Can a lawyer represent a client suing a relative for personal injury when recovery is limited to the relative's insurance?

Plain-English summary

The Committee considered two similar inquiries together. In the first, counsel represented one brother (B-1) in a divorce while a second brother (B-2) was injured on the home B-1 owned with his wife; all parties would consent to counsel representing B-2 in a suit against B-1, with recovery limited to the homeowner's insurance. In the second, a lawyer represented a client whose mother-in-law was injured falling in the client's home; all would consent to the lawyer representing the mother-in-law against the client and spouse, with recovery limited to insurance.

The Committee found each a direct conflict under RPC 1.7(a). Although the inquirers argued the conflicts were cured by knowing consent after full disclosure under RPC 1.7(a)(1) and (2), the Committee held they overlooked a third interested party, the insurer, and that RPC 1.7(c)(2) must be considered. That Rule prohibits multiple representation in situations creating an appearance of impropriety, where an ordinary knowledgeable citizen acquainted with the facts would conclude the representation poses a substantial risk of disservice to the public interest.

The Committee concluded that an ordinary knowledgeable citizen would frown on the proposed representations, that the public interest would be disserved and the legal profession demeaned, and that the intended representations are prohibited.

Currency note

This opinion was issued in 1988, before New Jersey's adoption of the 2004 revisions to the Rules of Professional Conduct, which abolished the "appearance of impropriety" standard codified in the former RPC 1.7(c)(2) the Committee applied here. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule mentioned here.

Common questions

Q: Does client consent cure the conflict in suing a relative limited to insurance?

A: Per the opinion, no. Even with knowing consent under RPC 1.7(a), the Committee held RPC 1.7(c)(2)'s appearance-of-impropriety bar applied and prohibited the representation.

Q: Why did the insurer matter?

A: The Committee said the inquirers overlooked a third interested party, the insurer, and that an ordinary knowledgeable citizen acquainted with the facts would view the family-versus-insurer arrangement as a disservice to the public interest.

Background and rules framework

The opinion applies NJ RPC 1.7(a) (direct adversity / concurrent conflict) and the former NJ RPC 1.7(c)(2) (Model Rule 1.7 in New Jersey's then-distinctive appearance-of-impropriety form), which barred multiple representation where an ordinary knowledgeable citizen would conclude it poses a substantial risk of disservice to a client or the public interest, even where the parties consent.

Citations and references

Rules of Professional Conduct:

• MR 1.7 / NJ RPC 1.7(a) (concurrent conflict of interest)
• NJ RPC 1.7(c)(2) (former appearance-of-impropriety bar)

See also

• NJ ACPE Op. 616: Blanket (Aggregate) Settlement Offers
• NJ ACPE Op. 613: Withdrawing Attorney Claiming a Referral Fee After a Driver/Passenger Conflict

Source

• Full text (Justia mirror): https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp615-1.html
• Issuing authority: New Jersey Supreme Court Advisory Committee on Professional Ethics, via the NJ Courts Supreme Court Committees page

Original opinion text

Reproduced from a full-text mirror of the official opinion for research purposes. The linked official source controls.

122 N.J.L.J. 207, July 21, 1988

OPINION 615

Conflict of Interest: Representation of Plaintiff in Personal Injury Action Where Defendant is Plaintiff's Relative

These two inquiries received by the Committee within two weeks of each other relate to the same subject matter and shall be considered together.

The first set of facts presents Counsel representing Brother 1 (B-1) in a divorce action wherein he and his wife together own a house. Brother 2 (B-2) was injured on the premises. Both B-1, his wife, and B-2 will consent to Counsel's representation of B-2 in a suit against B-1, since there is a homeowner's policy of sufficient amount to cover any "projected" damages, and all parties agree that B-2 will never make claim against any asset other than insurance proceeds.

The second group of circumstances involves a lawyer who has represented, and presently does represent, a client whose mother-in-law was injured in a fall in his home. All parties will consent to representation of mother-in-law by the inquirer in a suit against husband (client) and wife. They all also agree that any recovery is to be limited to insurance proceeds.

Each of these cases presents a direct conflict as contemplated by RPC 1.7(a). Both inquirers, however, assert that their cases are excluded by reason of RPC 1.7(a)(1) and (2) because there will be knowledgeable consent after full disclosure and consultation.

Both overlook the fact that in each case there is a third party which has an interest - the insurer. While it may be argued that no conflict exists vis-a-vis the insurer, we believe that RPC 1.7(c)(2) must be considered. That Rule, in pertinent part, provides:

...(2) in certain cases or situations creating an appearance of impropriety..., multiple representation is not permissible, that is, in those situations in which an ordinary knowledgeable citizen acquainted with the facts would conclude that... representation poses substantial risk of disservice to... the public interest... .

It appears clear to us that an ordinary knowledgeable citizen (not necessarily the insurer in these cases) would frown on the intended representations proposed here. Not only would the public interest be disservice, the legal profession would be demeaned. The intended representations are prohibited.