Chapter 4. Insurance defense practice - Control

4:19. Insurance Defense Practice-- Control

Rule of Professional Conduct 1.8(f) provides that:

A lawyer shall not accept compensation for representing a client from one other than the client unless:

  • (1) the client consents after consultation;

  • (2) there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship; and

  • (3) information relating to representation of a client is protected as required by Rule 1.6.

Rule 1.8(f) requires that the client consent “after consultation,” which is defined in the Terminology preface to the Rules as “communication of information reasonably sufficient to permit the client to appreciate the significance of the matter in question.” The Restatement provides for “consent to the direction under the limitation and conditions,” which include providing the client “reasonably adequate information about the material risks of such representation to that client or former client.” 1 This is just the sort of disclosure and consent process required under Rule 1.7(b), which does not comport with much of the day-to-day economic reality of insurance defense practice.

The ABA Standing Committee on Ethics and Professional Responsibility has suggested that the requirement of disclosure and consent ordinarily can be met with a letter from the lawyer to the insured setting forth the general parameters of the relationship, perhaps supplemented with additional disclosures if and when the lawyer has a face to face meeting with the insured.2

Florida has amended its version of Rule 1.7 to include an additional paragraph specifically addressing the insurance defense context:

  • (e) Representation of insureds. Upon undertaking the representation of an insured client at the expense of the insurer, a lawyer has a duty to ascertain whether the lawyer will be representing both the insurer and the insured as clients, or only the insured, and to inform both the insured and the insurer regarding the scope of the representation. All other Rules Regulating The Florida Bar related to conflicts of interest apply to the representation as they would in any other situation.3

While the ABA recommendations and Florida rule are not binding on lawyers in Georgia, both provide some guidance. The better practice would be to explain the relationship in a letter to the insured client at the beginning of the representation. The following is an illustrative example of the type of letter that would fulfill that role.

Dear [client's name]:

This law firm has been retained by [name of insurance company], under the terms of your insurance policy, to defend you in the above-referenced case which arises from [incident] on [date]. It will be necessary for us to meet and confer regarding the defense of this case. Please contact me upon your receipt of this letter. If I am out of the office, you may speak with [name of associate], who is assisting me on this case, or with my paralegal, [name of paralegal].

Please do not discuss this case with anyone other than representatives of this law firm or [name of insurance company].

Under the terms of your insurance policy, the insurance company is authorized to select defense counsel and control both defense strategy and settlement negotiations. In most cases, the insured welcomes being relieved of that burden and no actual conflict develops between the insurance company and the insured. As an attorneys hired to represent you, however, I should inform you that in any such case there is at least some theoretical potential, however remote, that there could arise adverse or differing interests between you and your insurance company.

If any conflict were to arise between you and your insurance company regarding matters of insurance coverage, this firm would decline to get involved in either side of such a controversy. Even though we do have an ongoing relationship with [name of insurance company], frequently defend lawsuits against their insureds, and sometimes represent the company itself, we are careful to maintain and exercise independent professional judgment on behalf of the individuals we are hired to defend. In this case, it is my professional duty to inform you that:

  • (1). Although the insurance company pays our bills and has authority over litigation and settlement decisions, this firm's primary professional duty is to you.

  • (2). Some people would be concerned about the temptation for attorneys representing clients with potentially adverse interests to shape evidence in a manner more favorable to the insurance company, although in our experience we have found the officials of [name of insurance company] respect our efforts to maintain high ethical standards and avoid any conflicts of interest which might impair our independent professional judgment.

  • (3). We could not represent or advise either you or your insurer if there were any dispute on coverage issues. You have the right to consult with independent counsel, of your own choosing and at your own expense, if you wish, and it is entirely your own decision whether you do so or not.

In the course of representing you in this case, we will keep you informed of any settlement offers that may affect your rights or obligations under your insurance policy, so that you may, if you choose, discuss such matters with other counsel.

After reading this letter, please do the following:

  • (1) Call me to discuss this case, and if possible schedule a conference at a mutually convenient time. The phone number is [insert phone number].

  • (2) Sign and return the enclosed copy of this letter, indicating that you have read and understand it, and that you consent to representation by this firm as provided and paid for by [name of insurance company]. A reply envelope is enclosed for your convenience. This may seem like an unnecessary bother, but it is preferred practice under the highest standards of legal ethics.

Feel free to call at any time if you have questions.




1 Restatement (Third) of the Law Governing Lawyers §§122, 134 (2000).

2 ABA Comm. on Ethics and Prof'l Responsibility, Formal Op. 96-403 (1996) (“Obligations of a Lawyer Representing an Insured Who Objects to a Proposed Settlement Within Policy Limits”) [hereinafter Formal Op. 96-403].

3 Fla. Rule of Prof'l Conduct R. 1-1.7(e).

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