When an insurer-retained defense lawyer faces a coverage dispute between the insured and the insurer, must the lawyer withdraw?

Plain-English summary

The lawyer had been retained by an insurer to defend a doctor in a medical malpractice claim in which the plaintiff was now seeking to set aside a settlement. A dispute had arisen over the doctor's insurance coverage: the insurer had denied coverage for a cross-claim by the co-defendant hospital, based on the doctor's failure to comply with insurance-coverage requirements.

Based on those facts, the committee was of the opinion that the lawyer must advise the doctor and the insurer that the lawyer must withdraw and new counsel must be substituted for the doctor, and that the insurance company should be advised to seek its own counsel.

The coverage dispute placed the insured and the insurer on opposite sides, and the committee concluded that the lawyer could no longer continue representing the insured in those circumstances.

Currency note

This opinion was issued in 1988, before the 2006 revisions to the Washington Rules of Professional Conduct. The conflict rule then numbered RPC 1.7 corresponds to Model Rule 1.7 and was rewritten in the current rules. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule mentioned here.

Common questions

Q: Does a coverage dispute between the insured and the insurer require defense counsel to withdraw?

A: Per the opinion, on these facts yes. The committee was of the opinion that the lawyer must withdraw and new counsel must be substituted for the doctor.

Q: What was the lawyer told to do about the insurer?

A: The committee was of the opinion that the insurance company should be advised to seek its own counsel.

Q: Who did the lawyer have to advise?

A: Both. The committee said the lawyer must advise the doctor and the insurer of the need to withdraw and substitute new counsel for the doctor.

Background and rules framework

The opinion applies the conflict rule then numbered Washington RPC 1.7, corresponding to Model Rule 1.7, to a lawyer retained by an insurer to defend its insured. When the coverage dispute set the insurer's interests against the insured's, the committee concluded the lawyer could not continue to represent the insured and directed withdrawal, substitution of new counsel for the insured, and separate counsel for the insurer.

Citations and references

Rules of Professional Conduct:

• Washington RPC 1.7 (conflict of interest), corresponding to Model Rule 1.7.

See also

• WSBA Ethics Op. 943: insurer-retained counsel under a reservation of rights and the insured's confidences
• WSBA Ethics Op. 974: independent judgment of counsel an insurer retains to defend its insured
• ABA Formal Op. 01-421: a lawyer's duties under insurance-company litigation guidelines

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=216

Original opinion text

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

Advisory Opinion: 1136
Year Issued: 1988
RPC(s): RPC 1.7
Subject: Conflict of interest; attorney retained by insurance company to represent insured

The Committee understands that you were retained by an insurer to defend a doctor in a medical malpractice claim in which the plaintiff is now seeking to set aside a settlement. [There was a dispute regarding the client's insurance coverage and the insurance company denied coverage for a cross-claim by the co-defendant hospital for failing to comply with insurance coverage requirements.] Based upon the facts presented by you, the Committee was of the opinion that you must advise the doctor and the insurer that you must withdraw and new counsel must be substituted for the doctor, and that the insurance company should be advised to seek its own counsel.