Can an insurance defense lawyer follow the carrier's requirement to use a designated outside legal research firm, and submit the insured's briefs to the carrier's brief bank?

Plain-English summary

An insurance carrier required defense counsel for its insureds to consult a designated outside legal research firm (a research and brief bank) before doing original research, and to submit the insured's briefs and memoranda to build that bank. The committee answered three questions, starting from the principle that the policyholder, not the carrier, is the client (N.Y. State 716).

On using the research firm, the committee held there was no impropriety, with the client's informed consent, in acceding to the carrier's request to consult or commission the firm, as long as the lawyer adequately reviews the research and is satisfied it is complete and correct. Because the lawyer must keep independent professional judgment (DR 5-107(B)) and provide competent representation (Canon 6, DR 6-101(A)(2)), a requirement to do no further research without the carrier's consent is acceptable only if the lawyer concludes no additional work is needed; if the limitation would result in inadequate representation, the lawyer may not agree. The insured may authorize the same reasonable limits the insured could impose, including a reasonable research budget, and the lawyer must disclose the carrier's requirements and obtain the insured's consent (DR 5-107(A)). If the insured will not consent and the carrier will not pay, the lawyer may withdraw under DR 2-110, continue and risk nonpayment, or petition the court to order payment.

On the research firm's staffing, the committee held that lawyers not admitted in New York have the status of non-lawyers in New York, and that non-lawyers may perform legal research and draft documents as long as a New York lawyer supervises the work. Adequate supervision (considering the work in advance and reviewing it afterward) means counsel is not aiding the unauthorized practice of law; but if the carrier instructed the lawyer not to supervise adequately, the lawyer could not agree, because the firm would then be engaged in the unauthorized practice of law (DR 3-101(B)).

On submitting the insured's materials to the brief bank, the committee held that the lawyer's work product belongs to the client and may contain confidences and secrets. Publicly filed briefs and motions often do not contain secrets, while fact memoranda and depositions usually do, at least until the matter ends. The insurance contract is not consent to disclose the client's confidences (N.Y. State 716), so the lawyer must obtain the insured's specific informed consent before submitting materials that contain confidences or secrets. The absence of a conflicts check by the research firm matters where shared materials could reach an adverse party.

Currency note

This opinion was issued in 1999, under New York's former Code of Professional Responsibility, which New York replaced with the Rules of Professional Conduct in 2009. 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 insurance defense counsel be required to use the carrier's research firm?

A: The opinion concluded yes, with the insured's informed consent, if the lawyer adequately reviews the research and the requirement does not compromise effective representation; a no-further-research limit is acceptable only if the lawyer judges no more work is needed.

Q: Does it matter that the research firm uses non-lawyers or lawyers not admitted in New York?

A: The opinion held it does not, as long as a New York lawyer supervises or reviews the work. Without that supervision the firm would be engaged in the unauthorized practice of law, and counsel could not agree to forgo supervision.

Q: Can the lawyer send the insured's briefs and memos to the carrier's brief bank?

A: The opinion concluded counsel may do so only if the documents contain no client confidences or secrets, or the insured gives informed consent; the insurance contract alone is not that consent.

Background and rules framework

The opinion interpreted DR 5-107(A) and (B) (compensation from a third party and independent judgment), DR 6-101(A)(2) (competent preparation), DR 4-101 (confidences and secrets), and DR 3-101(B) (aiding the unauthorized practice of law) of New York's former Code of Professional Responsibility. The Model Rule analogues are Rule 1.6 (confidentiality), Rule 5.3 (supervision of non-lawyer assistants), Rule 5.4 (professional independence; third-party payment), and Rule 5.5 (unauthorized practice). New York replaced the Code with the Rules of Professional Conduct in 2009; the DR numbers cited here are historical.

Citations and references

Rules of Professional Conduct:

• MR 1.6 (confidentiality of information)
• MR 5.3 (responsibilities regarding non-lawyer assistance)
• MR 5.4 (professional independence; third-party payment)
• MR 5.5 (unauthorized practice of law)
• NY DR 5-107(A), (B); DR 6-101(A)(2); DR 4-101; DR 3-101(B)

Cases:

• Feliberty v. Damon, 72 N.Y.2d 112 (1988), insured's remedies for inadequate defense
• American Employers Insurance Co. v. Goble Aircraft Specialties, 205 Misc. 1066 (1954), counsel's fealty to the insured

Other opinions cited:

• N.Y. State 716 (1999): the insured, not the insurer, is the client; insurance contract is not consent to disclose confidences
• N.Y. State 677 (1995): delegating tasks to non-lawyers turns on whether the task is the practice of law
• ABA Formal Op. 96-403: disclosure of the carrier's role and limitations to the insured

See also

• NY State Bar Op. 716: Submitting defense billing records to an insurer's outside auditor
• NY State Bar Op. 726: Insurance staff counsel holding out as a law firm

Source

• Landing page: https://nysba.org/opinion-721/