Can an insurance defense lawyer file pleadings and appear in court for an insured who has vanished and never authorized the representation?

Plain-English summary

A lawyer retained by an insurance carrier to defend an insured in an auto-accident negligence suit could not locate the insured, whose whereabouts were unknown and who had to be served by publication. The lawyer asked whether he could proceed, file pleadings, and appear in court for the insured.

The opinion concludes the lawyer may not. Whether a client-lawyer relationship exists turns on substantive law external to the Rules (Rule 0.2, Comment [4]), and although the committee usually declines to opine on questions of law, North Carolina case law is clear. Under Dunkley v. Shoemate and Johnson v. Amethyst Corp., no lawyer-client relationship arises where the lawyer has had no contact with, and no authorization from, the defendant; an attorney-client relationship rests on agency principles requiring that the agent be authorized to act and the principal exercise control. So, unless allowed by statute, court order, or later case law, a lawyer may not appear for a party who has not authorized the representation. The result does not change if the insurance contract gives the carrier authority to choose counsel and decide on settlement (Opinion #2).

If the insured had actual notice and contacted the carrier before disappearing, whether that creates a relationship with carrier-selected counsel is a question of fact and law the case law does not resolve, though the committee doubts the agency factors would be met (Opinion #3). If the insured actually authorized the representation before disappearing, the lawyer may appear, but may not mislead the court about the insured's absence (Rule 3.3(a)(1)) and may have to move to withdraw if the insured cannot participate (Rule 1.2, Rule 1.16; RPC 223; 03 FEO 16) (Opinion #4). Whether a contract clause authorizing the carrier to proceed in the insured's name after losing contact changes the analysis is a question of law outside the committee's purview (Opinion #5). On a "John Doe" defendant, if the designation is needed for service and the lawyer can identify the intended person, the lawyer may work to identify and, once authorized, appear for that individual; if the identity cannot be ascertained, whether the lawyer may represent "John Doe" is a legal question outside the committee's purview (Opinion #6).

In practice

Under the North Carolina rules as they stood at the time, the opinion holds that authorization by the insured, not the carrier's contract, is what permits a lawyer to appear for the insured: absent an established client-lawyer relationship, the lawyer may not file pleadings or appear for a missing insured. Where the insured did authorize the representation but is then unreachable, the opinion holds the lawyer must not mislead the tribunal about the absence and may need to seek withdrawal. The committee expressly leaves several variations (contractual proceed-in-the-name clauses, unidentifiable "John Doe" defendants) to substantive law as questions outside its purview.

Common questions

Q: Can an insurance defense lawyer defend an insured who can't be found and never authorized the lawyer?

A: Per Opinion #1, no. The opinion, applying Dunkley v. Shoemate, concludes no client-lawyer relationship exists without the insured's authorization and contact, so the lawyer may not appear.

Q: Does it matter that the insurance policy lets the carrier pick the lawyer and control settlement?

A: Per Opinion #2, no. The carrier's contractual authority to select counsel does not create the required client-lawyer relationship with the insured.

Q: What if the insured authorized the lawyer and then disappeared?

A: Per Opinion #4, the lawyer may appear, but may not mislead the court about the insured's absence (Rule 3.3(a)(1)) and may have to move to withdraw if the insured cannot participate.

Background and rules framework

The opinion interprets North Carolina Rules of Professional Conduct 0.2 (Scope; substantive law determines whether a client-lawyer relationship exists), 1.2 (scope of representation; client's authority), 1.16 (declining or terminating representation), and 3.3(a)(1) (candor to the tribunal). These correspond to ABA Model Rules 1.2, 1.16, and 3.3. It applies North Carolina case law (Dunkley v. Shoemate; Johnson v. Amethyst Corp.) and prior opinions RPC 223 and 03 FEO 16.

Citations and references

Rules of Professional Conduct:

• NC Rule 0.2 (Scope; existence of a client-lawyer relationship)
• Model Rule 1.2 / NC Rule 1.2 (scope and authority)
• Model Rule 1.16 / NC Rule 1.16 (withdrawal)
• Model Rule 3.3 / NC Rule 3.3(a)(1) (candor to the tribunal)

Cases:

• Dunkley v. Shoemate, 350 N.C. 573, 515 S.E.2d 442 (1999), no client-lawyer relationship without authorization and contact
• Johnson v. Amethyst Corp., 120 N.C. App. 529, 463 S.E.2d 397 (1995), attorney-client relationship rests on agency principles

Other opinions cited:

• RPC 223; 03 FEO 16 (authority to represent; client contact and withdrawal)

See also

• ABA Formal Op. 96-403: Insured Objecting to Settlement
• NC State Bar 2010 FEO 12: Lateral Conflict Checks

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/2010-formal-ethics-opinion-1/

Original opinion text

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

Inquiry #1:

Attorney was retained by Insurance Carrier to defend Insured in a negligence lawsuit based upon an automobile accident. Insured cannot be located and his whereabouts are unknown. Service by publication was required. May Attorney proceed with the representation, file pleadings on behalf of Insured, and appear in court to defend the case on behalf of Insured?

