When an insurer hires a lawyer to defend its insured, can the lawyer follow the insurer's instruction to file a motion that would harm the insured?

Plain-English summary

An attorney hired by an insurer to defend its insured against negligence and breach-of-contract claims was instructed by the insurer to file a motion for partial summary judgment on the negligence claim. The attorney believed that winning the motion, while reducing potential damages, would eliminate the allegations supporting the insurer's duty to defend, so the motion would not be in the insured's interest. The attorney asked whether he could continue to represent the insured as long as the insurer did not affect his independent professional judgment, proposing to tell the insurer the motion would not be filed.

The committee explained that Rule 4-1.8(f) prohibits third-party payment of a lawyer's fee unless the client consents after consultation, there is no interference with the lawyer's independent professional judgment or the client-lawyer relationship, and confidential information is protected under Rule 4-1.6. Citing the Comment to Rule 4-1.7, the opinion observed that when an insurer and its insured have conflicting interests, the arrangement must assure the lawyer's professional independence, and that an attorney compensated by a third party must separate economic interests from professional loyalties. Where divergence of interests would adversely affect the representation, the attorney had to withdraw (Opinion 70-58; Rules 4-1.7(b), 4-5.4(d)).

The opinion concluded that the attorney should follow the committee's earlier guidance (including Opinion 81-5): as long as the representation continued, the attorney's primary duty and duty of communication ran to the insured. After informing the insured and with the insured's consent, the attorney should ask the insurer to withdraw its request to file the motion; if the insurer refused, the attorney should advise the insured of the circumstances and act only in the insured's best interests. Whether he could continue depended on his ability to comply with Rules 4-1.8(f), 4-1.7(b), and 4-5.4(d).

Currency note

This opinion was issued in 1997, before The Florida Bar's adoption of the 2006 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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: Whose interest comes first when an insurer hires the defense lawyer?

A: Per the opinion, the attorney's primary duty is to the insured; as long as the representation continued, the duties of loyalty and communication ran to the insured, not the paying insurer.

Q: Could the lawyer file the summary judgment motion the insurer wanted?

A: Under this opinion, no, where the lawyer had determined the motion was against the insured's interest; the lawyer had to ask the insurer to withdraw the request and, if it refused, act only in the insured's best interests.

Q: What if the insurer's and insured's interests diverged in a way that hurt the defense?

A: The committee concluded that if the divergence would adversely affect the representation, the attorney had to withdraw, consistent with Opinion 70-58 and Rules 4-1.7(b) and 4-5.4(d).

Background and rules framework

The opinion interpreted Rule 4-1.8(f) (compensation from one other than the client, comparable to Model Rule 1.8(f)), Rule 4-1.6 (confidentiality, Model Rule 1.6), Rule 4-1.7 and its Comment (conflicts, including the insurer-insured situation, Model Rule 1.7), and Rule 4-5.4(d) (professional independence; comparable to Model Rule 5.4).

Citations and references

Rules of Professional Conduct:

• Model Rule 1.8(f) / Fla. Rule 4-1.8(f) (third-party compensation)
• Model Rule 1.6 / Fla. Rule 4-1.6 (confidentiality)
• Model Rule 1.7 / Fla. Rule 4-1.7, 4-1.7(b) and Comment (conflicts; insurer-insured)
• Model Rule 5.4 / Fla. Rule 4-5.4(d) (professional independence of the lawyer)

Other opinions cited:

• Fla. Ethics Ops. 70-58, 81-5

See also

• FL Bar Ethics Op. 02-7: Insured Client's Rights
• FL Bar Ethics Op. 98-2: Set Fee for Insurance Defense
• FL Bar Ethics Op. 98-3: In-House Insurance Counsel and Firm Names

Source

• Landing page: https://www.floridabar.org/etopinions/etopinion-97-1/
• Original PDF: https://www-media.floridabar.org/uploads/2017/04/FL-Bar-Ethics-Op-97-1.pdf

