Can a lawyer take an insurer's subrogated claim on contingency, and also handle the insured's own deductible portion of the same claim?

Plain-English summary

The inquiry asked whether a lawyer could handle, on a contingent basis, damage claims that the insured had subrogated to the insurer after the insurer paid under the policy, and whether the same lawyer could also offer to handle the deducted portion of the insured's own claim.

On the first question, the Committee unanimously concluded that no violation would be presented; a lawyer may ethically handle subrogated damage claims on a contingent basis (10-0). On the second, the Committee unanimously concluded that unless the insured requested the lawyer to handle his claim, offering to handle it (on contingency or otherwise) would violate Canon 24. It also unanimously concluded that the lawyer may represent both the insurer and the insured under the described circumstances, provided he complies with Canon 6's requirement of full disclosure of pertinent facts and express consent of all concerned (10-0).

Currency note

This opinion was issued in 1953, under the former Texas Canons of Ethics, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. Concurrent conflicts and solicitation are now governed by Texas Disciplinary Rules 1.06 and 7.03 and ABA Model Rules 1.7 and 7.3. 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 Treat this page as historical context, not current guidance.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: Could a lawyer take subrogated insurer claims on contingency?

A: Yes. The Committee held unanimously that handling subrogated damage claims on a contingent basis would not violate the Canons (10-0).

Q: Could the lawyer also handle the insured's own deducted portion?

A: Only if the insured requested it, with full disclosure and express consent under Canon 6. Offering to take it unasked would violate Canon 24 (10-0).

Q: Could the lawyer represent both the insurer and the insured?

A: Yes, under the described circumstances, provided he complied with Canon 6's full disclosure and express consent requirements.

Background and rules framework

The opinion interprets former Texas Canon 6 (conflicting interests) and Canon 24 (solicitation), applied to a lawyer handling an insurer's subrogated claim and the insured's related claim. The modern analogs are ABA Model Rule 1.7 (concurrent conflicts) and Model Rule 7.3 (solicitation of clients).

Citations and references

Rules of Professional Conduct:

• MR 1.7 (concurrent conflicts of interest), as the modern analog
• MR 7.3 (solicitation of clients)
• Texas Canon 6 (conflicting interests)
• Texas Canon 24 (advertising and solicitation)

See also

• TX Ethics Op. 99: Insurer's Counsel and Conflicting Interests
• TX Ethics Op. 106: Advancing Living Expenses to a Client
• TX Ethics Op. 97: Compromise Letter to an Unrepresented Tortfeasor

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-89/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_89.pdf

Original opinion text

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

QUESTION PRESENTED

Would it be a violation of the Canons of Ethics for an attorney to handle on a contingent basis for an insurance company damage claims subrogated by the insured to the insurer after the latter has paid the insured under the terms of the policy?
Would it be a violation of the Canons of Ethics for an attorney handling the matter described in Question No. 1 to offer to handle also that portion of the insured's claim deducted under the terms of the policy?

18 Baylor L. Rev. 232 (1966)

CONFLICTING INTERESTS - EMPLOYMENT
An attorney may handle on a contingent basis damage claims subrogated by the insured to the insurer.

CONFLICTING INTERESTS - SOLICITATION - EMPLOYMENT
An attorney handling damage claims subrogated by the insured to the insurer, may also handle the insured's claim, provided the attorney is requested by the insured to handle his claim, and full disclosure of pertinent facts is made and express consent of all concerned obtained.

Canons 6, 24.

The members of the committee are unanimously of the opinion that no violation of the Canons of Ethics would be presented by Question No. 1. The members of the committee hold the view that an attorney may ethically handle on a contingent basis damage claims subrogated by the insured to the insurer. (10-0)

As to Question No. 2, the members of the committee are unanimously of the opinion that, unless the attorney is requested by the insured to handle his claim, it would violate Canon 24 for the attorney to offer to handle the insured's claim on a contingent basis or otherwise. The members of the committee are also unanimously of the opinion that an attorney may ethically represent both the insurer and the insured under the circumstances described, provided he complies with Canon 6, which requires a full disclosure of pertinent facts and express consent of all concerned. (10-0)

Tex. Comm. On Professional Ethics, Op. 89 (1953)