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Bar Journal 2017

Ethical Issues in Insurance Law

By Timila S. Rother

For attorneys who practice the law of insurance, complex and difficult-to-resolve ethical issues are abundant. Conflicts of interest, issue conflicts, confidentiality dilemmas and insurers’ measures to control litigation costs are regular occurrences that attorneys must resolve. In an environment where attorneys are increasingly the target of dissatisfied litigants, vigilance in complying with the Rules of Professional Conduct and the overall integrity of the profession are not only an ethical obligation, but are necessary to protect the attorney from liability claims by the insured or insurer. These issues arise most often in the relationship where attorneys are hired by insurers to defend insureds, and much of this article is so focused. However, many of the issues create conundrums in first-party insurance relationships as well. This article surveys some of the recurring attorney ethical and liability issues in both relationships.

WHO IS THE CLIENT?
An attorney cannot fulfill his or her ethical or common law duties to a client unless the attorney knows to whom those obligations are owed. When an attorney is retained to represent an insurer or insured in first-party litigation, there is no uncertainty – the attorney represents only the individual or entity that retained the attorney. If the attorney is retained by an insurer to represent its insured in third-party litigation, does the attorney represent the insured, the insurer or both? The answer to that question varies based upon the facts and the jurisdiction.

Neither the legislature nor the courts of Oklahoma have decided the full scope of the relationships and duties in this triangle.1 There is no question that at least the insured is the client.2 But what of the insurer? The United States District Court for the Northern District of Oklahoma recently observed “that the Oklahoma Supreme Court has yet to decide whether the attorney-client relationship extends to an insurance carrier who retains a law firm to represent its insured.”3 In Nisson v. American Home Assur. Co.,4 however, the Oklahoma Court of Civil Appeals implicitly recognized the existence of at least some duties by the attorney to the insurer by holding that an insurer must provide independent counsel for its insured where the defense attorney is conflicted by defending the liability claim in a way that impacts the insurer’s coverage defense.5 A conflict would not arise if some obligation to the insurer were not owed. 

In other jurisdictions, courts or ethics committees have defined the relationship so that counsel’s “primary” obligation or duty of loyalty is to the insured. The word “primary” correctly implies that the lawyer also owes some duties to the insurer (as a client or otherwise), at least when the interests of the insured and the insurer do not conflict.6 In some states, the law has evolved so that insurance defense counsel’s only client is the insured.7 A few states have resolved the question by rule. Florida, followed by Ohio, amended its Rules of Professional Conduct to require that lawyers undertaking the defense of certain types of claims for an insured provide the insured a comprehensive statement of the insured’s rights and maintain a record that it was sent.8  Florida also requires attorneys to determine at the outset whether they represent the insurer (as well as the insured) and to inform both of the dual representation and its limitations.9

The need to define the relationships in this triangle was addressed, without specific resolution, by the Restatement of the Law (Third) Governing Lawyers. The comment titled “Representing an Insured” states:

It is clear in an insurance situation that a lawyer designated to defend the insured has a client-lawyer relationship with the insured. The insurer is not, simply by the fact that it designates the lawyer, a client of the lawyer. Whether a client-lawyer relationship also exists between the lawyer and the insurer is determined under §14 [Formation of a Client-Lawyer Relationship].

… 

With respect to events or information that create a conflict of interest between insured and insurer, the lawyer must proceed in the best interests of the insured, consistent with the lawyer’s duty not to assist client fraud (see §94) and, if applicable, consistent with the lawyer’s duties to the insurer as a co-client (see §60, Comment l). If the designated lawyer finds it impossible so to proceed, the lawyer must withdraw from representation of both clients as provided in §32 (see also §60, comment l).The designated lawyer may be precluded by duties to the insurer from providing advice and other legal services to the insured concerning such matters as coverage under the policy, claims against other persons insured by the same insurer, and the advisability of asserting other claims against the insurer. In such instances, the lawyer must inform the insured in an adequate and timely manner of the limitation on the scope of the lawyer’s services and the importance of obtaining assistance of other counsel with respect to such matters.10 

These authorities do not consider whether the determination of the relationship by law or rule may be modified by an engagement letter. Some courts and scholars have sharply criticized the attempt to define the relationship by rule, arguing instead that the retainer agreement with the insurer and insured should define the attorney-client relationship because it arises by consent.11 The fact that Oklahoma law does not statutorily define this relationship, coupled with the policy arguments against establishing an inflexible legal definition, suggests that the relationship can be defined by the engagement letter, so long as not inconsistent with the Rules of Professional Conduct.12

Thus, in Oklahoma, the insured is a client, the insurer may be a client and an engagement letter appears to be a permissible means to establish some certainty as to any obligation owed to the insurer. As discussed below, that certainty helps determine to whom ethical duties, as well as common law duties of care, are owed.

CONFIDENTIAL INFORMATION
Under Oklahoma Rule of Professional Conduct 1.6, the confidentiality obligation is owed to the client. Thus, identifying all of the clients in the insurance defense relationship is also necessary for the attorney to determine to whom the duty of confidentiality is owed. What if the attorney learns facts as part of the insured’s defense that creates a coverage issue, may he or she disclose those facts to the insurer? Certainly, that temptation is strong as the attorney would like to maintain the business of the insurer, which is paying the bills, for representation of its insureds in the future. Nevertheless, the weight of authority holds that no such disclosure to the insurer may occur, even if the insurer is also considered a client.

Parsons v. Continental Nat’l Am. Group,13 highlights the dilemma. In Parsons, the attorney hired by the insurer to defend the insured learned facts presenting a coverage defense and informed the insurer of the facts. The insurer then issued a reservation of rights letter and subsequently rejected a (reasonable) settlement offer within policy limits based on the coverage defense. The insurer thereafter re-fused to pay a judgment in excess of policy limits against the insured. The insured sued both the attorney and the insurer. The court held 1) the attorney breached his duty of confidentiality to the insured by revealing information contrary to the insured’s interest, whatever its source; 2) the insurer’s participation in the improper conduct estopped it from denying coverage or liability; and, 3) the insurer acted in bad faith and was liable for the excess judgment.14

Obligations of confidentiality are also put in peril where the insurer or the insured request the attorney’s file for use in subsequent litigation, such as a bad faith claim by the insured against the insurer. Setting aside the different question of how much of an attorney’s file a client is entitled to obtain generally, the existence of an attorney-client relationship with the insurer will not prevent discovery of the communications directly between insurer and at-torney about the insured’s case. The Oklahoma Evidence Code specifically excepts from privilege any communications between parties who are jointly represented, if those communications are offered into evidence or otherwise sought in the context of a subsequent action between those same parties.15 Oklahoma courts16  have not yet applied this “joint representation” exception to the tripartite attorney-insured-insurer relationship, but the majority of the courts in other jurisdictions to consider the issue have done so.17

Under Oklahoma law, these layers of analysis lead to the conclusion that no confidential information detrimental to the insured may be shared with the insurer. Further, the insured will presumptively have access to not only how the insurer instructs the attorney to proceed in the representation for which the insurer is paying, but will also have access to how the attorney responds to those instructions and what information of the insured the attorney is providing to the insurer. As discussed in the following sections, these confidentiality dilemmas are a symptom of a broader problem – a conflict of interest that may not be curable after a joint representation is undertaken.