Original opinion text

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

THE FLORIDA BAR ETHICS OPINION
OPINION 97-1
May 1, 1997
Advisory ethics opinions are not binding.
An attorney who has been hired by an insurance company to represent an insured owes
his primary duty to the insured. An attorney may not ethically continue the representation of the
insured under instructions from the insurance carrier that the lawyer file for summary judgment
where the attorney has determined that such a motion would be against the insured’s interest.
RPC: Rule 4-1.8(f), Rule 4-1.6, Rule 4-1.7, Rule 4-1.7(b), Rule 4-5.4(d)
Opinions: 70-58, 81-5
A member of the Florida Bar requested an advisory ethics opinion. The operative facts
presented by the inquirer are as follows:
An attorney is hired by an insurance company to represent its insured. The
insurance policy provides a defense for negligent acts of the insured. A complaint
has been filed against the insured alleging negligence and breach of contract. The
insurance company has already paid damages to the plaintiff relating to damage
caused by the insured’s negligence. Accordingly, the insurer instructs the
attorney to file a motion for partial summary judgment on the negligence claim.
The attorney believes that, although he may reduce potential damages in the
lawsuit if the motion for summary judgment is granted, the complaint would no
longer contain allegations to support the insurance company’s duty to defend the
insured. It is the opinion of the attorney that the insured would have little to gain
by winning the motion and that it would be in the insured’s best interest to have
continued representation.
The attorney asks whether it would be proper to continue to represent the insured
as long as the insurance company does not affect the attorney’s exercise of
independent professional judgment on behalf of the insured. Accordingly, the
inquirer proposes to inform the insurance company that a motion for summary
judgment would not be in the best interest of the insured and will not be filed.
The Rules of Professional Conduct contemplate the potential conflict of interests that can
arise when an attorney is paid by a third party to represent a client. A common scenario under
which a third party pays the legal fees of a client is when an insurance company pays an attorney
to defend one of its insureds. Rule 4-1.8(f) prohibits a third party payment of an attorney’s fee
unless certain conditions are met. The rule provides:
(f) Compensation by Third Party. A lawyer shall not accept compensation for
representing a client from one other than the client unless:
(1) the client consents after consultation;
(2) there is no interference with the lawyer’s independence of professional
judgment or with the client-lawyer relationship; and
(3) information relating to representation of a client is protected as required by
rule 4-1.6.
The comment to Rule 4-1.7 specifically addresses instances where a conflict arises
between insurer and insured. The comment, in pertinent part, states:
A lawyer may be paid from a source other than the client, if the client is informed
of that fact and consents and the arrangement does not compromise the lawyer’s
duty of loyalty to the client. See rule 4-1.8(f). For example, when an insurer and
its insured have conflicting interests in a matter arising from a liability insurance
agreement and the insurer is required to provide special counsel for the insured,
the arrangement should assure the special counsel’s professional independence.
[Emphasis added.]
As indicated, an attorney who undertakes representation when being compensated by a
third party must ensure that his or her independent professional judgment is not affected by the
fact that someone other than the client is paying the attorney’s fees. In other words, the attorney
should make a division between economic interests and professional loyalties.
Although the interests of the third party paying the attorney’s fees and the interests of the
attorney’s client often are aligned, there also are times when the interests diverge -- such as when
a dispute arises over insurance coverage. If the divergence in interests would adversely affect
the attorney’s representation of the client insured, the attorney must withdraw from the
representation. Florida Ethics Opinion 70-58. See also Rule 4-1.7(b) and Rule 4-5.4(d).
This Committee has previously published an advisory opinion addressing a situation in
which an attorney who was hired by an insurance company to represent an insured was
instructed by the insurer to withhold any opinion as to the settlement value of the case from the
insured client. The Committee advised the attorney to seek to have the insurer voluntarily
remove the restraint and, if that attempt was unsuccessful, to withdraw from the representation.
Florida Ethics Opinion 81-5.
It is the opinion of the Committee that the attorney in the instant inquiry should follow
the guidance provided in our earlier opinions. As long as the representation continues, the
attorney’s primary duty is to the insured. The duty of communication to the insured also
continues as long as the representation continues. Once the insured is informed and with the
insured’s consent, the inquiring attorney should inform the insurer that, when he has been
retained to represent an insured, he may only act in the best interests of the insured and,
accordingly, the attorney should ask the insurer to withdraw its request that he file a motion for
partial summary judgment. If the insurer refuses, the attorney should advise the insured of the
circumstances surrounding the controversy and act only in the best interests of the insured. The
attorney’s ability to continue in the representation will be dependent upon whether he can
comply with the requirements of Rules 4-1.8(f), 4-1.7(b), and 4-5.4(d), as previously discussed.