Can a plaintiff's lawyer write directly to an insured defendant about the insurer's duty to settle within policy limits?

Plain-English summary

The opinion addressed a plaintiff's lawyer in a personal-injury case who wanted to write directly to the insured defendant, typically to notify the insured of the insurer's potential liability for failing to settle within policy limits. The Board recognized why such a letter is attractive: it lays the basis for recovering any excess judgment against the insurer and pressures the insurer by showing that the insured understands its rights. The Board concluded the letter is nonetheless improper because it amounts to giving legal advice to an adverse party.

The Board separated two situations. If the insured is already represented, the plaintiff's lawyer may not contact the insured at all about the representation without the consent of the insured's lawyer, under DR 7-104(A)(1) and Standard 47. If the insured is not yet represented, the lawyer may communicate, but under DR 7-104(A)(2) and Standard 48 may not give legal advice to an unrepresented person whose interests are or may be in conflict with the lawyer's client, other than the advice to secure counsel. The Board expressly overruled prior Georgia Advisory Opinion No. 10, which had allowed such contact, to the extent it conflicted with that standard, noting Opinion 10 predated the adoption of DR 7-104(A)(2) and Standard 48.

Relying on ABA Informal Opinion 1034, the Board treated advising the insured about the effect of the insurer's refusal to settle within policy limits as legal advice. It explained that the proper person to inform the insured of the insurer's good-faith duty to settle is the insured's own lawyer, who has a duty to keep the insured informed even though that lawyer is also retained by the insurer. The Board permitted the plaintiff's lawyer to write the insured's and insurer's attorney with a settlement offer and to ask that the information be passed to the insured, and to write the insured directly only to obtain the insurer's identity, limited to a demand, a request for the necessary information, and a suggestion to seek counsel.

Currency note

This opinion was issued in 1987, before the State Bar of Georgia adopted the Georgia Rules of Professional Conduct in 2001, which replaced the Code of Professional Responsibility and Standards of Conduct this opinion construes. The State Bar's headnote notes the opinion bears on matters now addressed by Rule 4.2 (communication with represented persons); the unrepresented-person limit it applies is now reflected in Rule 4.3. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current Rules of Professional Conduct before relying on any specific rule mentioned here.

Common questions

Q: Can a plaintiff's lawyer write the insured defendant about the insurer's duty to settle within policy limits?

A: No. The opinion treated advising the insured about the effect of the insurer's refusal to settle within limits as legal advice to an adverse party, which is improper.

Q: Can the plaintiff's lawyer contact the insured at all?

A: Only in limited ways. If the insured is unrepresented, the lawyer may write to make a demand, request the name of the insurer, and suggest the insured seek counsel, but no more. If the insured is represented, the lawyer may not contact the insured without the consent of the insured's lawyer.

Q: Who is supposed to advise the insured about the insurer's exposure?

A: The opinion said the insured's own lawyer, who has a duty to keep the insured informed of settlement offers and of the insurer's potential liability for a bad-faith refusal to settle, even though that lawyer is also retained by the insurer.

Background and rules framework

The opinion construed the former Code of Professional Responsibility DR 7-104(A)(1) and (A)(2) and the corresponding Standards of Conduct 47 (contact with represented persons) and 48 (legal advice to unrepresented persons). The State Bar's headnote maps the opinion to current Rule 4.2; the unrepresented-person prohibition corresponds to Rule 4.3. The opinion also discussed the insurer-defense lawyer's duty to keep the insured client informed under the proposed Rules 1.2(c) and 1.4(b).