CONFLICTS OF INTEREST
Unfortunately, a plethora of issues may arise which place the interests of the insured and the insurer at odds which in turn are likely to create a conflict of interest for the attorney who has undertaken the matter with both as clients. Such conflicts may cause the attorney to have to withdraw unless he or she has an engagement letter under which the parties agree how any such conflict will be resolved. Some of the most likely conflict scenarios are discussed below.

Reservation of Rights
Chief among the recurring conflict of interests confronting attorneys is the insurer’s undertaking of the defense with a reservation of the insurer’s right to later deny coverage. The problem for defense counsel is not only that investigation and discovery in the case may yield information on the coverage issue disadvantageous to the insured, but also the constraints an attorney may feel in his or her strategy or preparation because of its impact on the coverage decision.18 This situation presents a conflict of interest under Rule 1.7 which will ordinarily require that the attorney limit his or her representation to the insured or insurer. If the representation of both is already underway, the attorney may be required to withdraw from both. The insurer also may potentially be required to pay for independent counsel for the insured.

The Oklahoma Court of Appeals addressed essentially this issue in Nisson v. American Home Assur. Co.19 The underlying litigation in Nisson involved a professional malpractice action against a psychologist who was accused of sexual misconduct with a client. The petition was later amended to include the psychologist’s partners, and to allege both sexual and nonsexual acts of negligence against the psychologist. The psychologist and her partners were insured by American Home under a policy which had a limit of $25,000 for claims of sexual misconduct and $1 million for other claims of malpractice. American Home hired counsel to defend the psychologist and her partners but took the position that the psychologist had only $25,000 in coverage based upon the sexual acts limit. Perceiving a conflict of interest, the psychologist hired independent counsel to represent her. Upon inquiry by independent counsel, counsel hired by American Home to defend the action admitted a desire to take a position “potentially detrimental” to the psychologist’s interest. At the conclusion of that lawsuit, the psychologist sued American Home for recovery of the fees she paid for independent counsel. The trial court granted summary judgment to American Home. The Court of Appeals reversed, holding:

We agree, in part, with both parties. In that regard, an insured should not be allowed to unilaterally reject the insurer’s offer to defend then demand counsel of his choice at the insurer’s expense in every instance in which the insured perceives his interests are not being fully served. However, neither should the insurer be allowed to rely on a reservation of rights provision regarding coverage while subjecting its insured to a possible half-hearted defense by an attorney whose interests are subservient to that of the insurer and which could place such an attorney in an ethically untenable position.20

The court reviewed the law of other jurisdictions and found the “common theme” to be that “not every perceived or potential conflict of interest automatically gives rise to a duty on the part of the insurer to pay for the insured’s choice of independent counsel.”21 So long as the issue of coverage is separate from the issue of liability, there is no divided loyalty and no need for independent counsel.22 American Home was thus not required to provide independent counsel when a potential conflict arose over the extent of coverage. However, it was so required when it recognized that a “potentially detrimental conflict of interest existed regarding the strategy to be used in defending the underlying lawsuit” and there was a prospect of defending under some but not all available defenses.23 American Home was obligated to pay the reasonable fees for independent counsel from the time that conflict arose.24

The courts and bar associations of other jurisdictions have also addressed the conflict created by a reservation of rights, including the obligation to provide independent counsel.25  The majority have held that a conflict of interest exists but with variations in the resolution of the conflict.26 And, like Nisson, a significant number of authorities hold that not every reservation of rights creates a conflict requiring independent counsel.27


Discovery or Development of Facts Creating a Coverage Defense
Similarly, an attorney may learn facts as part of his defense of the insured, either through confidential information revealed by the insured or through discovery, which establish a coverage defense. In those instances, the attorney who represents both insurer and insured has a Rule 1.7 conflict as the action that is in the best interest of the insurer – disclosure of the coverage defense – is absolutely contrary to the interests of the insured. As set forth above, an attorney also violates the confidentiality provisions of Rule 1.6 if the attorney reveals that information to the insurer.28

Actions Seeking Damages in Excess of Coverage Limits/Settlement Demands
It is plainly in the best interest of the insured for an action against him or her to be resolved within policy limits. It is in the insurer’s interest to develop defenses which, separate from any coverage issues, defeat the liability claim against the in-sured entirely. The insurer also wants to pay as little of the policy limits as possible. As soon as a settlement offer is made by a plaintiff within policy limits, the attorney providing the defense in this tripartite relationship finds him or herself caught in the middle of these competing interests.29

Claims for punitive damages may also raise conflict issues if the policy excludes them, though this conflict is infrequent. In most in-stances, it is in the insurer’s best interest to defend any claim of wrongdoing by the insured vigorously as the insurer will not benefit from pursuing a theory that establishes that the insured acted maliciously or recklessly and the punitive damage defense is benefitted by this over-arching motivation.30 If a conflict develops, it is not likely attributable to the punitive damage claim, but rather to a coverage issue, e.g., facts showing the insured acted intentionally (which may be excluded) rather than negligently (which may be covered).31 Therefore, punitive damage claims do not usually present a disqualifying conflict.

