion No. 63: insurer-retained counsel represents the insured, not the carrier

See also

• ABA Formal Op. 01-421: Insurer Litigation Guidelines
• Maine Ethics Op. 164: Insurer Billing Audits

Source

• Landing page: https://mebaroverseers.org/attorney_services/opinion.html?id=91177

Original opinion text

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

Issued by the Professional Ethics Commission

Date Issued: August 6, 1986

This opinion concerns the ethical responsibilities of a lawyer retained by a liability insurance carrier to defend its insured, the husband of the plaintiff, in an action in which the plaintiff alleges that she sustained injuries as a passenger in an automobile accident caused by the negligence of her husband, the driver of the automobile. The lawyer believes that the wife's claim may be unfounded because the accident occurred under extreme weather and hazardous driving conditions that could prevent the wife from establishing negligence on the part of her husband.

The situation is further complicated because, in the lawyer's view, it could be determined that the wife's injuries were work-related, in which case the immunity provisions of the Workers' Compensation Act might bar the wife's civil action. The husband and wife are both employed by the same company, as a managing officer and administrative employee, respectively, and the accident occurred while they were leaving a business meeting attended by other people in that company's industry.

The husband's liability policy limits exceed any conceivable verdict for the wife, and the husband has told the lawyer retained by the carrier that the wife's claims should be paid despite any defenses based on the Workers' Compensation Act, absence of negligence or otherwise.

In Opinion No. 63, the Professional Ethics Commission concluded that a lawyer retained by an insurance carrier to represent its insured represents only the insured and not the carrier. Accordingly, the husband is entitled to be considered the client of that lawyer for all purposes, and the lawyer has the duty to treat the insured with the full measure of care accorded to all client relationships, including the duty to protect confidential communications with the insured.

Accordingly, the question presented by the situation described to the Commission is whether an attorney is bound to honor the client's choice of desired result and strategy under these circumstances. Absent an insurer, the client would plainly be within his rights in deciding not to defend a claim. With an insurer in the picture, it is also plainly within the client's rights to insist that his attorney refuse cooperation with the insurer, whatever effect that decision may have on coverage both for the ultimate liability and for the defense costs. The client may also require his attorney to design and carry out a strategy to refuse cooperation while asserting every honest justification for refusal offered by the policy and the law. But the client may not require the attorney, regardless of the eventual source of his compensation, to create the appearance of cooperation, so as to avoid jeopardizing coverage, while in fact, working to produce an unsuccessful defense and a recovery for the wife. Nor may the client require the attorney to bill the insurer for legal services which are inconsistent with the company's legitimate expectations under the policy.

The reason is that such conduct would amount to a fraud on the insurer. The lawyer is forbidden by Bar Rule 3.2(f)(3) from engaging in fraudulent conduct himself. If he discovers that his client is committing a fraud, Rule 3.6(c) requires him to disclose the fraud unless the information is privileged, probably not the case here with respect to the critical information as to circumstances of the accident. Rule 3.5(b) requires withdrawal from representation if the lawyer knows that continued employment would result in violation of the Bar Rules, and Rule 3.5(c) permits withdrawal if continued employment would be likely to result in violation of the rules or the client seeks to pursue an illegal course of conduct.

If the client, the defendant-insured and not the insurer, is asking the attorney to create an appearance of cooperation while suppressing, or perhaps just ignoring, facts that would establish a defense, the lawyer should call upon the client to amend his instructions, and if he refuses, should ask for leave to withdraw from the case.