What duties does an insurance-appointed defense lawyer owe the insured, and when must the lawyer withdraw?

Plain-English summary

The inquiry arose from a civil-rights suit against a municipality and two police officers, where the insurer assigned separate counsel to each insured. One officer objected to the assigned lawyer, lost confidence in the lawyer, learned the lawyer had done no independent investigation, was refused disclosure of lawyer-insurer communications, and was never told of any right to independent counsel paid by the insurer. The opinion addressed the lawyer's duties in this "tripartite" insurer-insured-counsel relationship.

The opinion concluded that the insured is at least the defense lawyer's primary client, owed the same professional obligations as a client who personally retained the lawyer, and entitled to priority whenever the insured's and insurer's interests are inconsistent. It declined to resolve the academic debate over whether the insurer is also a client, relying on prior Opinions 89-17 and 92-02 and on Illinois case law (Rogers v. Robson) that assigned counsel owes the insured the same obligations as if retained. It then answered four questions:

On withdrawal, the opinion concluded that the insured's loss of confidence did not by itself create grounds for mandatory withdrawal under Rule 1.16(a), but if the discontent made it unreasonably difficult to defend the insured effectively, permissive withdrawal grounds existed under Rule 1.16(b). On disclosure, it concluded that defense counsel has a duty under Rule 1.4 to disclose lawyer-insurer communications that are relevant and material to the insured's defense; refusing, to protect the insurer's position, is a material limitation under Rule 1.7(b) and, absent the insured's consent, grounds for mandatory withdrawal under Rule 1.16(a)(2). On scope, it concluded under Rule 5.4(c) that the insurer may not direct the lawyer's professional judgment, and restrictions that compromise that judgment without the insured's informed consent are grounds for mandatory withdrawal. On the fourth question, it declined to answer as framed because it presumed improper motive by the insurer, repeating that the lawyer must withdraw if unable to meet the obligations owed the insured.

Currency note

This opinion was issued in 1999, before Illinois adopted the 2010 Illinois Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in January 2010 as generally consistent with the 2010 Rules (referring to Rules 1.2, 1.4, 1.6, 1.7, 1.16, 4.1, and 5.4), while noting the specific standards referenced may differ from the 2010 Rules. 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 or requirement mentioned here.

Common questions

Q: Who is the client when an insurer appoints defense counsel?

A: The opinion concluded the insured is at least the lawyer's primary client, owed the same professional obligations as if the insured had personally retained the lawyer, with priority when the insured's and insurer's interests conflict.

Q: Must the lawyer disclose communications with the insurer to the insured?

A: Yes, where those communications are relevant and material to the defense. The opinion held Rule 1.4 requires disclosure; refusing to protect the insurer's position is a material limitation under Rule 1.7(b) and, without consent, grounds for mandatory withdrawal.

Q: Can the insurer limit the lawyer to services it will pay for?

A: The opinion held that under Rule 5.4(c) the insurer may not direct or regulate the lawyer's professional judgment, and any scope restriction that compromises that judgment requires the insured's informed consent or the lawyer must withdraw.

Q: Does losing confidence in the lawyer force the lawyer to withdraw?

A: Not automatically. The opinion concluded that on these facts there were no mandatory-withdrawal grounds under Rule 1.16(a), but permissive withdrawal under Rule 1.16(b) applies if the discontent makes effective defense unreasonably difficult.

Background and rules framework

The opinion interpreted Illinois Rules 1.2, 1.4, 1.6, 1.7, 1.16, 4.1, and 5.4 (corresponding Model Rules 1.2, 1.4, 1.6, 1.7, 1.16, 4.1, 5.4) as applied to the insurance-defense relationship. It drew on Illinois insurance-coverage case law (the insurer's right to control the defense, subject to the Seibert conflict exceptions) and the then-Proposed Final Draft of the Restatement (Third) of the Law Governing Lawyers § 215.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.4 (communication) / Illinois Rule 1.4
• Model Rule 1.6 (confidentiality) / Illinois Rule 1.6
• Model Rule 1.7 (conflict of interest) / Illinois Rule 1.7
• Model Rule 1.16 (declining or terminating representation) / Illinois Rule 1.16
• Model Rule 5.4(c) (independence from a third-party payer) / Illinois Rule 5.4(c)
• Model Rules 1.2 and 4.1 / Illinois Rules 1.2, 4.1

Cases:

• Rogers v. Robson, Masters, Ryan, Brumund & Belom, 74 Ill.App.3d 467, 392 N.E.2d 1365 (3d Dist. 1979), aff'd, 81 Ill.2d 201, 407 N.E.2d 47 (1980), assigned counsel's duties to the insured
• Nandorf, Inc. v. CNA Insurance Cos., 134 Ill.App.3d 134, 479 N.E.2d 988 (1st Dist. 1985), conflicts in the insurer-insured-counsel triangle
• Illinois Municipal League Risk Mgmt. Ass'n v. Seibert, 223 Ill.App.3d 864, 585 N.E.2d 1130 (4th Dist. 1992), exceptions to the insurer's control of the defense

Other opinions cited:

• ISBA Advisory Opinions Nos. 89-17, 92-02: the insured is the client of insurer-appointed counsel
• ABA Formal Opinion 96-403: disclosing policy limits on the representation to the insured

See also

• ISBA Ethics Op. 98-06: One Spouse in Divorce, Both Spouses in Bankruptcy
• ISBA Ethics Op. 99-07: Lawyer for Lender Compensated by Borrower

Source

• Landing page: https://www.isba.org/ethics/opinions/9808