LIABILITY AND MALPRACTICE CLAIMS AGAINST THE ATTORNEY

As a general rule, violations of the Rules of Professional Conduct do not give rise to a cause of action by the client or a third-party against the attorney.32 And most courts hold that nonclients to the relationship may not sue for malpractice. However, an attorney may nonetheless have liability in contract, tort or equitable theories for breaches of duty or standards of care arising out of a conflict of interest or breach of a duty of confidentiality. The possible scope of such liability is what was decided by the court in Atkinson, Haskins, Nellis, Brittingham, Gladd & Fiasco, P.C. v. Oceanus Insurance Company.33

In Atkinson, Haskins, the court determined that an insurer could not sue the law firm it hired to represent three insureds on a theory of legal malpractice because there was no attorney-client relationship between the law firm and insurer.34 The court determined that the insurer had alleged insufficient facts to show it was identified as the client of the law firm in the retainer agreement, or that it was the intended beneficiary of the agreement.35 However, citing Atlanta International,36 the court predicted that the Oklahoma Supreme Court would allow a claim for equitable subrogation to be brought by an insurer against the law firm it had hired to represent its insureds.37 In Atlanta International, the court held that, though the insurer which retained counsel to defend its insured was not a client of the retained attorney, the insurer was “equitably subrogated” to the insured’s rights because it had paid the judgment caused by the attorney’s malpractice.38 The court found that Atlanta International was consistent with the Oklahoma principles underlying equitable subrogation.39 Additionally, permitting a claim for equitable subrogation would address the insurer’s concerns that the law firm would not be held accountable for its alleged malpractice.40 

Defense counsel are also at risk from suit by reinsurers and excess insurers on subrogation theories.41 Again, however, a number of courts hold to the contrary, finding that the absence of an attorney-client relationship or privity of contract defeats even the subrogation claim.42

Atkinson, Haskins and the other cases highlight the importance of the engagement letter to attempt to avoid the suggestion of an attorney-client relationship under these circumstances. Such writing making clear that the insurer is not the client, though it may not prevent an equitable subrogation claim, may negate a malpractice claim and the associated tort liability – punitive damages – that accompany such claims.

Attorneys have likewise been held to have an obligation to investigate and advise the insured of other insurance coverage that may be available to the insured, including excess coverage. In Shaya B. Pacific, LLC v. Wilson, Elser, Moskowitz, Edelman & Dicker, LLP,43 the court concluded that a law firm hired by an insurer to defend a policyholder may have an obligation to investigate whether there is excess coverage available and advise the insured. Such obligations of the attorney may also be limited or defined in the engagement letter.

Thus, while violation of the Rules of Professional Conduct does not give rise to a private right of action, such violations may be the evidence used by the insured client and, if such representation is not negated by an engagement letter, the insurer client in a malpractice claim against the attorney. In any event, the absence of client status does not negate potential equitable claims by the insurer against the attorney, if the insurer is obligated to pay a judgment based upon the negligence of the attorney.

ISSUE CONFLICTS

Issue or positional conflicts arise when an attorney advocates contrary positions on behalf of different clients in unrelated matters. Unlike most of the ethical issues discussed herein, issue conflicts are not peculiar to insurance defense. Indeed, they are more likely to occur in an attorney’s first-party representation of an insurer or an insured. The proliferation of bad faith insurance litigation in Oklahoma over the past 30 years has led attorneys who traditionally represented only insurers to now simultaneously represent insureds in unrelated cases. Under these circumstances, attorneys or their firms may find themselves arguing the opposite side of the same legal issue, with the ultimate risk of making law disadvantageous to an existing client.

Issue conflicts are governed by Rule 1.7(a)(2) of the Rules of Professional Conduct which prohibits an attorney from representing a client if there is a “significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client…”44 As to issue conflicts, the Comment to Rule 1.7 states that an attorney may as general matter “take inconsistent legal positions in different tribunals at different times on behalf of different clients.”45

A conflict of interest exists, however, if there is a significant risk that a lawyer’s action on behalf of one client will materially limit the lawyer’s effectiveness in representing another client in a different case; for example, when a decision favoring one client will create a precedent likely to seriously weaken the position taken on behalf of the other client. Factors relevant in de-termining whether the clients need to be advised of the risk include: where the cases are pending, whether the issue is substantive or procedural, the temporal relationship between the matters, the significance of the issue to the immediate and long-term interests of the clients involved and the clients’ reasonable expectations in retaining the lawyer. If there is significant risk of material limitation, then absent informed consent of the affected clients, the lawyers must refuse one of the representations or withdraw from one or both matters.46

The ABA Standing Committee on Ethics and Professional Responsibility addressed issue conflicts in Formal Opinion 93-377 and rejected previously liberal treatment of the issue. The committee identified the concerns raised by such representation as: 1) the dilution of the lawyer’s advocacy when the matters will be argued to the same judge; 2) the effect that the first decision rendered may have in terms of being either precedential or persuasive on the other matter; 3) the concern that a lawyer may favor one client over the other in the “race” to be first; and, 4) client concern that the law firm has divided loyalties.47 The committee concluded:

The Committee is therefore of the opinion that if the two matters are being litigated in the same jurisdiction, and there is a substantial risk that the law firm’s representation of one client will create a legal precedent, even if not binding, which is likely materially to undercut the legal position being urged on behalf of the other client, the lawyer should either refuse to accept the second representation or (if otherwise permissible) withdraw from the first, unless both clients consent after full disclosure of the potential ramifications of the lawyer continuing to handle both matters.48

Even if the matters are not in the same jurisdiction, the lawyer has an obligation to determine whether his representation of either client will be limited by the lawyer’s (or the firm’s) representation of another client.49 In making this determination, the lawyer should consider whether: 1) the issue is of such importance that its determination is likely to affect the ultimate outcome of at least one of the cases; 2) the determination of the issue in one case will likely have a significant impact on the determination of that issue in the other case; 3) there will be any tendency to “soft pedal” any issue which would otherwise be vigorously pursued to avoid negative impact on the other case; and, 4) there would be any tendency within the firm to alter arguments so that the positions in the two cases could be reconciled.50 Under these circumstances, the representation of at least one client would be adversely affected in violation of Rule 1.7.51 However, if the lawyer reasonably concludes that although there is a potential for one representation to adversely affect the other, that such will not likely occur, the lawyer may proceed with both representations provided both clients consent after full disclosure.52

Although the committee’s analysis was based on an assumption that the positional conflict was immediately apparent, the committee believed that the same analysis applied to conflicts which emerged after the second representation was underway, potentially requiring the attorney to withdraw from one of the representations.53 In deciding from which of the matters to withdraw, the committee concluded that “the lawyer should determine which of the representations would suffer the least harm as a consequence of the lawyer’s withdrawal and then withdraw from that matter.”54

The potential for issue conflicts is not limited to an attorney’s work for different clients on different matters. The problem may also arise in an attorney’s work as part of a lobbying group, with a bar committee or just in commentary on particular legal issues. In Opinion No. 1997-3 of the New York Committee on Professional and Judicial Ethics,55 the committee considered the extent to which attorneys in New York may speak out or work in favor of or against particular legislative change, in that instance, tort reform. Attorneys were being pressured by clients not to express public opinions about such issues. The committee held that “[a]s long as client confidences and zealous advocacy in a pending matter are not compromised, a lawyer is entitled to participate in bar association activities and speak publicly on issues which may be contrary to the interest of a former or current client without obtaining client consent.”56

Issue conflicts are often overlooked by attorneys. However, they lend themselves to occurrence in the insurance practice area and, in particular, in bad faith insurance litigation where the scope of the law continues to evolve and attorneys represent both insureds and insurers with regard to the tort and coverage issues that arise in those cases.

