Can a lawyer handling an insurer's subrogation claim tell the insured his injury claim may be barred and offer to handle that claim too?

Plain-English summary

An attorney retained by an insurer to pursue a third party for a collision-policy loss paid to the insured asked whether he may write the insured to warn that his personal-injury action could be barred by the subrogation suit, and list alternatives, one of which was to employ the same attorney to handle the personal-injury claim along with the insurer's subrogated interest. The Committee concluded he may not solicit that way (6-0).

The Committee agreed unanimously that the letter clearly violates Canon 24, which prohibits solicitation. A majority also found a violation of Canon 25, which prohibits volunteering advice to bring a lawsuit; the Canon 25 violation lay in the degree to which the letter suggested and assumed that the insured should want to sue, spelling out in detail the effect of the insurer's suit. At the same time, the Committee said the attorney, because of the peculiar relationship, had a duty to give the insured some notice that the litigation could affect his rights, even if doing so might to some extent stir up litigation. As to Canon 9 (giving legal advice to a party not represented by counsel), the majority found no violation, while a minority felt the letter contained more legal advice than necessary to discharge the duty of notice.

Currency note

This opinion was issued in 1960, under the former Texas Canons of Ethics, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. It also predates Bates v. State Bar of Arizona, 433 U.S. 350 (1977), which loosened categorical advertising restrictions, though prohibitions on solicitation were not eliminated. 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 Treat this page as historical context, not current guidance.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 a subrogation lawyer offer to also handle the insured's personal-injury claim?

A: No. The Committee held unanimously that offering to handle the insured's injury claim, and soliciting that employment, violates Canon 24 (6-0).

Q: May the lawyer tell the insured the subrogation suit could affect his injury claim?

A: Yes. The Committee said the lawyer had a duty, because of the peculiar relationship, to give the insured some notice that the litigation could affect his rights, even if that might to some extent stir up litigation.

Q: What made the letter cross into Canon 25?

A: A majority found a Canon 25 violation in the degree to which the letter suggested and assumed the insured should sue, spelling out in detail the effect of the insurer's suit.

Background and rules framework

The opinion interprets former Texas Canon 24 (solicitation) and Canon 25 (volunteering advice to bring a lawsuit, or stirring up litigation). The modern analog for the solicitation point is ABA Model Rule 7.3 (solicitation of clients).

Citations and references

Rules of Professional Conduct:

• MR 7.3 (solicitation of clients), as the modern analog
• Texas Canons 24 and 25 (former canons on solicitation and stirring up litigation)

See also

• TX Ethics Op. 201: Plaintiff's Letter to an Unrepresented Defendant
• TX Ethics Op. 196: Lawyer-Owned Abstract Company and "Feeding"
• TX Ethics Op. 213: Settlement Demands Pleaded in a Petition

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-202/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_202.pdf

Original opinion text

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

QUESTION PRESENTED

Where an attorney has been retained by insurer to proceed against a third party for loss paid to insured under a collision policy, may the attorney communicate directly with insured and advise him that his action for personal injuries may be barred by such subrogation suit, and further list alternative courses of action for the insured, one of which is to employ said attorney to handle the personal injury claim along with insurer's subrogated interest?

18 Baylor L. Rev. 290 (1966)

SOLICITATION - EMPLOYMENT - INSURANCE - SUBROGATION
An attorney, handling insurer's subrogation claim against a third party, in notifying insured of possible effect of pending litigation upon any possible claim of insured for personal injuries, cannot suggest or assume that insured should sue for his injuries, nor can attorney offer his services to handle the insured's personal injury claim along with the insurer's subrogation claim for the property damage.

Canons 24, 25.

The committee agrees unanimously that such a letter clearly violates Texas Canon 24 which prohibits solicitation. A majority of the Committee believes that the action also violates Texas Canon 25, which prohibits the volunteering of advice to bring a lawsuit. The violation of Canon 25 is found in the degree in which the letter suggested and assumed that the insured should want to sue for his personal injuries. The letter spelled out in some detail the effect of a suit brought by the insurer. The Committee is of the opinion that the attorney, because of the peculiar relationship present, had a duty to give some notice to the insured that the matter to be litigated could well affect his rights, even though such action might to some extent constitute stirring up litigation. With regard to Canon 9, which prohibits the giving of legal advice to a party not represented by counsel, the majority of the Committee found no violation, while a minority felt that the particular letter contained more advice as to the law than was necessary to discharge the duty of giving notice to the insured. (6-0)

Tex. Comm. On Professional Ethics, Op. 202 (1960)