Is a lawyer who passively owns part of the insurance agency that wrote a defendant's liability policy disqualified from suing that defendant?

Plain-English summary

A lawyer owned an interest in a local insurance soliciting agency, which he had nothing to do with managing. He was retained to assist a Missouri lawyer in a personal-injury suit against a resort whose liability insurer turned out to be a company for which his agency had written the policy. On learning of his involvement, the insurer told him he should be disqualified because he was a partner in the agency. The lawyer noted the agency's only interest was the small commission it earned writing the policy, with no obligation for any losses, and asked whether he was disqualified.

The committee answered that he was not disqualified. Quoting Canon 6, it explained that a lawyer represents conflicting interests when, on behalf of one client, his duty requires him to contend for what duty to another client requires him to oppose. Because the lawyer did not represent the insurance company in the capacity of a lawyer, there was no conflict and no disqualification; a conflict requires an attorney-client relationship, and none ever existed between the lawyer and the insurer. It cited Texas, Wisconsin, and Iowa decisions holding that the disqualification objection is available only to those as to whom the attorney sustains or has sustained the attorney-client relation.

Currency note

This opinion was issued in 1953, decades before Oklahoma replaced its original Rules of Professional Conduct (patterned on the ABA Canons of Professional Ethics) with the Oklahoma Rules of Professional Conduct (adopted 1988) and the later Ethics 2000 revisions. Canon 6, the conflicting-interests rule applied here, belongs to that superseded canon-era code; the current rules on conflicts, personal-interest conflicts, and standing to object are stated differently today. Subsequent rule amendments and 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 Treat this page as historical context, not current guidance.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: Why was the lawyer's ownership stake in the insurance agency not a conflict?

A: The committee reasoned that a Canon 6 conflict requires an attorney-client relationship, and the lawyer never represented the insurer as a lawyer; his passive ownership interest in the agency that wrote the policy did not create one.

Q: Who can raise a disqualification objection, under the opinion's authorities?

A: The committee cited decisions holding the objection is available only to those as to whom the attorney sustains or has sustained the relation of attorney and client.

Background and rules framework

The opinion applied Canon 6 of the Canons of Professional Ethics, adopted in Oklahoma, on representing conflicting interests, reading it to require an attorney-client relationship before disqualification can result. The opinion predates the Model Rules and made no Model Rule citation.

Citations and references

Rules of Professional Conduct:

• Canon 6 (ABA Canons of Professional Ethics, adopted by the Oklahoma Bar): it is unprofessional to represent conflicting interests, which requires an attorney-client relationship.

Cases:

• Ferguson v. Alexander, 122 S.W.2d 1079 (Tex. Civ. App.), disqualification objection limited to former or present clients
• Harvey v. Harvey, 202 Wis. 553, 231 N.W. 580
• Michel v. McKenna, 199 Wis. 608, 227 N.W. 396
• Van Veen v. Van Veen, 213 Iowa 323, 236 N.W. 1, 238 N.W. 718
• Almon v. American Carloading Corp., 38 N.E.2d 362 (Ill. App.)

See also

• Okla. Bar Ethics Op. 161: Counsel for a surviving partner, no apparent conflict
• Okla. Bar Ethics Op. 154: Former claim agent representing a claimant against the former employer

Source

• Landing page: https://www.okbar.org/ethics/ethics-opinion-no-171/

Original opinion text

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

Adopted September 16, 1953

QUERY

A lawyer has made the following inquiry:

“I own an interest in the Blank Insurance Agency, which is a local soliciting agency for the purpose of writing insurance of all kinds upon property, also bonds and liability insurance contracts. The agency solicits and writes insurance for several different companies. I have nothing to do with the management of the agency, as it is operated exclusively by Mr. C. of Blank, Oklahoma.

Recently a lawyer from Neosho, Missouri, employed me to assist him in the filing of a law suit against a resort on Grand Lake by reason of personal injuries which a client had received in a fall alleged to have been due to the negligence of the resort owners. The Insurance Company of Tulsa, Oklahoma, carried the liability insurance, which fact was ascertained by the Neosho lawyer through a check of the records by the G. R. D. A.

The Insurance Company upon learning that I had been employed in the case advised me that the liability policy had been written by the Blank Insurance Agency, and that since I was a partner in that venture. I should be disqualified in handling the suit in question. I would like to point out the only interest the Blank Insurance Agency has in the matter is the small commission they earned for the writing of the policy. They are in no wise obligated to the Insurance Company for any losses suffered.

I would appreciate being advised under these circumstances whether or not I am disqualified in handling this litigation.”

ANSWER

Canon 6 reads in part

“It is unprofessional to represent conflicting interests, …. Within the meaning of this Canon, a lawyer represents conflicting interests when, in behalf of one client, it is his duty to contend for that which duty to another client requires him to oppose.”

Since the lawyer does not represent the insurance company in the capacity of a lawyer under the above quoted portion of Canon 6, there is no conflict of interest and the lawyer is not disqualified from handling the litigation. To be a conflict of interest there must be a relationship of attorney and client. Here no relationship of attorney and client ever existed, and no disqualification can result.

As said in Ferguson v. Alexander, Tex. Civ. App., 122 S.W.2d 1079, at page 1081:

“The doctrine seems to be well settled that, ‘The objection that an attorney is disqualified by reason of his representing adverse interests, is available only to those as to whom the attorney in question sustains or has sustained the relation of attorney and client * * *.’ 7 C.J.S. Attorney and Client § 47, p. 826. To the same effect see: Harvey v. Harvey, 202 Wis. 553, 231 N.W. 580, 583; Michel v. McKenna, 199 Wis. 608, 227 N.W. 396: Van Veen v. Van Veen, 213 Iowa 323, 236 N.W. 1, 8, 238 N.W. 718.”

See also Almon et al. v. American Carloading Corp., 312 Ill.App.2d 225, 38 N.E.2d 362.