Can a lawyer represent an injured client and also the client's health insurer asserting a subrogation claim for the same medical bills?

Plain-English summary

The inquiry arose where a lawyer originally represented a client in a personal-injury case and later agreed to represent the client's health insurer, which claimed a subrogation interest for the client's medical bills. The lawyer then settled the personal-injury case on the client's instructions without first consulting the health insurer.

The opinion concluded that a lawyer may contract with a client's health insurer to collect funds the client is contractually obligated to reimburse under a subrogation clause, citing South Carolina Ethics Opinion 91-25. Such joint representation is permissible, however, only if it is obvious the lawyer can adequately represent the interests of each client and each consents, preferably in writing, after full disclosure of the possible effect of the representation under DR 5-105(C).

On the handling of the settlement, the opinion applied DR 5-106(A), which bars a lawyer who represents two or more clients from making or participating in an aggregate settlement unless each client consents after being advised of the existence and nature of all the claims, the total amount of the settlement, and each person's participation. The opinion concluded the lawyer therefore had to advise both the client and the insurer of the proposed settlement, and that at the initial contact the lawyer should advise the insurer (orally and in writing) that if the two clients did not agree on the proposed settlement, the lawyer could not continue the multiple employment and would have to withdraw from representing the insurer.

Currency note

This opinion was issued in 1995, before Tennessee's adoption of the 2003 Rules of Professional Conduct, which replaced the former Code of Professional Responsibility (including DR 5-105(C) and DR 5-106(A)) on which it relied, and before the ABA's 2002 Ethics 2000 revisions. The modern analogs are RPC 1.7 (concurrent conflicts) and RPC 1.8(g) (aggregate settlements). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance, and verify against the current rules before relying on any specific requirement mentioned here.

Common questions

Q: Could a Tennessee lawyer represent both an injured client and the client's health insurer on its subrogation claim?

A: Per the opinion, yes, but only if it was obvious the lawyer could adequately represent each and each consented after full disclosure (preferably in writing) under DR 5-105(C).

Q: Could the lawyer settle the injury case without telling the insurer?

A: No. The opinion treated the resolution as a joint settlement, so DR 5-106(A) required advising both clients of the existence, nature, and total amount of the settlement and each party's participation before settling.

Q: What was the lawyer supposed to do if the client and the insurer could not agree on a settlement?

A: The opinion concluded the lawyer should tell the insurer at the outset, orally and in writing, that if the two clients could not agree, the lawyer would have to withdraw from representing the insurer.

Background and rules framework

The opinion interpreted former DR 5-105(C) (multiple representation permitted only with adequate representation of each client and consent after full disclosure) and DR 5-106(A) (aggregate settlements require each client's informed consent). The modern analogs are Model Rule 1.7 / Tennessee RPC 1.7 (concurrent conflicts of interest, requiring informed consent confirmed in writing) and Model Rule 1.8(g) / Tennessee RPC 1.8(g) (aggregate settlements). It relied on South Carolina Ethics Opinion 91-25.

Citations and references

Rules of Professional Conduct (former Code):

• DR 5-105(C) (multiple representation with consent after full disclosure). Modern analog: Model Rule 1.7 / Tennessee RPC 1.7
• DR 5-106(A) (aggregate settlements). Modern analog: Model Rule 1.8(g) / Tennessee RPC 1.8(g)

Other opinions cited:

• South Carolina Ethics Opinion 91-25 (October 1991) (lawyer collecting an insurer's subrogation interest from a client's recovery)

See also

• SC Bar Ethics Op. 91-25: Plaintiff and Subrogated Insurer
• ABA Formal Op. 06-438: Aggregate Settlement Disclosures

Source

• Landing page: https://www.tbpr.org/ethic_opinions/95-f-136

Original opinion text

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

95-F-136 - Attorney representing client and client's health insurer

BOARD OF PROFESSIONAL RESPONSIBILITY OF THE SUPREME COURT OF TENNESSEE

FORMAL ETHICS OPINION 95-F-136

Inquiry is made as to the propriety of an attorney representing a client while also representing the client's health insurer claiming a subrogation interest for medical bills of the client's.

The attorney originally represented a client on her personal injury case. Later, the attorney agreed to represent the client's health insurer who claimed a subrogation interest for the medical bills of the client's. Pursuant to the client's instructions, the attorney settled the client's personal injury case, without first advising or consulting with the client's health insurer.

An attorney who represents a client may also enter into a contract with the client's health insurance provider to collect funds the client is contractually obligated to reimburse the health insurance provider pursuant to a subrogation clause in the client's health insurance contract. South Carolina Ethics Opinion 91-25 (October, 1991). An attorney may represent the client and the client's health insurance provider if it is obvious that the lawyer can adequately represent the interests of each and if each consents preferably in writing to the representation after full disclosure of the possible effect of such representation. DR 5-105(C).

With regard to the attorney's handling of a settlement, DR 5-106(A) states:

"A lawyer who represents two or more clients shall not make or participate in the making of an aggregate settlement of the claims of or against his clients, unless each client has consented to the settlement after being advised of the existence and nature of all the claims involved in the proposed settlement, of the total amount of the settlement, and of the participation of each person in the settlement."

Therefore, the attorney representing both his original client and also his client's health insurance provider must advise both clients of the existence and nature of the proposed settlement. At the time of the initial contact by the health insurance provider, the attorney should advise the health insurance provider both orally and in writing that if both clients do not agree on the proposed settlement, then the lawyer may not continue his multiple employment and must withdraw from representing the health insurer.

This 8th day of September, 1995.

ETHICS COMMITTEE:

James M. Glasgow, Jr.

Herman Morris, Jr.

Frankie E. Wade

APPROVED AND ADOPTED BY THE BOARD