Citations and references

Rules of Professional Conduct:

• MR 4.2 / Ga. RPC 4.2 (communication with a represented person)
• MR 4.3 / Ga. RPC 4.3 (dealing with an unrepresented person; no legal advice beyond securing counsel)

Former standards construed:

• DR 7-104(A)(1) and (A)(2); Standards of Conduct 47 and 48

Cases:

• National Emblem Insurance Co. v. Pritchard, 140 Ga. App. 350 (1976) (insurer's good-faith duty to settle)
• United States Fidelity & Guaranty Co. v. Evans, 116 Ga. App. 93, aff'd 223 Ga. 789 (1967)
• State Farm Insurance Co. v. Smoot, 381 F.2d 331 (5th Cir. 1967) (excess-judgment liability)
• Rogers v. Robson, Masters, Ryan, Brumund & Belom, 81 Ill. 2d 201 (1980) (insurer-defense lawyer's duty to the insured)

Other opinions cited:

• ABA Informal Opinion 1034 (1968): advising an insured of the effect of the insurer's refusal to settle is legal advice
• Georgia Advisory Opinion No. 10 (1969): overruled to the extent it conflicts with Standard 48

See also

• ABA Formal Op. 92-362: Contact With Opposing Party on a Settlement Offer
• ABA Formal Op. 95-396: Communications With Represented Persons
• ABA Formal Op. 472: Communicating With a Person Receiving Limited-Scope Services

Source

• Landing page: https://www.gabar.org/handbook?rule=rule463

Original opinion text

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

State Bar of Georgia
Issued by the Supreme Court of Georgia
On December 17, 1987
Formal Advisory Opinion No 86-4

This opinion relies on both Directory Rules and Standards of Conduct that bear upon matters addressed by Rule 4.2 .

For an explanation regarding the addition of headnotes to the opinion, click here .

Ethical Propriety of the Plaintiff's Attorney in a Personal Injury Case Writing a Letter to the Insured Defendant Which May Contain Legal Advice.

It is ethically improper for the plaintiff's attorney in a personal injury case to write a letter to the insured defendant which contains legal advice. The plaintiff's lawyer can properly write a letter to the attorney for the insured and the insurer making an offer of settlement. The letter may properly request the lawyer to provide this information to the insured as well as the insurer. If the plaintiff's lawyer needs information as to the name of the insured's insurer, he or she may properly write the insured requesting this information. But the contents of the letter shall be limited to a request for the necessary information. The plaintiff's attorney may not render legal advice to the insured.

It is ethically improper for the plaintiff's attorney in a personal injury case to write a letter to the insured defendant which may contain legal advice. The problem is raised by letter to insureds notifying them of the potential liability of their insurers for failure to settle within policy limits.

It is important first to state the applicable rules of law. An insurer is normally liable only for any judgment within the policy limits. The insured is normally liable for any judgment in excess of the policy limits. An insurer has a good faith duty to the insured, however, to settle a claim within the policy limits under the "equal consideration "rule. National Emblem Insurance Co. v. Pritchard, 140 Ga. App. 350, 231 S.E. 2d 126 (1976); United States Fidelity &Guaranty Co. v. Evans, 116 Ga. App. 93, 156 S.E. 2d 809, aff'd, 223 Ga. 789, 158 S.E. 2d 243(1967). The failure of the insurer to fulfill this good faith duty may cause the insurer to be liable for any excess judgment. State Farm Insurance Co. v. Smoot, 381 F.2d331 (5th Cir. 1967).

These legal rules make apparent the reason a plaintiff's attorney may wish to write the insured directly. The letter will lay the basis for seeking recovery against the insurer for the portion of a judgment rendered in excess of the policy limits. Attorneys for plaintiffs may also perceive an advantage in having the insurer know that the insured is fully aware of his or her rights. That is, the communication with the insured is a helpful pressure tactic.

Such a letter is impermissible, regardless of whether it is sent before or after the insured is represented by counsel. A lawyer is precluded from contacting a person represented by a lawyer as to matters relevant to the representation without the written consent of that person's lawyer. Ga. Code of Professional Responsibility, DR 7-104(A)(1), Standard 47. Georgia Advisory Opinion No. 10 (July 18,1969), held that such contact with an insured defendant is not improper if undertaken before the defendant is represented by a lawyer and before an action is filed. Opinion 10, however, was written prior to the adoption of our current Code of Professional Responsibility and Standards of Conduct and was based upon former Bar Rule 3-109 which is very similar to our current DR 7-104(A)(1) and Standard 47. Apparently there was no counterpart to DR 7-104(A)(2) and Standard 49, which now prohibit a lawyer from giving legal advice to a person who is not represented by a lawyer, other than the advice to secure counsel, whenever the interests of the recipient are or may be in conflict with the interests of the lawyer's client.

