In a subrogation suit, can the liability insurer's lawyer pressure the insured against his own interest, and can the lawyer deal directly with the nominal plaintiff?

Plain-English summary

The questions arose from subrogation litigation after an automobile collision. The defendant's liability insurer (which did not also carry the defendant's collision insurance) had its lawyer involved. The defendant wished to release a Safety Responsibility Board suspension on the nominal plaintiff's registration tags rather than file a cross-action, and the defendant's separate collision carrier did not wish to sue on subrogation.

On the first question, the Committee held that the situation is controlled by Canon 6, which makes it unprofessional to represent conflicting interests except under certain circumstances. It concluded the conduct would violate Canon 6 unless the lawyer made full disclosure to the defendant and suggested the defendant consult counsel of his own choice (8-2). On the second question, the Committee held unanimously that for the insurer's lawyer to communicate directly with the nominal plaintiff, offering that the liability carrier would permit release of the suspension if the plaintiff's collision carrier dropped the suit, would violate Canon 9 (10-0).

Currency note

This opinion was issued in 1954, under the former Texas Canons of Ethics, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. Conflicting interests and communication with an opposing party are now governed by Texas Disciplinary Rules 1.06, 4.02, and 4.03 and ABA Model Rules 1.7, 4.2, and 4.3. 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 Treat this page as historical context, not current guidance.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 the insurer's lawyer warn the insured that releasing the suspension would void his policy?

A: Only with full disclosure. The Committee held this would violate Canon 6 unless the lawyer made full disclosure to the defendant and suggested he consult his own counsel (8-2).

Q: Could the insurer's lawyer deal directly with the nominal plaintiff?

A: No. The Committee held unanimously that approaching the nominal plaintiff with an offer tied to dropping the suit would violate Canon 9 (10-0).

Q: What made the insurer's position a conflict?

A: The liability carrier did not carry the defendant's collision insurance, and the defendant himself wished to release the suspension rather than pursue a cross-action, so the carrier's litigation interest diverged from the insured's wishes.

Background and rules framework

The opinion interprets former Texas Canon 6 (representing conflicting interests) and Canon 9 (negotiating with the opposite party). The modern analogs are ABA Model Rule 1.7 (concurrent conflicts) and Model Rule 4.3 (dealing with an unrepresented person), with Model Rule 4.2 governing contact with represented parties.

Citations and references

Rules of Professional Conduct:

• MR 1.7 (concurrent conflicts of interest), as the modern analog
• MR 4.3 (dealing with an unrepresented person)
• Texas Canon 6 (conflicting interests)
• Texas Canon 9 (negotiations with the opposite party)

See also

• TX Ethics Op. 101: Settlement Letter to an Unrepresented Adverse Party
• TX Ethics Op. 117: Obtaining a Statement From an Opposing Party
• TX Ethics Op. 130: Claimant's Lawyer's Letter to a Tortfeasor

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-99/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_99.pdf

Original opinion text

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

QUESTION PRESENTED

In subrogation litigation growing out of an automobile collision, would it be a violation of the Canons of Ethics for the counsel for the defendant's liability insurance carrier to advise the defendant that it would be a policy violation resulting in cancellation of his policy if the defendant should request the Safety Responsibility Board to release a suspension that it had placed on the nominal plaintiff's registration tags, when the said Liability carrier DID NOT carry the defendant's collision insuranceΧthe latter being carried by another company which does not wish to sue on subrogationΧand when the defendant himself does not wish to file a cross-action but rather wishes to release the suspension?
In the situation described above would it be a violation of the Canons of Ethics for the counsel for the defendant's liability insurance carrier to communicate directly with the nominal plaintiff, who is much disturbed over his suspension, advising him in the presence of the defendant that the defendant's liability insurance carrier would gladly permit the defendant to release the suspension if the nominal plaintiff's collision carrier should be persuaded to drop the suit?

18 Baylor L. Rev. 235 (1966)

CONFLICTING INTERESTS - ATTORNEY FOR INSURANCE COMPANY
Unless full disclosure were made and consultation with other counsel suggested, it would be unprofessional, in a subrogation suit arising out of an automobile collision, for an attorney for the defendant's liability insurance carrier which did not carry defendant's collision insurance to advise the defendant that cancellation of his policy would result if he requested the Safety Responsibility Board to release the suspension of the nominal plaintiff's registration tags, when the company which does carry defendant's collision insurance does not wish to sue on subrogation and defendant himself wishes to release the suspension.

NEGOTIATION WITH OPPOSITE PARTY
It would be improper in such situation for the attorney for defendant's liability insurance carrier to advise the nominal plaintiff that the defendant's liability insurance carrier would gladly permit the defendant to release the suspension should the nominal plaintiff's collision carrier be persuaded to drop the suit.

Canons 6, 9.

The committee is of the opinion that the situation described in Question No. 1 would be controlled by Canon 6, which provides that it is unprofessional to represent conflicting interests except under certain circumstances. We take the view that the situation described would violate Canon 6 unless the attorney made a full disclosure to the defendant and suggested that the defendant consult counsel of his own choice. (8-2)
The members of the committee are unanimously of the opinion that the conduct described in Question No. 2 would violate Canon No. 9. (10-0)

Tex. Comm. On Professional Ethics, Op. 99 (1954)