Opinion #72. Refusal of Insured to Cooperate in Defense of Wife's Claim

Issued by the Professional Ethics Commission

Date Issued: August 6, 1986

This opinion concerns the ethical responsibilities of a lawyer retained by a liability insurance carrier to defend its insured, the husband of the plaintiff, in an action in which the plaintiff alleges that she sustained injuries as a passenger in an automobile accident caused by the negligence of her husband, the driver of the automobile. The lawyer believes that the wife’s claim may be unfounded because the accident occurred under extreme weather and hazardous driving conditions that could prevent the wife from establishing negligence on the part of her husband.

The situation is further complicated because, in the lawyer’s view, it could be determined that the wife’s injuries were work‑related, in which case the immunity provisions of the Workers’ Compensation Act might bar the wife’s civil action. The husband and wife are both employed by the same company, as a managing officer and administrative employee, respectively, and the accident occurred while they were leaving a business meeting attended by other people in that company’s industry.

The husband’s liability policy limits exceed any conceivable verdict for the wife, and the husband has told the lawyer retained by the carrier that the wife’s claims should be paid despite any defenses based on the Workers’ Compensation Act, absence of negligence or otherwise.

In Opinion No. 63, the Professional Ethics Commission concluded that a lawyer retained by an insurance carrier to represent its insured represents only the insured and not the carrier. Accordingly, the husband is entitled to be considered the client of that lawyer for all purposes, and the lawyer has the duty to treat the insured with the full measure of care accorded to all client relationships, including the duty to protect confidential communications with the insured.

Accordingly, the question presented by the situation described to the Commission is whether an attorney is bound to honor the client’s choice of desired result and strategy under these circumstances. Absent an insurer, the client would plainly be within his rights in deciding not to defend a claim. With an insurer in the picture, it is also plainly within the client’s rights to insist that his attorney refuse cooperation with the insurer, whatever effect that decision may have on coverage both for the ultimate liability and for the defense costs. The client may also require his attorney to design and carry out a strategy to refuse cooperation while asserting every honest justification for refusal offered by the policy and the law. But the client may not require the attorney—regardless of the eventual source of his compensation—to create the appearance of cooperation, so as to avoid jeopardizing coverage, while in fact, working to produce an unsuccessful defense and a recovery for the wife. Nor may the client require the attorney to bill the insurer for legal services which are inconsistent with the company’s legitimate expectations under the policy.

The reason is that such conduct would amount to a fraud on the insurer. The lawyer is forbidden by Bar Rule 3.2(f)(3) from engaging in fraudulent conduct himself. If he discovers that his client is committing a fraud, Rule 3.6(c) requires him to disclose the fraud unless the information is privileged, probably not the case here with respect to the critical information as to circumstances of the accident. Rule 3.5(b) requires withdrawal from representation if the lawyer knows that continued employment would result in violation of the Bar Rules, and Rule 3.5(c) permits withdrawal if continued employment would be likely to result in violation of the rules or the client seeks to pursue an illegal course of conduct.

If the client, the defendant‑insured and not the insurer, is asking the attorney to create an appearance of cooperation while suppressing, or perhaps just ignoring, facts that would establish a defense, the lawyer should call upon the client to amend his instructions, and if he refuses, should ask for leave to withdraw from the case.


Enduring Ethics Opinion