BILLING AND LITIGATION GUIDELINES

Billing and litigation guidelines are now a common part of insurers’ efforts to control the cost of outside legal services. Such guidelines may include limits on research, discovery, experts and staffing of a matter. Those guidelines may also require that an attorney submit its bills to a third-party auditor hired by the insurer. These guidelines present several ethical dilemmas for the attorney.


Submission of Bills to Outside Auditors
The Oklahoma Bar Association Legal Ethics Committee issued an opinion on outside bill review in 2000.57 The issue framed by the committee was whether an attorney hired by an insurer to represent its insured could submit his or her bills to an outside auditor for review without violating the Oklahoma Rules of Professional Conduct.

The committee first analyzed to whom the attorney’s ethical obligations are owed, concluding that the insured was certainly the client and whether the insurer was also a client depended on the circumstances.58 If both are clients, the direct adversity analysis of Rule 1.7 applies. If only the insured is the client, the material limitation analysis of Rule 1.7 applies.

Also applicable is Rule 1.8(f) which prohibits an attorney from accepting compensation for representing a client from one other than the client unless 1) the client gives informed consent; 2) “there is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship;” and, 3) information relating to the representation is protected by Rule 1.6. Rule 1.6 prohibits a lawyer from revealing information relating to representation of a client unless the client consents after consultation, except for disclosures that are impliedly authorized to carry out the representation.

In applying the confidentiality obligation of Rule 1.6(a), the committee considered whether disclosure to auditors designated by the insurer with whom the insured had a contractual relationship was “impliedly authorized” by this contractual arrangement. The committee concluded that while disclosure to the insurer may be impliedly authorized, disclosure to an outside auditor was not because that disclosure had everything to do with an insurer’s cost containment efforts and nothing to do with the evaluation and defense of a claim.59  The committee also focused on the growing number of cases in which the courts held that the disclosure of billing statements to outside auditors, including governmental auditors, waived the attorney-client privilege.60

The committee held:

[I]t would be unethical for Attorney to seek Client’s consent to the audit procedure because to do so would place Attorney in a conflict between Client’s interests and those of a third party, Insurer, and Attorney’s own self interest in getting paid by Insurer.

The informed consent provisions of Rules 1.6, 1.7 and 1.8(f) are mandatory. Attorney could not ethically agree to representation of Client knowing that Insurer will submit Attorney’s fee statements to an outside auditor without obtaining Client’s in-formed consent. In order to ethically agree to the representation, the Attorney would be required, at the outset of formation of the attorney-client relationship, to advise the Client that the Insurer is paying Attorney for the Client’s representation and that Attorney therefore has a personal financial interest in the auditing procedure which interest may be adverse to Client’s interest. See Rule 1.7(b), Rule 1.8(a), (f)(1). Attorney would also be required at the outset to advise Client that invoices for services rendered would contain detailed descriptions of Attorney’s work and that confidential information, as reflected in the narrative of services in the Attorney’s invoices to the Insurer, would be revealed to a third party Auditor under the terms of representation as proposed by the Insurer. See Rule 1.6(a). Informed consent would also require that the Client be informed of all of the risks and consequences associated with disclosure to an outside Auditor, including the Attorney’s opinion whether the disclosure to the Auditor is a waiver of the attorney-client privilege.61

The ABA Standing Committee on Ethics and Professional Responsibility has also concluded that an attorney may not provide bills containing information protected by Rule 1.6 to outside auditors for insurers without first obtaining the consent of the client insured after consultation.62 The substantial majority of other state bar associations have reached the same conclusion, though with varying conclusions on what is sufficient to be informed consent.63

Other Insurer Guidelines
In addition to the request that bills be reviewed by outside auditors, insurers impose other guidelines that place limits on an attorney’s control of the representation.64 Where the attorney represents the insurer directly without the existence of an insured who is also a client, then these guidelines present no problem because the client – the insurer – has consented to the restrictions by imposing them. However, where the attorney represents the insured (or both insurer and insured) and the insurer guidelines restrict the attorney’s work on behalf of the insured client, an ethical issue may exist.65 Limits on legal research or the use of electronic research, restrictions on travel for the purpose of discovery, limits on the use of experts and similar restrictions may impact an attorney’s efforts to thoroughly represent the insured’s interest. In addition to Rule 1.8(f) prohibiting an attorney from accepting compensation for representation of a client from a person other than the client except in prescribed circumstances, the rules most implicated by such guidelines are Oklahoma Rules of Professional Conduct 1.1 (competence), 1.2 (scope of representation), 1.3 (diligence), 1.4 (communication) and 5.4(c) (professional independence).

Rule 5.4(c) applies directly to this issue and controls the analysis of it. Rule 5.4(c) prohibits an attorney from permitting a person who pays the lawyer to render legal services for another to “direct or regulate the lawyer’s professional judgment in rendering such legal services.” Almost by definition, an insurer’s guidelines “direct or regulate the lawyer’s professional judgment.” Many of the guidelines are narrow and do not unreasonably control an attorney’s professional judgment. Others, such as limits on research or discovery, may result in more control than ethically permitted, depending on the facts of each case. In those circumstances, the attorney is ethically obligated to nonetheless perform all work that, in his or her professional judgment, is required to thoroughly and completely represent the client’s interest.

Rule 1.1 requires that “[a] lawyer shall provide competent representation to a client” which requires “the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” Therefore, if an attorney believes that some task is necessary to advance the insured’s case and it is not allowed by the guidelines or otherwise approved by the insurer, Rule 1.1 requires that the work be undertaken, even if not paid by the insurer. The duty of competence, preparation, thoroughness and loyalty runs to the insured client. “Professional competence for ethical and malpractice purposes does not depend on insurers’ guidelines, the reimbursement of professional expenses, or the payment of fees.”66

Rule 1.2 requires an attorney to abide by a client’s decisions as to the objectives of a representation and to consult with the client as to the means to carry out the objective. Where an insurer’s guidelines limit the attorney with regard to the representation, the attorney must consult with the client about those restrictions and, to the extent it impacts the objectives of the representation, abide by the client’s decision as to whether to follow them.