Opinion #1:

No. To respond to this inquiry, the question of whether a client-lawyer relationship is created between Attorney and Insured must be addressed. Comment [4] of Rule 0.2, Scope, provides that "for purposes of determining the lawyer's authority and responsibility, principles of substantive law external to these Rules determine whether a client-lawyer relationship exists." In most instances, the Ethics Committee declines to offer an opinion that hinges upon a question of law. Nevertheless, the determination of whether a client-lawyer relationship exists is often essential to the committee's interpretation and application of the Rules of Professional Conduct. Moreover, the relevant North Carolina case law is clear. In Dunkley v. Shoemate, 350 N.C. 573, 515 S.E. 2d 442 (1999), the Supreme Court held that where a law firm had no contact with the defendant and was not authorized by the defendant to undertake his representation, no lawyer-client relationship existed between the defendant and the lawyers seeking to represent him pursuant to the insurance trust fund for the defendant's employer. The Dunkley opinion cites favorably the following statement from Johnson v. Amethyst Corp., 120 N.C. App. 529, 463 S.E. 2d 397 (1995): "[n]o person has the right to appear as another's attorney without the authority to do so, granted by the party for which he [or she] is appearing." Id. at 577, 515 S.E. 2d at 444 [quoting Amethyst Corp. 120 N.C. App. at 532, 463 S.E. 2d at 400]. The Court also concurred with the statement in Amethyst Corp. that, "North Carolina law has long recognized that an attorney-client relationship is based upon principles of agency," and "[t]wo factors are essential in establishing an agency relationship: (1) The agent must be authorized to act for the principal; and (2) The principal must exercise control over the agent.'" Id. [quoting Amethyst Corp., 120 N.C. App. at 533-534, 463 S.E. 2d at 400].

Therefore, unless allowed by statute, court order, or subsequent case law, a lawyer may not appear in court for a party who has not authorized the representation and with whom the lawyer has not established a client-lawyer relationship.

Inquiry #2:

Would the response to Inquiry #1 be different if the insurance contract with Insured specifies that Insurance Carrier has the authority to choose legal counsel for Insured and to decide whether to settle the case?

Opinion #2:

No.

Inquiry #3:

Would the response to Inquiry #1 be different if Insured received actual notice of the lawsuit and contacted Insurance Carrier before disappearing?

Opinion #3:

Whether such contact with Insurance Carrier is sufficient to create a client-lawyer relationship with a lawyer selected by Insurance Carrier is a question of fact and law not resolved by the existing case law. However, the Ethics Committee doubts that the two factors required to establish an agency relationship exist in this situation. See also Dunkley, 350 N.C. at 578, 515 S.E. 2d at 445 ("RPC 223, Rule 1.2(a), and Amethyst Corp. correctly emphasize the principle that a lawyer cannot properly represent a client with whom he has no contact.").

Inquiry #4:

Would the response to Inquiry #1 be different if Insured received notice of the lawsuit and specifically authorized the representation before disappearing?

Opinion #4:

Yes, Attorney may appear in the lawsuit on behalf of Insured if Insured has authorized the representation. However, if Insured cannot thereafter be located, Attorney may not mislead the court about Insured's absence. Rule 3.3(a)(1). Moreover, in the event Insured is not present to participate in the representation, Attorney may have to file a motion to withdraw. Rule 1.2, cmt. [1] (Client has "the ultimate authority to determine the purposes to be served by legal representation85."); Rule 1.16; RPC 223; 03 FEO 16; see also Dunkley, 350 N.C. at 578, 515 S.E. 2d at 445 ("a lawyer cannot properly represent a client with whom he has no contact.").

Inquiry #5:

Would the response to Inquiry #1 be different if the insurance contract contained a provision granting Insurance Carrier the express authority to proceed with the representation on behalf of and in the name of the Insured in the event contact with Insured is lost?

Opinion #5:

This is a question of law that is not resolved by the existing case law and is outside the purview of the Ethics Committee.

Inquiry #6:

Attorney is retained by Insurance Carrier to defend a "John Doe" defendant in an automobile accident case. May Attorney represent "John Doe" in the court proceedings?

Opinion #6:

If the designation of a certain person as "John Doe" is necessary to effect service of process and Attorney concludes that he is able to identify the intended person (e.g., an employee of an insured defendant company), Attorney may work with Insurance Carrier and the defendant company to identify the individual and, once identified, may appear in the lawsuit on behalf of the individual if authorized to do so by the individual. If the identity of "John Doe" cannot be ascertained by Attorney, Insurance Carrier, or another client, whether Attorney may represent "John Doe" in the court proceedings is a question of law outside the purview of the Ethics Committee.