Can an Oregon lawyer paid by an insurer represent both the insurer and the insured in a subrogation action against a third party?

Plain-English summary

An insurer pays an insured for property damage caused by a third party, minus the deductible, and is subrogated to the insured's claims to the extent of its payment. The insurer proposes to pay a lawyer to represent both the insurer and the insured in an action against the third party, seeking both the damages not reimbursed to the insured and the sums the insurer paid. At the time of the request, the interests of insurer and insured do not appear to diverge. The opinion asks whether the lawyer may represent both.

The opinion concludes yes, qualified. The lawyer would have both the insurer and the insured as clients, even if the action is prosecuted in the insured's name. Because the insurer would pay the lawyer's fee, the lawyer must comply with Oregon RPC 1.8(f): the client's informed consent, no interference with the lawyer's independent judgment or the client-lawyer relationship, and protection of client information under RPC 1.6. RPC 5.4(c) likewise bars letting a payer direct or regulate the lawyer's professional judgment.

So long as the lawyer does not permit improper influence under RPC 5.4(c) and obtains the insured's informed consent under RPC 1.8(f)(1) and RPC 1.0(g), the opinion concludes the simultaneous representation is not prohibited, and there is no reason it should be barred by RPC 1.7. The opinion adds (citing OSB Formal Op. 2005-27) that a lawyer may represent multiple clients without special disclosure and consent when no conflict reasonably appears to be present.

In practice

The opinion holds that the insurer-insured joint representation is permitted where the interests do not appear to diverge, conditioned on the insured's informed consent to the insurer paying the fee and on the lawyer's independence from the payer. Per the opinion, RPC 1.8(f) and RPC 5.4(c) govern the third-party payment, and RPC 1.7 does not bar the representation because no conflict reasonably appears at the outset.

Common questions

Q: Can a lawyer represent both an insurer and its insured in the same suit?

A: Yes, qualified. The opinion concludes the lawyer may do so where the interests do not appear to diverge, with the insured's informed consent and without improper insurer influence.

Q: What must the lawyer do because the insurer is paying the fee?

A: The opinion concludes the lawyer must satisfy RPC 1.8(f): the client's informed consent, no interference with independent judgment, and protection of client information, and must not let the insurer direct the lawyer's judgment under RPC 5.4(c).

Q: Does this representation require formal conflict consent under RPC 1.7?

A: Not on these facts. The opinion concludes that, because no conflict reasonably appears to be present, RPC 1.7 does not bar the joint representation.

Background and rules framework

The opinion interprets Oregon RPC 1.8(f) (compensation from a third party), RPC 5.4(c) (independence from a payer), and RPC 1.7 (current-client conflicts), with the informed-consent definition in RPC 1.0(g). These track Model Rules 1.8(f), 5.4, and 1.7.

Citations and references

Rules of Professional Conduct:

• Oregon RPC 1.8(f) / Model Rule 1.8(f) (compensation from a third party)
• Oregon RPC 5.4(c) / Model Rule 5.4 (independence from a payer)
• Oregon RPC 1.7 / Model Rule 1.7 (current-client conflicts)

Cases:

• In re Weidner, 310 Or 757, 801 P2d 828 (1990)
• In re Stauffer, 327 Or 44, 956 P2d 967 (1998)

Other opinions cited:

• ABA Formal Op. 282 (1950) and ABA Informal Op. 1476 (1981): insurer-insured representation
• OSB Formal Op. 2005-27: representing multiple clients absent an apparent conflict

See also

• OSB Ethics Op. 2005-22: Third-Party Payment of Fees
• OSB Ethics Op. 2005-27: Trade Association vs. Members Conflict

Source

• Landing page: https://www.osbar.org/ethics/toc.html
• Original PDF: https://www.osbar.org/_docs/ethics/2005-30.pdf