“A lawyer shall act with reasonable diligence and promptness in representing a client.”67 “A defense attorney who unreasonably delays or postpones activities because of litigation guidelines may violate Rule 1.3.”68 Rule 1.3 may also be violated by failing to perform a task because it is not allowed by the guidelines.69 An attorney who allows himself or herself to be limited by these guidelines, though a reasonable attorney would conclude that the limitation should not be followed, commits an ethical violation even if the client suffers no injury.70

Under Rule 1.4, an attorney must keep the client reasonably informed about the matter and must explain a matter “to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.” Thus, to the extent an insurer’s guidelines in any way interfere with an attorney’s representation of an insured, the attorney must inform and discuss the matter with the client.

ABA Formal Opinion No. 01-421, cited previously for its conclusions regarding an insurer’s requirement that a defense attorney submit bills to an outside auditor, also opined on the ethical issues raised by an insurer’s other guidelines. The opinion concludes:

If the lawyer reasonably believes his representation of the insured will be impaired materially by the insurer’s guidelines or if the insured objects to the defense provided by a lawyer working under insurance company guidelines, the lawyer must consult with both the insured and the insurer concerning the means by which the objectives of the representation are being pursued. “If the lawyer is to proceed with the representation of the insured at the direction of the insurer, the lawyer must make appropriate disclosure sufficient to apprise the insured of the limited nature of his representation as well as the insurer’s right to control the defense in accordance with the terms of the insurance contract.” If the insurer does not withdraw or modify the limitation on the lawyer’s representation and the insured refuses to consent to the limited representation, the resulting conflict implicates Rule 1.7(b) and unless the lawyer is willing to represent the insured without compensation from the insurer, requires the lawyer to terminate the representation of both clients.71

CONCLUSION
Every case is different and a myriad of issues may arise which require a different ethical and risk avoidance analysis. Vigilance in every circumstance is not only required by the Rules of Professional Conduct, but will protect clients, insurers and the attorney from the uncertainty, and perhaps the litigation, that may arise from a failure to adhere closely to the rules.

