Can a plaintiff's lawyer keep negotiating directly with an insurance company's claims adjuster after defense counsel says to stop?

Plain-English summary

A plaintiff injured in an auto accident sued the allegedly at-fault driver, whose insurer assigned defense counsel. Before suit, the plaintiff's lawyer had negotiated unsuccessfully with the insurer's non-lawyer claims adjuster. After the assignment, defense counsel learned the plaintiff's lawyer was still communicating with the adjuster and instructed him to stop. The committee was asked whether the plaintiff's lawyer may continue direct settlement negotiations with the adjuster over assigned defense counsel's objection.

The committee concludes he may. DR 7-104(A)(1), the "no contact" rule, bars communicating about the matter with a party the lawyer knows to be represented by counsel in that matter, absent the other lawyer's consent or legal authorization. The committee asks whether the adjuster is a represented party, that is, whether the adjuster is represented by the counsel assigned to defend the policyholder, and answers no. Relying on N.Y. State 4 (1964) and its line of opinions on the tripartite insurer/assigned-counsel/policyholder relationship, the committee reiterates that in New York the assigned lawyer's client is the policyholder, not the insurer, and the two are not co-clients. Contact with the adjuster is therefore not contact with the represented policyholder.

The committee adds two limits. First, the no-contact rule does bar unconsented communication with the adjuster if the insurance company is known to be separately represented by counsel on the matter (and in some circumstances the plaintiff's lawyer may have a duty to inquire before assuming it is not, citing N.Y. State 728). Second, a lawyer may not deliberately elicit information protected by privilege or as work product from an unrepresented person such as the insurer, for whom the adjuster is an agent; because much of the insurer's file is likely work product, the plaintiff's lawyer must not deliberately elicit such protected information during the settlement discussions.

In practice

Under the New York Code as it stood at the time, the opinion holds that a plaintiff's lawyer may negotiate directly with an insurer's non-lawyer claims adjuster even after assigned defense counsel objects, because the adjuster represents the insurer (an unrepresented entity for this purpose), not the policyholder whom defense counsel represents. The committee conditions that on two points: the insurer must not have its own separate counsel on the matter (with a possible duty to inquire), and the lawyer must not deliberately elicit privileged or work-product information from the adjuster.

Common questions

Q: Does the no-contact rule bar a plaintiff's lawyer from talking to the defendant's insurance adjuster?

A: No. The committee concludes the adjuster is not the represented party, because assigned defense counsel represents the policyholder, not the insurer, so contacting the adjuster is not prohibited contact with a represented person.

Q: Can the lawyer keep negotiating after assigned defense counsel says to stop?

A: Yes. The committee holds the plaintiff's lawyer may continue direct settlement discussions with the adjuster over defense counsel's objection, subject to the opinion's two conditions.

Q: When would contacting the adjuster be improper?

A: If the insurer is separately represented by counsel on the matter, unconsented communication is barred; the committee also notes the lawyer may have a duty to inquire before assuming the insurer has no separate counsel.

Q: Is there a limit on what the lawyer can ask the adjuster?

A: Yes. The committee states the lawyer may not deliberately elicit information protected by privilege or as work product, and notes much of the insurer's file is likely work product.

Background and rules framework

The opinion applies New York's former Code of Professional Responsibility. DR 7-104(A)(1) is the no-contact rule barring communication with a represented party absent consent or legal authorization (analogous to Model Rule 4.2). The limit on deliberately eliciting privileged or work-product material from an unrepresented person reflects the principle later codified in Model Rule 4.4 (respect for the rights of third persons). The insurer/assigned-counsel/policyholder analysis draws on N.Y. State 716 and 721.

Citations and references

Rules of Professional Conduct:

• MR 4.2 (communication with a represented person); NY DR 7-104(A)(1)
• MR 4.4 (respect for rights of third persons; not deliberately eliciting protected information)

Statutes:

• CPLR 3101(d)(2) (protection for materials prepared in anticipation of litigation)

Cases:

• American Employers Ins. Co. v. Goble Aircraft Specialties, Inc., 205 Misc. 1066 (Sup. Ct. 1954), assigned counsel owes single allegiance to the insured

Other opinions cited:

• N.Y. State 4 (1964): a claimant's lawyer may negotiate with the adjuster
• N.Y. State 716 (1999) and 721 (1999): the policyholder, not the insurer, is assigned counsel's client
• N.Y. State 728 (2000): duty to inquire before assuming the insurer is unrepresented

See also

• NY State Bar Op. 1080: Contacting a public official represented by counsel
• NY State Bar Op. 1124: Communicating with opposing counsel and party
• NY State Bar Op. 1047: Government lawyer interviewing a represented person's clients

Source

• Landing page: https://nysba.org/ethics-opinion-785/