When a firm hired by an insurer to defend its insured under a reservation of rights also represents the insurer, what can it reveal to the insured about that relationship?

Plain-English summary

A law firm was appointed by an insurance company (B) to represent its insured (A) under a reservation-of-rights defense. The insured (A) asked the firm to disclose facts about the firm's previous or present representation of the insurer (B). The committee gave a general answer in two layers.

First, before undertaking to represent A, the firm would have to disclose to A any facts concerning its representation of B that might potentially cause a conflict of interest or otherwise adversely affect the representation of A. The committee observed, without settling the legal questions, that some of A's inquiries did not appear to involve confidential or secret information of the other client, B.

Second, many of A's questions would involve apparent confidences or secrets of B. The firm could not reveal those to A without B's consent after full disclosure to B. The committee noted that the firm's ability to seek that consent was impeded by A's instruction that the questions were "entirely confidential" and A's refusal to authorize releasing the questions to B. The committee concluded that the firm could make the general disclosure of its representation of B to A, but could not release specific information without B's consent, and so would need to advise A that it could not seek B's consent unless A authorized disclosure of the matters A had asked be kept confidential.

Currency note

This opinion was issued in 1985, before the 2006 revisions to the Washington Rules of Professional Conduct. Subsequent rule amendments and later opinions on insurance-defense representation and the tripartite relationship 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 Treat this page as historical context, not current guidance.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: What must insurer-retained counsel tell the insured before taking the defense?

A: The committee said the firm would have to disclose to the insured any facts about its representation of the insurer that might potentially cause a conflict of interest or otherwise adversely affect the representation of the insured.

Q: Can the firm reveal the insurer's confidences to the insured on request?

A: Not without the insurer's consent after full disclosure. The committee concluded that where the insured's questions involved the insurer's confidences or secrets, the firm could not reveal them to the insured without the insurer's consent.

Q: What happens when the insured insists its questions stay confidential from the insurer?

A: The committee said the firm could make a general disclosure of its representation of the insurer but could not release specific information without the insurer's consent, and would have to advise the insured that it could not seek the insurer's consent unless the insured authorized disclosure of those questions.

Background and rules framework

The opinion interprets Washington RPC 1.6 (confidentiality of information) and RPC 1.7 (conflict of interest), which correspond to Model Rules 1.6 and 1.7, in the setting of a firm that represents both an insurer and the insurer's insured in a reservation-of-rights defense. The committee separated the conflict-disclosure duty owed to the insured from the confidentiality duty owed to the insurer, and it expressly declined to settle the underlying legal questions.

Citations and references

Rules of Professional Conduct:

• Washington RPC 1.6 (confidentiality of information), corresponding to Model Rule 1.6.
• Washington RPC 1.7 (conflict of interest), corresponding to Model Rule 1.7.

See also

• ABA Formal Op. 01-421: a lawyer working under insurance company guidelines
• ABA Formal Op. 96-403: an insured who objects to a within-limits settlement
• ABA Formal Op. 08-450: confidentiality when a lawyer represents multiple clients in the same matter

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=54

Original opinion text

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

Advisory Opinion: 943
Year Issued: 1985
RPC(s): RPC 1.6; 1.7
Subject: Conflict of interest; client confidence or secret; law firm retained by insurance company to represent its insured under reservation of rights where firm also represents insurance company

A law firm was appointed by B, an insurance company, to represent its insured, A, under a reservation of rights defense. In reviewing the inquiry regarding disclosures requested by your client A, concerning your previous or present representation of B, the Committee was of the general opinion that before you could undertake to represent A, you would have to disclose to A, any facts concerning your representation of B which might potentially cause a conflict of interest or otherwise adversely affect your representation of A. Without attempting to settle the legal questions involved, the Committee did note that some of the inquiries posed by A did not appear to involve confidential or secret information of your other client B.

However, many of the questions raised by A would involve apparent confidences or secrets, as those terms are used in the Rules of Professional Conduct. Therefore, before you could reveal those matters to A, you have to have the consent of B to release that information after full disclosure to B. Your ability to do that is apparently impeded by A's directive to you that the questions are "entirely confidential" and refusing to authorize you to release the questions to B. Therefore the Committee was of the opinion that you may make the general disclosure of your representation of B to A, but that you could not release specific information without B's consent. Therefore, you would need to advise A that you would be unable to seek the consent of B to release the information unless A authorized you to disclose the matters they have so far requested be kept confidential.