1. See. e.g. Scott v. Peterson, 2005 OK 84, ¶7, 126 P.3d 1232. 
2. See Church v. Hofer, Inc., 1992 OK CIV APP 148, 844 P.2d 887, 888 (Where an insurance company hires an attorney to defend the company’s insured, the insured becomes a client “with all the ethical considerations that are part of the attorney-client relationship.”). See also e.g. Atkinson, Haskins, Nellis, Brittingham, Gladd & Fiasco P.C. v. Oceanus Ins. Co., No. 13-CV-762-JED-PJC, 2016 WL 5746210 (N.D. Okla. Sept. 30, 2016).
3. Atkinson, Haskins, Nellis, Brittingham, Gladd & Fiasco, P.C., 2016 WL 5746210, *4.
4. 1996 OK CIV APP 40, 917 P.2d 488, 489.
5. See also OBA Legal Ethics Committee Opinion 314 (2000) (finding that the insured is unquestionably the client and entitled to all ethical considerations which are part of the attorney-client relationship, but recognizing that the insurer may also be a client depending upon the facts of each case).
6. See, e.g., Nevada Yellow Cab Corp. v. Eighth Judicial District Court ex rel. County of Clark, 152 P.3d 737 (Nev. 2007) (where no conflict exists, lawyer’s primary client is the insured, but lawyer owes duties of confidentiality and care to the insurer); State Farm Mut. Auto. Ins. Co. v. Federal Ins. Co., 86 Cal. Rptr. 2d 20 (Cal. Ct. App. 1999) (where no conflict exists between insured and insurer, the insurer is co-client of defense counsel); Am. Nat’l Prop. & Cas. Co. v. Ensz & Jester, P.C., 358 S.W.3d 75, 83 (Mo. Ct. App. 2011) (recognizing that a lawyer can owe duties both to the insurer and the insured); see also Hartford Ins. Co. of the Midwest v. Koeppel, 629 F. Supp. 2d 1293 (M.D. Fla. 2009) (allowing insurance company to sue lawyer representing insured); Unigard Ins. Group v. O’Flaherty & Belgum, 45 Cal. Rptr. 2d 565 (Cal. Ct. App. 1995) (same); American Casualty Co. of Reading, Pa. v. O’Flaherty, 67 Cal. Rptr. 2d 539 (Cal. Ct. App. 1997) (same); Paradigm Ins. Co. v. Langerman Law Offices, P.A., 24 P.3d 593 (Ariz. 2001) (en banc) (whether or not insurer is always a client, insurer may sue defense counsel for failure to tender policy claim to coinsurer, which would have been in interests of both insured and insurer).
7. See Virginia Opinion 1863 (Sept. 26, 2012) (case law “strongly suggest[s] that the defendant/insured is the only client of the lawyer”); See, e.g., In re Rules of Professional Conduct and Insurer Imposed Billing Rules and Procedures, 2 P.3d 806 (Mont. 2000); Atlanta Int’l Ins. Co. v. Bell, 475 N.W.2d 294 (Mich. 1991); cf. Continental Cas. Co. v. Pullman, Comley, Bradley & Reeves, 929 F.2d 103 (2d Cir. 1991); In re A.H. Robins Co., Inc., 880 F.2d 709 (4th Cir. 1989); Essex Ins. Co. v. Tyler, 309 F. Supp. 2d 1270 (D. Colo. 2004); Gibbs v. Lappies, 828 F. Supp. 6 (D.N.H. 1993); Emons Industries, Inc. v. Liberty Mut. Ins., Co., 747 F. Supp 1079 (S.D.N.Y. 1990); First American Carriers, Inc. v. Kroger Co., 787 S.W.2d 669 (Ark. 1990); Higgins v. Karp, 687 A.2d 539 (Conn. 1997); Employers Cas. Co. v. Tilley, 496 S.W.2d 552 (Tex. 1973).
8. See Florida Rule of Professional Conduct 1.8(j); Ohio Rule of Professional Conduct 1.8(f)(4).
9. See Fla. R. Prof. Conduct 4-1.7(e). See also Wisconsin R. of Prof. Conduct for Attorneys 1.2(e) (requiring attorney retained by insurer to represent insured to inform the insured client in writing of the terms and scope of the representation).
10. Rest. of Law Governing Lawyers, §134, Comment f. Section 134 covers payment of an attorney’s fees by a third person. The Oklahoma Rules of Professional Conduct deal with the issue of the payment of an attorney’s fees by a third-party in Rules 1.8(f) and 5.4(c).
11. See Ellen S. Pryor & Charles Silver, “Defense Lawyers’ Professional Responsibilities: Part I – Excess Exposure Cases,” 78 Tex. L. Rev. 599, 607-08 (2000); Charles Silver & Kent Syverud, “The Professional Responsibilities of Insurance Defense Lawyers,” 45 Duke L.J. 255, 273-75 (1995).
12. See e.g., Atkinson, Haskins, Nellis, Brittingham, Gladd & Fiasco, P.C. v. Oceanus Insurance Company, No. 13-CV-762-JED-PJC, 2016 WL 5746210 (N.D. Okla. Sept. 30, 2016) (implying attorney-client relationship between an insurer and the law firm it hired to defend its insured can be defined by the retainer agreement.).
13. 550 P.2d 94 (Ariz. 1976) (en banc).
14. Id. See also Allstate Ins. Co. v. Madden, 601 S.E.2d 25 (W. Va. 2004); Brandon v. West Bend Mut. Ins. Co., 681 N.W.2d 633 (Iowa 2004); Hutchinson v. Farm Family Cas. Ins. Co., 867 A.2d 1 (Conn. 2005).
15. 12 Okla. Stat. §2502(D)(6) (2011 & Supp. 2017) (“There is no privilege under this section … [a]s to a communication relevant to a matter of common interest between or among two or more clients if the communication was made by any of them to an attorney retained or consulted in common, when offered in an action between or among any of the clients.”).
16. See 3 Leo H. Whinery, Oklahoma Evidence: Commentary on the Law of Evidence §36.07 & n.10 (2d ed. 2000) (citing Hall v. Goodwin, 1989 OK 88, 775 P.2d 291). Even before the codification of the joint representation exception in §2502 of the Oklahoma Evidence Code, the Oklahoma Supreme Court recognized its applicability in other contexts. See, e.g., Bush v. Bush, 1930 OK 117, ¶31, 286 P. 322 (finding communications between jointly represented parties not privileged as between one party and the other party’s heirs for purposes of determining the validity of deed which purported to transfer real property from one party to the other).
17. See Annotation, Charles C. Marvel, “Applicability of attorney-client privilege or testimony in subsequent action between parties originally represented contemporaneously by same attorney, with reference to communication to or from one party,” 4 A.L.R. 4th 765 §5[a] (1981).
18. See e.g. CHI of Alaska, Inc. v. Employers Reinsurance Corp., 844 P.2d 1113 (Alaska 1993).
19. 1996 OK CIV APP 40, 917 P.2d 488.
20. Nisson, 917 P.2d at 489.
21. Id. at 490.
22. Id.
23. Id.
24. Id.
25. See e.g. Couch on Insurance 3d, §202:26 (2003).
26. See e.g. State Farm Mut. Auto. Ins. Co. v. Hansen, 357 P.3d 338 (Nev. 2015) (concluding that Nevada requires insurer to provide independent counsel at insurer’s expense where reservation of rights letter presented an actual conflict, but finding a reservation of rights letter does not create a per se conflict); Twin City Fire Ins. Co. v. City of Madison, Mississippi, 309 F.3d 901, 907 (5th Cir. 2002) (Under Mississippi law, “[w]hen an insurer is defending under a reservation of rights, the carrier ‘should afford the insured ample opportunity to select his own independent counsel to look after his interest’.”); Tank v. State Farm Fire & Cas. Co., 715 P.2d 1133 (Wash. 1986) and L & S Roofing Supply Co. v. St. Paul Fire & Marine Ins. Co., 521 So.2d 1298, 1304 (Ala. 1987) (resolving the conflict by imposing an “enhanced” standard of good faith upon an insurer which reserves its rights, requiring 1) a thorough investigation of the Plaintiff’s claim; 2) retaining competent defense counsel who understands that the insured is the sole client; 3) fully informing the insured of all coverage issues and progress of the case; and 4) taking no action which puts the insurer’s financial interest ahead of the insured); Shelby Steel Fabricators, Inc. v. United States Fid. & Guar. Ins. Co., 569 So.2d 309 (Ala. 1990) (estopping insurer from denying coverage where the insurer failed to meet this enhanced standard of good faith because it failed to keep the insured informed of the progress of the defense); California State Bar Committee on Professional Responsibility Formal Opinion No. 1995-139 (1995) (An attorney hired by an insurer to defend an insured owes her loyalty to the insured, not the insurer, and if the attorney becomes aware of information that changes the coverage situation or otherwise affects the insurer’s position, she may not reveal the information, but must withdraw from representing the insured.); Illinois State Bar Association Opinion No. 92-02 (July 17, 1992) (A lawyer retained by an insurance company to defend its insured under a reservation of rights may not disclose information to the insurer which might prejudice the insured’s coverage rights.).
