Can a lawyer's firm sue an insurer or fund on whose board of directors the lawyer sits?

Plain-English summary

Opinion E-86-16 considered a lawyer who served on the boards of directors of an insurer and an insurance fund while the lawyer and members of the lawyer's firm frequently represented persons against that insurer and fund, and who, as a director on both boards, possessed or had access to detailed information about how the insurer and fund handled claims of the kind the firm brought. The question was whether the lawyer's firm, or any partner, shareholder, or associate, may represent interests adverse to the insurer and fund.

The committee answered no. It cited the former Code's conflict provisions (SCR 20.23(1), 20.24(1)) and the no-contact rule (SCR 20.38(1)), along with several earlier Wisconsin opinions and American Dredging Co. v. City of Philadelphia, which addressed disqualification of an attorney/city-agency board member's firm in a suit against the city. The committee noted that, although it had given qualified approval to a lawyer serving simultaneously as corporate director and counsel, it had never approved a corporate lawyer/director or that lawyer's firm representing third-party interests adverse to the corporation. It reasoned that the lawyer's fiduciary obligations as a director would otherwise be in direct conflict with the duties owed to firm clients with interests adverse to the insurance company and fund.

Currency note

This opinion was issued in 1986, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update), and it analyzes conduct under the former Code. The conflict-of-interest framework is now found in SCR 20:1.7 / Model Rule 1.7. 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 Treat this page as historical context, not current guidance.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 my firm represent clients against an insurer whose board I sit on?

A: The committee concluded no; a lawyer's firm and its members may not represent interests adverse to an insurer and fund for which the lawyer serves as a director.

Q: Why does the lawyer's board seat disqualify the whole firm?

A: Per the opinion, the lawyer's fiduciary duties as a director conflict directly with the firm's duties to clients adverse to the insurer, and the committee had never approved a lawyer/director or that lawyer's firm representing third parties against the corporation.

Q: Is serving as both corporate director and counsel always barred?

A: No; the committee noted it had given qualified approval to a lawyer serving simultaneously as corporate director and counsel, but not where the lawyer or firm represents interests adverse to that corporation.

Background and rules framework

The opinion interpreted the former Code's conflict-of-interest provisions (SCR 20.23, 20.24), the area now governed by the concurrent-conflict rule SCR 20:1.7 / Model Rule 1.7, applied to a lawyer's fiduciary role as a director of an organization the lawyer's firm sues.

Citations and references

Rules of Professional Conduct:

• Wis. SCR 20.23, 20.24 / Model Rule 1.7 (conflicts of interest) (former Code provisions)

Cases:

• American Dredging Co. v. City of Philadelphia, 480 Pa. 177, 389 A.2d 568 (1978)

Other opinions cited:

• Wisconsin Formal Ops. E-54-2, E-76-2, E-77-11, E-84-9, E-84-12
• Wisconsin Attorney General Opinion OAG 33-86

See also

• WI Ethics Op. E-87-4: Defending a Firm You Regularly Oppose
• WI Ethics Op. E-89-10: Representing Majority and Minority Investors
• WI Ethics Op. E-87-1: City Attorney as Both Advocate and Advisor

Source

• Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
• Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-86-16.pdf