Can an insurer hire defense counsel for its insured on the condition that the insurer controls litigation decisions like depositions, experts, and pretrial strategy?

Plain-English summary

The Committee addressed an insurer that selected counsel to represent an insured under a standard automobile liability policy, with no coverage questions and no policy-limits issue. The insurer conditioned the lawyer's employment on the lawyer's agreement that the insurer would manage and control the litigation, so that the lawyer would make independent legal judgments about depositions, retaining experts, and pretrial proceedings only with the insurer's approval. The question was whether a lawyer could accept such a condition in light of Rule 1.8(f)(2).

The opinion concluded the lawyer could not. Rule 1.8(f)(2) allows a lawyer to accept compensation for representing a client from someone other than the client only if there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship. The opinion explained that under this rule the lawyer owes absolute loyalty to the insured and is duty bound to exercise independent professional judgment for the insured's benefit. It relied on Hartford Accident & Indemnity Co. v. Foster, agreeing that the insurance contract's authorization for the insurer to employ defense counsel does not diminish the lawyer's duty to the insured.

The opinion concluded that while insurers may exercise reasonable discretion in choosing counsel, once counsel is selected the insurer may not supplant, interfere with, alter, or deter counsel's independent legal judgment. Defense counsel may not waive that obligation, and may not enter any agreement that delegates the duty of independent judgment to a third-party insurer.

Currency note

This opinion was issued in 1993, interpreting the Mississippi Rules of Professional Conduct (adopted effective June 22, 1994, and amended February 5, 1999). Mississippi did not adopt the ABA's 2002 Ethics 2000 revisions wholesale, but 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 Treat this page as historical context, not current guidance.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: Can an insurer require that defense counsel get approval before taking depositions or hiring experts?

A: The opinion concluded no; conditioning employment on the insurer controlling those litigation decisions interferes with the lawyer's independent professional judgment, which Rule 1.8(f)(2) protects.

Q: Does the insurer's right to pick counsel mean it can run the defense?

A: Per the opinion, no; the insurer may use reasonable discretion to select counsel, but once selected, counsel's independent legal judgment for the insured may not be supplanted or controlled by the insurer.

Q: Whose client is the insurer-paid defense lawyer?

A: The opinion concluded the lawyer owes absolute loyalty to the insured and must exercise independent judgment for the insured's benefit, relying on Hartford v. Foster that the insurer's role in employing counsel does not diminish that duty.

Background and rules framework

The opinion applies Mississippi Rule of Professional Conduct 1.8(f)(2) (a lawyer may accept compensation from a third party only if there is no interference with the lawyer's independent professional judgment or the client-lawyer relationship), which corresponds to Model Rule 1.8(f).

Citations and references

Rules of Professional Conduct (Mississippi; cf. Model Rules):

• MRPC 1.8(f)(2) (third-party compensation; no interference with independent judgment) (cf. Model Rule 1.8)

Cases:

• Hartford Accident & Indemnity Co. v. Foster, 528 So. 2d 255 (Miss. 1988), defense counsel's duty to the insured is not diminished by the insurer's role.

See also

• MS Bar Ethics Op. 212: Living-Trust Mills and UPL

Source

• Landing page: https://www.msbar.org/ethics-discipline/ethics-opinions/formal-opinions/211/
• Original PDF: https://www.msbar.org/media/1460/35a_et_op_211.pdf

Original opinion text

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

ETHICS OPINION NO. 211

OF THE MISSISSIPPI BAR

RENDERED November 18, 1993

CONFLICT OF INTEREST: PROHIBITED TRANSACTIONS: Counsel may not enter into any agreement which delegates to a third party his or her duty to exercise independent judgment for the benefit of his client.

The Ethics Committee of The Mississippi Bar has been requested to render an opinion upon the following facts:

An insurance company has selected counsel to represent an insured under a standard automobile liability policy. There exist no coverage questions nor are there any limits of liability. The insurance company conditions employment of the attorney upon the attorney's agreement that the insurance company will manage and control the litigation and will allow the attorney to prepare the defense i.e., to make independent legal judgments regarding the taking of depositions, the retention of experts and the conduct of pretrial proceedings only upon the approval of the insurer.

The Ethics Committee of The Mississippi Bar has been asked to opine whether an attorney may represent an insured at the request of an insurer upon condition that the insurer and not the attorney will manage and control the defense, i.e., the insurance company will ultimately approve all decisions regarding depositions, retention of experts and other pretrial procedures, notwithstanding the provisions of MRPC 1.8 (f)(2).

An insurance company has selected counsel to represent an insured under a standard automobile liability policy. There exists no coverage questions. There are no limits of liability. The insurance company conditions employment of the attorney upon the attorney's agreement that the insurance company will manage and control the litigation i.e., the attorney will make independent legal judgments regarding the taking of depositions, the retention of experts and the conduct of pretrial proceedings solely upon the approval of the insurer.

MRPC 1.8 (f)(2) reads:

(f) A lawyer shall not accept compensation for representing a client from one other than the client unless:

(2) there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship; . . .

Under the provisions of this Rule, a lawyer owes absolute loyalty to his or her client, the insured. In that capacity, the lawyer is duty bound to exercise independent professional judgment for the benefit of the client. We are mindful of the recent decision of the Mississippi Supreme Court regarding the duties of defense counsel to the insurer and insured.Hartford A.C.C. & Indem. Co. v. Foster, 528 So.2d 255 (Miss. 1988). We agree and adhere to the finding that "[t]he fact that the insurance contract authorizes the insurance company to employ an attorney to handle the defense of a case in no way impairs or diminishes the duty of the lawyer to the insured client."Hartford, 528 So.2d at 268.

Insurers are rightfully concerned with the quality and economy of performance of the counsel they select to fulfill their promise of defense to an insured. The selection of counsel, however, once made, does not further empower the insurer to supplant the independent legal judgment of selected counsel or to interfere, alter or deter the decisions of such counsel in exercise of the attorney's duty to the client.

We therefore, conclude that counsel may not ethically enter into any prohibited transaction that allows a third party insurer to interfere with his or her exercise of independent judgment for the benefit of his client. This finding does not alter or deter the right of the insurance company to exercise reasonable discretion in its choice of counsel. The insurer may exercise its judgment to select counsel that best serves its interests and protects its insureds. Nevertheless, the selected defense counsel owes a client a duty to exercise his or her independent legal judgment for the benefit of the insured. Defense counsel may not waive or ignore that obligation as a matter of law or ethics. Hence, defense counsel may not enter unto any agreement which delegates his or her duty to exercise independent judgment to a third party insurer.