Could a Vermont firm defend an insurer in a coverage case after withdrawing from its insured’s personal-injury defense?

Plain-English summary

An insurer retained a firm to defend its insured in a personal-injury suit. The firm withdrew after the insured failed to cooperate, and a default judgment followed. When the plaintiff later sued the insurer for payment, the insurer asked the same firm to defend it using the insured's noncooperation.

The committee said the firm should not accept the insurer's new case. It relied on the Vermont Supreme Court's former-client standard in In Re Themelis: the new defense could deprive the insured of coverage and would use information learned through the prior representation against that former client.

The committee did not decide whether the former associate could testify for the insurer. It cautioned that the associate's knowledge of the insured's noncooperation might be a protected secret under DR 4-101. The opinion acknowledged that the firm might have learned no confidential disclosures, but found the Vermont former-client standard controlling on the stated facts.

Currency note

This opinion was issued in 1991 under Vermont's former Code of Professional Responsibility. The Vermont Supreme Court's rules history says the Rules of Professional Conduct replaced the Code and applied to lawyer conduct after September 1, 1999; the court later made comprehensive amendments in 2009. 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 Treat this page as historical context, not current guidance.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.

Common questions

Q: Could the firm represent the insurer in the later suit?

A: No. The committee said the new defense could harm the former insured and use information learned in the prior defense against that client.

Q: Did the committee decide whether a former associate could testify?

A: No. It declined to reach that question and cautioned that the insured’s noncooperation history might be a protected secret.

Q: Did the apparent absence of confidential disclosures change the result?

A: No. The committee applied the broader former-client standard stated by the Vermont Supreme Court in In Re Themelis.

Background and rules framework

The opinion compared the substantial-relationship approach to the Vermont Supreme Court’s standard in In Re Themelis and discussed former Code DR 4-101 in relation to possible protected secrets.

Citations and references

Vermont Code of Professional Responsibility:

• DR 4-101

Cases:

• In Re Themelis, 117 Vt. 19, 23 (1951), former-client employment; Silver Chrysler Plymouth v. Chrysler Motors Corp., 518 F.2d 751 (2d Cir. 1975), substantial relationship; Emle Industries v. Patentex, Inc., 478 F.2d 562 (2d Cir. 1973), presumption of confidences; Interstate Properties v. Pyramid Co., 547 F.Supp. 178 (S.D.N.Y. 1982), rebutting presumption

Other opinions cited:

• Vermont Opinions 78-3, 83-6, and 89-15

See also

• Vermont Ethics Op. 95-21: Lawyer insurer conflict
• Vermont Ethics Op. 00-12: Estate against former client

Source

• Landing page: VBA conflict of interest opinions
• Original PDF: Vermont Advisory Opinion 91-16
• Rules history: Vermont Rules of Professional Conduct, “These rules apply to lawyer conduct after September 1, 1999.”