Can an insurance defense lawyer send a settlement-payment notice directly to a represented claimant, without opposing counsel's consent, when a Texas Department of Insurance bulletin encourages it?

Plain-English summary

The opinion addresses a lawyer retained by an insurance company to defend an insured in a matter where the claimant is represented by another lawyer. The settlement requires the insurer to send the settlement check to the claimant's lawyer, and, prompted by a Texas Department of Insurance bulletin, the defense lawyer proposes to send written notice of the payment directly to the claimant at the same time.

The Committee applies Rule 4.02(a), which bars a lawyer from communicating, or causing or encouraging another to communicate, about the subject of the representation with a person the lawyer knows to be represented, unless the other lawyer consents or the communication is authorized by law. The proposed notice is a communication about the subject of the representation with the represented claimant, so without opposing counsel's consent it is permitted only if authorized by law. Because the TDI bulletin strongly encourages but does not require the notice, the Committee concludes the communication is not "authorized by law," and the lawyer may not send it or participate in sending it.

The Committee adds that although the insurer itself is not bound by the Rules and may communicate with others, Rule 4.02(a) bars the lawyer from causing or encouraging persons acting for the insurer to make a communication the lawyer could not make directly. So long as the lawyer does not cause or encourage it, however, the lawyer need not affirmatively discourage a communication by the insurer in which the lawyer is not involved (citing Comment 2 to Rule 4.02).

In practice

Under this opinion, and under the Texas rules as they stood at the time, insurance defense counsel may not send a represented claimant direct notice of a settlement payment without the claimant's lawyer's consent. The Committee treats the notice as a Rule 4.02(a) communication about the subject of the representation, permissible only with consent or authorization by law, and holds that a TDI bulletin that merely encourages the notice does not authorize it. The opinion also bars the lawyer from causing or encouraging the insurer or its agents to send what the lawyer could not send directly, while clarifying the lawyer has no duty to affirmatively stop a communication by the insurer that the lawyer is not involved in.

Common questions

Q: Can I send a settlement-payment notice straight to the other side's client if my insurer client wants it?

A: No, not without opposing counsel's consent. Per Opinion 613, the notice is a Rule 4.02(a) communication with a represented person about the subject of the representation, which is barred absent consent or authorization by law.

Q: A Texas Department of Insurance bulletin encourages the notice. Doesn't that authorize it?

A: No. The Committee says that because the bulletin strongly encourages but does not require the notice, the communication is not "authorized by law" within the meaning of Rule 4.02(a).

Q: Can I just have the insurance company send the notice instead?

A: Not if you cause or encourage it. The opinion says Rule 4.02(a) bars the lawyer from causing or encouraging the insurer's people to make a communication the lawyer could not make directly, though the lawyer need not affirmatively discourage an insurer communication the lawyer is not involved in.

Background and rules framework

The opinion interprets Texas Disciplinary Rule 4.02(a) (communication with one represented by counsel), which corresponds to ABA Model Rule 4.2, including its bar on causing or encouraging another to make a prohibited communication, with Comments 1 and 2 to Rule 4.02 on the rule's purpose and on communications by the client.

Citations and references

Rules of Professional Conduct:

• MR 4.2 (communication with person represented by counsel)
• Texas Disciplinary Rule 4.02(a), and Comments 1 and 2 to Rule 4.02

See also

• TX Ethics Op. 609: Insurance Staff Lawyer Sharing an Office With an Adjuster

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-613/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_613.pdf

Original opinion text

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

QUESTION PRESENTED

Under the Texas Disciplinary Rules of Professional Conduct, may a lawyer, who has been retained by an insurance company to represent an insured person in a case that is settled based on the insurance company’s transfer of funds to the lawyer for the other party, provide, without the consent of the other party’s lawyer, written notice to the other party of the settlement payment as strongly encouraged by the Texas Department of Insurance?

STATEMENT OF FACTS

A lawyer is retained by an insurance company as defense counsel in a matter in which the claimant is represented by another lawyer. The terms of the settlement of the matter require that the insurance company issue a check for the settlement amount to the claimant’s lawyer. As strongly encouraged by a bulletin issued by the Texas Department of Insurance, the lawyer retained by the insurance company proposes to provide written notice of the payment directly to the claimant at the same time the settlement check is sent to the claimant’s lawyer.

DISCUSSION

Rule 4.02(a) of the Texas Disciplinary Rules of Professional Conduct prohibits a lawyer from communicating about the subject of the representation with a person the lawyer knows to be represented in the matter by another lawyer unless the first lawyer has the consent of the other lawyer or is authorized by law to do so:
“In representing a client, a lawyer shall not communicate or cause or encourage another to communicate about the subject of the representation with a person, organization or entity of government the lawyer knows to be represented by another lawyer regarding that subject, unless the lawyer has the consent of the other lawyer or is authorized by law to do so.”
As noted in Comment 1 to Rule 4.02, this rule is intended to prevent lawyers from circumventing the lawyer-client relationship of other persons represented by counsel in a matter.

Under the facts presented, the proposed notice of settlement payment is a communication “about the subject of the representation” with the claimant who is known to be represented by another lawyer. Consequently, in the absence of consent from the lawyer representing the claimant, the proposed communication is permitted under Rule 4.02(a) only if the lawyer’s communication is “authorized by law.” In the circumstances here considered, the insurance company and lawyer are responding to a bulletin from the Texas Department of Insurance that strongly encourages, but does not require, the notification. Accordingly it is not possible to say that the proposed communication as proposed by the lawyer is authorized by law within the meaning of Rule 4.02(a). In these circumstances, Texas lawyers remain subject to the requirements of Rule 4.02(a) and are not permitted to send, or participate in the sending of, a notice as encouraged by the Texas Department of Insurance.

Although insurance companies are not themselves subject to the Texas Disciplinary Rules of Professional Conduct and are thus not limited by Rule 4.02(a) in their own communications to other persons, Rule 4.02(a) prohibits a Texas lawyer from causing or encouraging other persons acting for the insurance company to carry out a communication to another party that would be prohibited if the communication were directly from the lawyer. However, so long as the lawyer does not cause or encourage such a communication, the lawyer is not required to affirmatively discourage a communication by the insurance company in which the lawyer is not involved. See Comment 2 to Rule 4.02.

CONCLUSION

Under the Texas Disciplinary Rules of Professional Conduct, a lawyer, who has been retained by an insurance company to represent an insured person in a case that is settled based on the insurance company’s transfer of funds to the lawyer for the other party, is prohibited from providing written notice of the settlement payment to the other party without the consent of the other party’s lawyer even if such communications are strongly encouraged by the Texas Department of Insurance.

Tex. Comm. On Professional Ethics, Op. 613 (2011)