Advisory Opinion No. 10 was implicitly overruled upon the adoption of DR 7-104(A)(2) and Standard 48, and is now expressly overruled to the extent it conflicts with that Standard. Under Standard 48, a plaintiff's attorney may communicate with the unrepresented potential defendant, but is precluded from rendering legal advice.

This is consistent with ABA Informal Opinion 1034 (May 30, 1968); which held that advising the insured of the effect of the insurer's refusal to settle within policy limits constitutes "legal advice."The ABA then quotes an earlier opinion, which involved a complaint about two collection letters, but the language is nonetheless relevant and applicable.

The adroit wording of the questioned paragraphs avoids any direct statement or advice as to what the final results of seeking the threatened remedies will be, and no lawyer would be likely to be misled by it. In each case, however, the overall effect upon lay recipients of such letters probably will be, and probably was intended by the writer to be, that they had better "pay up or else."Rather than state simply that if payment is not made as demanded, his clients will pursue all legal remedies available to them to enforce payment, the writer chooses to describe in legal terms the collection suits that will be filed and then to threaten, in addition, the proceedings [which will be pursued]. The only purpose of threatening such additional proceedings, which would have no direct connection with actions to collect debts, appears to have been to coerce and frighten the alleged debtors. ABA Informal Opinion 1034 at 219 citing ABA Informal Opinion 734.

Under Standard 48, a lawyer may communicate by letter with an adverse unrepresented person informing him of a demand on his insurance carrier and that suit will be filed if the demand is not met by a certain date, and that he should seek counsel, but no more. Under Standard 47, no communication with a represented adverse party is written consent without permission of adverse counsel.

It is obvious that the letter to the insured is meant for the insurer. It is equally obvious that the insured has a right to information not only as to his own legal rights, but also the legal duties of the insurer to him. It is not, however, obvious that the plaintiff's attorney is the proper person to inform the insured of these rights and duties. The appropriate attorney for this purpose is the insured's attorney. The problem here, of course, is that the attorney for the insured is also the attorney for the insurer. And given the context of the representation, it seems clear that the insurer would prefer that the insured not be made aware of its duty to settle theclaim in good faith.

The lawyer representing the insured and the insurer thus faces an apparent dilemma. But the dilemma is only apparent. He or she represents the insured as a client and has a duty to keep the insured fully informed by virtue of the rules of ethics. See Proposed Georgia Rules and Disciplinary Standards of Conduct, Rule 1.4; Rogers v. Robson, Masters, Ryan, Brumund &Belom, 81 Ill. 2d 201, 40 Ill. Dec. 816, 407 N.E. 2d 47 (1980). The lawyer for the insurer has a duty to inform the insured not only of any offer of settlement; See Proposed Georgia Rules and Disciplinary Standards of Professional Conduct, Rule 1.2(c), but also of the potential liability of the insurer for a bad faith refusal to accept any reasonable offer within the policy limits. Id. Rule 1.4(b).

To recognize that the plaintiff's lawyer has a right to communicate directly with the insured as to his or her rights would create new problems. Apart from the rules of ethics, to recognize that the plaintiff's lawyer has a right so to advise the insured may well create a duty on the part of the lawyer to do so. For if the lawyer can advise the adversary client for the purpose of laying a predicate for the insurer's liability for an excess judgment, but fails to do so, he or she may be liable to the client for malpractice.

The plaintiff's lawyer can properly write a letter to the attorney for the insured and the insurer making the offer of settlement. The letter may properly request the lawyer to provide this information to the insured as well as the insurer. The failure of the insured's lawyer to do so would be breach of the lawyer's duty to keep the client informed and may well subject the lawyer to liability.

If the plaintiff's lawyer needs information as to the name of the insured's insurer, he or she may properly write the insured requesting this information. But the contents of the letter shall be limited to no more than a demand, a request for the necessary information and a suggestion to seek counsel. The plaintiff's attorney may not render legal advice to the insured. Ga. Code of Professional Responsibility, DR 7-104(A)(2) and Standard 48.