27. See State Farm Mut. Auto. Ins. Co. v. Hansen, 357 P.3d 338, 343 (Nev. 2015) (a reservation of rights letter does not create a per se conflict of interest, instead, “[c]ourts must inquire, on a case-by-case basis, whether there is an actual conflict of interest.”); Twin City Fire Ins. Co. v. Ben Arnold-Sunbelt Beverage Co. of South Carolina, LP, 433 F.3d 365 (4th Cir. 2005) (insurer’s reservation of rights letter disclaiming coverage as to some claims did not create per se conflicts of interest so as to require insurer to cover attorney’s fees of insured’s chosen counsel); Dynamic Concepts, Inc. v. Truck Ins. Exchange, 71 Cal. Rptr. 2d 882, 887 (Cal. Ct. App. 1998) (“A mere possibility of an unspecified conflict does not require independent counsel. The conflict must be significant, not merely theoretical, actual, not merely potential.”); Native Sun Inv. Group v. Ticor Title Ins. Co., 235 Cal. Rptr. 34, 40 (Cal. Ct. App. 1987) (insurer not required to pay for independent counsel where resolution of third-party claim would not affect coverage dispute); Blanchard v. State Farm Fire & Cas. Co., 2 Cal. Rptr. 2d 884, 887 (Cal. Ct. App. 1991) (because the coverage issue involved only damages, there was no conflict because insurer and thus defense counsel had no incentive to attach liability to the insured); Hansen v. State Farm Mut. Auto. Ins. Co., No. 2:10-cv-01434-MMD, 2012 WL 6205722, at *10 (D. Nev. Dec. 12, 2012) (“[W]hether or not an insurer’s reservation of rights creates a conflict of interest must be determined by looking to the particular facts of each case.”).
28. See Parsons, supra; Employers Cas. Co. v. Tilley, 496 S.W. 2d 552 (Tex. 1973) (where insurer hired attorney to represent insured and as part of his discovery the attorney developed facts to support the insurer’s coverage claim of lack of notice including taking statements from the insured’s employees to support that claim, the court held it would be “untenable” for the insurer to disclaim its defense obligation; the late notice defense was improperly developed and violated the guiding principles in the insurer-insured relationship.); Paradigm Ins. Co. v. Langerman Law Offices, P.A., 2 P.3d 663, 667 (Ariz. Ct. App. 1999), vacated in part, 24 P.3d 593 (2001) (insured whose confidential information was disclosed by his attorney to the insurance company who hired counsel and used to assert a coverage defense may sue counsel for malpractice).
29. See Mid-America Bank & Trust Co. v. Commercial Union Ins. Co., 587 N.E.2d 81, 82-83 (Ill. App. Ct. 1992) (where insurer and defense counsel for insured twice rejected $50,000 policy limits offer and made a $30,000 counteroffer without informing the insured and the plaintiff later obtained a $911,563.50 judgment against the insured, the insurer and attorney were found liable for the excess judgment in the amount of 75% and 25%, respectively); Bohna v. Hughes, Thorsness, Gantz, Powell & Brundin, 828 P.2d 745, 750-51 (Alaska 1992) (insured sued his insurer and defense counsel after they offered a $50,000 policy limits settlement but refused to agree on a statutorily permitted attorney fee and then persuaded the insured to confess judgment in the amount of $3 million and file bankruptcy with this potentially non-dischargeable judgment. The insured recovered a $6,139,544.94 verdict with 40 percent liability attributed to the insurer and 60 percent to the attorney). Massachusetts Bar Association Opinion No. 1991-5 (an actual conflict arises and counsel is thereby prevented from expressing an opinion to the insurer as to the settlement value of the case where there is a potential liability defense but counsel knows the case can be settled within policy limits). But see Allstate Ins. Co. v. Campbell, 639 A.2d 652, 659 (Md. 1994) (unlike the cases where coverage is in dispute, potential excess liability alone does not create a conflict of interest requiring independent counsel; any conflict is mitigated by the insured’s ability to file a bad faith claim against the insurer if it mishandles his claim and thus the insured retains the right to control the defense in an excess liability case).
30. See Foremost Ins. Co. v. Wilks, 253 Cal. Rptr. 596, 602 (Cal. Ct. App. 1988).
31. See Illinois Municipal League Risk Mgmt. Ass’n. v. Siebert, 585 N.E. 2d 1130 (Ill. App. Ct. 1992).
32. Atkinson, Haskins, Nellis, Brittingham, Gladd & Fiasco, P.C. v. Oceanus Ins. Co., No. 13-CV-762-JED-PJC, 2016 WL 5746210 (N.D. Okla. Sept. 30, 2016), citing Atlanta Int’l Ins. Co. v. Bell, 475 N.W.2d 294 (Mich. 1991).
33. Atkinson, Haskins, Nellis, Brittingham, Gladd & Fiasco, P.C., 2016 WL 5746210.
34. Id.
35. Id. at *4.
36. 475 N.W.2d 294, 298-299 (Mich. 1991).
37. Id. at *5.
38. Atlanta Int’l, 475 N.W.2d at 298-299. See also Walter & Shuffain, P.C. v. CPA Mutual Ins. Co., No. CIV A06CV10163-NG, 2008 WL 885994 (D. Mass. Mar. 28, 2008) (insurer that was sued by insured accounting firm for negligently defending the firm could seek contribution from law firm the insurer had hired to defend the accounting firm in malpractice case, but could not sue law firm for indemnity); Great Am. E & S Ins. Co. v. Quintairos, Prieto, Wood, & Boyer, P.A., 100 So.3d 420, 424 (Miss. 2012) (plurality opinion) (“We hold only that, when lawyers breach the duty they owe to their clients, excess insurance carriers, who – on behalf of the clients – pay the damage, may pursue the same claim the client could have pursued. Holding otherwise would place negligent lawyers in a special category of protection.”); Allstate Ins. Co. v. American Transit Ins. Co., 977 F. Supp. 197 (E.D.N.Y 1997); American Centennial Ins. Co. v. Canal Ins. Co., 843 S.W.2d 480 (Tex. 1992).
39. Id.
40. Id. at *6.
41. See e.g. National Union Ins. Co. v. Dowd & Dowd, P.C., 2 F. Supp. 2d 1013 (N.D. Ill 1998) (federal district court predicting that Illinois would allow an excess insurer to assert a malpractice action against the insured’s defense lawyer under the doctrine of equitable subrogation).
