When an insurer hires a lawyer to defend its insured, may the lawyer let the insurer's claims personnel sit in on the attorney-client interview?

Plain-English summary

The Committee was asked whether a Kentucky attorney selected by an insurer to defend its insured may comply with the insurer's demand that claims personnel or other representatives sit in on the attorney-client interview. It answered "Qualified no."

The opinion proceeded from the view that the insured is the lawyer's client. From that, counsel must exercise independent professional judgment on behalf of the insured and guard against disclosure of information relating to the representation that would be adverse to the insured, citing Rules 1.8(f)(3) and 1.6. The opinion acknowledged an insurer may conduct whatever investigation it sees fit and deal with its insured as the insurance contract permits, but said it is not necessarily entitled to the assistance of the lawyer representing the insured; defense counsel's relationship with the insured is governed by the Rules of Professional Conduct, not the insurer-insured contract.

Because discussions with the client may reveal facts affecting coverage and suggest coverage defenses, the opinion said counsel should resist any demand that might put the insured at risk, and that any intrusion into the attorney-client relationship should be permitted only with the client's informed consent. It stressed that defense counsel is employed to defend the insured, not to help claims personnel develop coverage defenses (citing ABA Informal Op. 1476 (1981) and Mallen & Smith, Legal Malpractice). While the opinion did not say claims personnel may never be present, it emphasized counsel's obligation to resist demands incompatible with the insured's interests and inconsistent with Rule 1.8(f).

Currency note

This opinion was issued in 1990, before the substantial 2009 revisions to Kentucky's Rules of Professional Conduct (SCR 3.130); the bar notes the rules are amended periodically. 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 Treat this page as historical context, not current guidance.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 before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: When an insurer hires defense counsel, who is the lawyer's client?

A: The opinion took the view that the insured is the lawyer's client, so counsel owes the insured independent judgment and protection of confidences.

Q: Can the insurer require claims personnel to attend the client interview?

A: Qualified no. The opinion said counsel should resist such a demand; insurer representatives may be present only with the insured's informed consent, and never to help develop coverage defenses.

Q: Is the insurer entitled to defense counsel's help with coverage questions?

A: No. The opinion stated defense counsel is employed to defend the insured, not to assist claims personnel in developing coverage defenses, and should avoid any appearance of doing so.

Background and rules framework

The opinion interprets Rule 1.7 (conflicts; the opinion cites Comment (10)), Rule 1.8(f) (compensation by a third party / accepting direction from one who pays the fee), and Rule 1.6 (confidentiality), Model Rules 1.7, 1.8, and 1.6, in the insurance-defense triangle where the insurer pays but the insured is the client.

Citations and references

Rules of Professional Conduct:

• MR 1.6 / KRPC 1.6 (confidentiality)
• MR 1.7 / KRPC 1.7 (conflicts of interest; Comment (10))
• MR 1.8 / KRPC 1.8(f) (third-party payment of fees)

Other opinions and authorities cited:

• ABA Informal Op. 1476 (1981)
• R. Mallen & J. Smith, Legal Malpractice (3d ed. 1989)

See also

• KBA Ethics Op. E-378: Insurer-Insured Conflict
• AL Ethics Op. 2007-01: Insurance Staff Counsel

Source

• Landing page: https://kybar.org/For-Members/Rules-Ethics-Information/Ethics-Opinions
• Original PDF: https://kybar.org/Portals/0/Admin/Ethics%20Opinions/KBA_E-340.pdf

Original opinion text

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

KENTUCKY BAR ASSOCIATION
Ethics Opinion KBA E-340
Issued: July 1990

The Rules of Professional Conduct are amended periodically. Lawyers should consult the current version of the rules and comments, SCR 3.130 (available at http://www.kybar.org), before relying on this opinion.

Question:

May a Kentucky Attorney who is selected by an insurer to defend its insured comply with the insurer's demand that claims personnel or other representatives sit in on the attorney-client interview?

Answer:

Qualified no.

References:

Rules 1.7 Comment (10) and 1.8(f).
OPINION

The Rules take the view that the insured is the lawyer's client. It follows that the lawyer must (1) exercise his or her independent professional judgment on behalf of the insured and (2) guard against disclosure of information relating to the representation of the client (including the confidences and secrets of the client), which would be adverse to the interests of the client. Rules 1.8(f) (3) and 1.6. An insurer may have every right to conduct such investigation as it sees fit, and may deal with its insured in a manner permitted by the terms of the insurance contract. On the other hand, it is not necessarily entitled to the assistance of the lawyer representing the insured. Defense counsel's relationship with the insured is not governed by the insured-insurer contract, but is instead governed by the Rules of Professional Conduct. Discussions with a client may reveal facts affecting coverage (may suggest coverage defenses). Counsel should resist any 'demand'' that might put the insured at risk. It is also clear that any intrusion into the attorney/client sanctum should be permitted only with the informed consent of the client. It should be remembered that defense counsel is employed to defend the insured, not to develop or assist claims personnel in developing coverage defenses. ABA Informal Op. 1476 (1981); R. Mallen & J. Smith, Legal Malpractice (3d ed. 1989), sections 23.1 et. seq. Counsel should avoid any appearance that he or she is participating in inquiries along these lines. Accordingly, while there are undoubtedly instances in which representatives of the insurer may be present during attorney-client discussions, and while it would overstate the case to suggest that claims personnel may never be present at client interviews and the like, we must emphasize that counsel has an obligation to resist "demands" that are incompatible with the interests of the insured client and inconsistent with Rule 1.8(f).

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Note to Reader
This ethics opinion has been formally adopted by the Board of Governors of the Kentucky Bar Association under the provisions of Kentucky Supreme Court Rule 3.530 (or its predecessor rule). The Rule provides that formal opinions are advisory only.