42. See e.g. Zenith Ins. Co. v. Cozen O’Connor, 55 Cal. Rptr. 3d 911 (Cal. Ct. App. 2007) (though reinsurer reinsured 100% of insured’s liability and therefore would benefit or suffer from work of firm hired by insurer to defend insured, and though the reinsurer had many conversations with defense counsel as a result of this relationship, these facts did not establish an attorney-client relationship under which the reinsurer could sue); Querrey & Harrow, Ltd. v. Transcontinental Ins. Co., 861 N.E.2d 719 (Ind. Ct. App. 2007), opinion adopted by, 885 N.E.2d 1235 (Ind. 2008) (subrogation is the equivalent of an assignment and Indiana does not permit assignments of legal malpractice claims); Federal Ins. Co. v. North Am. Specialty Ins. Co., 847 N.Y.S.2d 7 (N.Y. App. Div. 2007) (excess carrier could not sustain malpractice claim because no privity existed between the excess insurer and the firm, whose duty ran only to its client).
43. 827 N.Y.S.2d 231 (N.Y. App. Div. 2006).
44. 5 Okla. Stat. Ch. 1, App. 3-A, Rule 1.7(a).
45. Comment 24, Rule 1.7.
46. Id.
47. Formal Op. 93-377, pp. 1-2.
48. Id. at 3-4.
49. Id. at 4.
50. Id.
51. Id. at 4-5.
52. Id.
53. Id.
54. Id. at 5 n. 6. For cases generally following the Comment and/or ABA Formal Opinion 93-377, see Advanced Display Systems, Inc. v. Kent State University, No. 3-96-CV-1480-BD, 2001 WL 1524433 (N.D. Tex. Nov. 29, 2001); Estates Theatres, Inc. v. Columbia Pictures Industries, Inc., 345 F. Supp. 93 (S.D.N.Y. 1972); Virginia Opinion 1476 (Aug. 24, 1992); Michigan Informal Opinion RI-108 (Dec. 3, 1991); Arizona Opinion 87-15 (July 27, 1987). But see California Opinion 1989-108 (undated) (not unethical, but imprudent, to argue opposite sides of same issue before same judge).
55. 1997 WL 1724483 (March 1997)
56. Id. at *4.
57. See Ethics Opinion No. 314 dated Dec. 15, 2000.
58. OK Adv. Op. 314, p. 3, citing Church v. Hofer, Inc., 1992 OK CIV APP 148, 844 P.2d 887, 888.
59. Id. at 5.
60. See U.S. v. Massachusetts Inst. of Tech., 129 F.3d 681, 683 (1st Cir. 1997) (MIT waived attorney-client privilege by disclosing billing statements of firms representing MIT to defense department auditors); In Re Rules of Professional Conduct and Insurer Imposed Billing Rules and Procedures, 2 P.3d 806 (Mont. 2000) (rejecting argument that disclosure was impliedly authorized by insurance relationship, the court held that the disclosure of attorney invoices by defense counsel to an outside auditor of the insured without obtaining contemporaneous informed consent from the insured violates the Montana Rules of Professional Conduct protecting client confidentiality); In re Columbia/HCA Healthcare Corp. Billings Practices Litig., 192 F.R.D. 575 (M.D. Tenn. 2000) (disclosure of documents to federal government during government investigation waives attorney-client privilege as to all adversaries despite agreement with government that such disclosure would not constitute a waiver); U.S. v. South Chicago Bank, No. 97-CR 849-1, 97-CR 849-2, 1998 WL 774001, *3 (N.D. Ill. Oct. 30, 1998) (as a general rule, confidential information may not be shared with an outside auditor without destroying the attorney-client privilege).
61. Ethics Opinion No. 314 dated Dec. 15, 2000, at 5-7, citing Pennsylvania Bar Association, Committee on Legal Ethics and Professional Responsibility, Formal Opinion No. 97-119 (1997).
62. ABA Formal Opinion 01-421 (Feb. 16, 2001).
63. Alabama Ethics Opinion No. RO-98-02; Alaska State Bar Ethics Opinion 99-1 (1999); Arizona State Bar Formal Opinion 99-08 (Sept. 1999); Cincinnati Bar Association, Op. 98-99-02; Colorado Bar Association Ethics Committee Formal Opinion 107 (Sept. 18, 1999); Connecticut Bar Association Formal Ethics Opinion No. 00-20 (Sept. 25, 2000); D.C. Bar Legal Ethics Committee Opinion 290 (April 20, 1999); Florida Bar Staff Opinion 20762 (March 3, 1998); Georgia State Bar Proposed Advisory Opinion No. 99-R2 (Jan. 2000); Hawaii Formal Ethics Commission Opinion 36 (March 25, 1999); Idaho State Bar Formal Ethics Opinion 136 (Oct. 1, 1999); Indiana State Bar Opinion No. 4 of 1998; Iowa Supreme Court Board of Ethics and Conduct Opinion 99-01 (Sept. 8, 1999); Kentucky Opinion KBA E-404 (June 1998); Louisiana Bar Ethics Opinion, 45 LA. B.J. 438 (Feb. 1998); Maine Bar Association Ethics Opinion 164 (Dec. 2, 1998); Maryland State Bar Association Committee on Ethics, Opinion 99-7 (Dec. 18, 1998); Massachusetts Bar Ethics Opinion 2000-4 (Sept. 13, 2000); Mississippi State Bar Association Opinion No. 246 (April 8, 1999); Missouri Informal Opinion Summary No. 980188; New Mexico State Bar Formal Advisory Opinion 2000-02 (June 20, 2000) New York State Bar Association Committee on Professional Ethics Opinion 7160 (March 3, 1999); North Carolina Proposed Formal Ethics Opinion 17 (Oct. 14, 1998); Ohio Supreme Court Opinion 2000-02 (June 1, 2000); Oregon Formal Opinion No. 1999-157 (June 1999); Pennsylvania Informal Opinion No. 97-119 (Oct. 6, 1997); Rhode Island Ethics Advisory Panel Opinion 99-17 (Oct. 27, 1999); South Carolina Ethics Advisory Opinion 97-22 (Dec. 1997); State Bar of South Dakota Ethics Opinion 99-2 (April 16, 1999); Tennessee Supreme Court Board of Professional Responsibility Formal Op. 99-F-143 (June 14, 1999); Utah State Bar Ethics Advisory Opinion 98-03 (April 17, 1998); Vermont Bar Association Ethics Opinion 98-7; Virginia Bar Legal Ethics Opinion 1723 (Nov. 23, 1998; Dec. 10, 1998); Washington Bar Informal Opinion (no number assigned April 29, 1997); West Virginia Lawyer Disciplinary Board Opinion LEI 99-02 (April 30, 1999); Wisconsin State Bar Ethics Opinion E-99-1 (1999).
64. The “ethical implications of the use of billing guidelines” were beyond the scope of Ethics Opinion 314. Opinion 314 at 2.
65. See e.g. Givens v. Mullikin, 75 S.W.3d 383, 394 (Tenn. 2002)
(“[a]ny policy, arrangement or device which effectively limits, by design or operation, the attorney’s professional judgment on behalf of or loyalty to the client is prohibited by the [Professional Responsibility] Code, and, undoubtedly, would not be consistent with public policy.”) (quotations and citations omitted).
66. Richmond, “Lost in the Eternal Triangle of Insurance Defense Ethics,” 9 Geo. J. Legal Ethics 475, 533 (1996). See also e.g. Finley v. Home Ins. Co., 975 P.2d 1145, 1156 (Haw. 1998) (an attorney may be liable for malpractice and the insurer for bad faith where the insurer induces the attorney to provide a defense that does not meet the standards of the applicable rules of professional conduct).
67. Rule 1.3 of the Oklahoma Rules of Professional Conduct.
68. Richmond at 534.
69. Id.
70. Id.
71. See also Alabama Ethics Opinion No. RO-98-02 (restrictions on discovery or similar litigation restrictions violate Rules 5.4(c) and 1.8(f) and may not be followed without full disclosure and informed consent from the client); Utah State Bar Ethics Advisory Opinion 20-03 (Feb. 27, 2002) (lawyer hired by insurance company cannot follow the insurer’s litigation guidelines if it would compromise the lawyers duties of confidentiality and competency).


ABOUT THE AUTHOR
Timila S. Rother is a litigation at-torney with Crowe & Dunlevy PC and is president and CEO of the firm. Prior to being president, she served 15 years as Crowe & Dunlevy’s loss prevention counsel. She has served as a member of the Oklahoma Legal Ethics Advisory Panel and is on the OBA Professionalism Committee. The emphasis of her legal practice is commercial litigation, including insurance and class action litigation, as well as professional liability and healthcare litigation.


Originally published in the Oklahoma Bar Journal -- OBJ 88 pg. 1971 (Oct. 21, 2017)

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