One aspect of insurance policies is the duty to defend claims. Often, insurers select defense counsel from a panel of attorneys who are pre-approved by the insurer. An attorney working as defense counsel for an insured needs to be cognizant of the potential issues that can arise in the representation.

Defining the Scope of Representation
The insured party may not understand your role, which is usually to defend certain claims brought against the insured. The insured may ask you for general legal advice on unrelated matters, to pursue counterclaims, or for advice on coverage issues.

If your representation is going to be limited, you may wish to review RPC 1.2(c) and obtain the client’s consent to the limitation after a consultation with the client, and then document the limited scope of your representation in a letter to the client.

Even if your representation is not limited in the sense referred to in RPC 1.2(c), explaining to the insured that you are only being retained to represent the insured in the defense of this one matter and not for any other purpose and then confirming that conversation in writing may help you to avoid misunderstandings. Providing a similar letter to the insurer confirming the scope of your representation and outlining your duties to it may also avoid misunderstandings with it.

Remember Who Your Client is
The first rule all counsel retained by insurers to represent insureds should remember is that, even though you might be paid by the insurance company, your actual client for ethical purposes is the insured you are hired to represent. See Tank v. State Farm, Inc., 105 Wn.2d 381, 388, 715 P.3d 1133 (1986) (‘retained defense counsel and the insurer must understand that only the insured is the client’).1

This rule is important to remember, for while it is relatively easy to classify the insured as one’s client, the attorney may also have separate contractual obligations to the insurer. Nevertheless, remembering who the client is under the RPCs is a good first step in determining the attorney’s obligations and course of action if any issues arise between the attorney and the insurer regarding representation.

Keep the Client Informed
Occasionally, attorneys provide regular status reports to insurers because they are contractually obligated to do so, but are sometimes less diligent in keeping the client informed of the progress of the case, and since the defense costs are not coming out of the client’s pocket, the client may not make a priority of seeking out the information from the attorney. Keeping the client informed is one of the attorney’s duties under the RPCs.

RPC 1.4 requires lawyers to keep clients reasonably informed about the status of a matter and explain matters to the extent reasonably necessary to make informed decisions regarding representation. The Washington Supreme Court took this a step further in Tank, which dealt with a reservation of rights, by requiring that an attorney also communicate to the insured, ‘all information relevant to the insured’s defense, including a realistic and periodic assessment of the insured’s chances to win or lose the pending lawsuit’ and all offers of settlement and activity involving settlement. Tank, 105 Wn.2d at 388-89.

Be Aware of Maintaining Independence of Professional Judgment
RPC 1.8 provides that an attorney ‘shall not accept compensation for representing a client from one other than the client’ unless the client consults after consultation and there is no interference with the lawyer’s independence of professional judgment. See RPC 1.8(f).

Similarly, RPC 5.4(c) prohibits a lawyer, employed by a party to represent a third party, from allowing the employer to influence his or her professional judgment. See RPC 5.4(c).

In addition to the rules that prevent interference with professional judgment, RPC 1.2 requires attorneys to ‘abide by a client’s decisions concerning the objectives of representation;’ RPC 3.2 requires attorneys to ‘make reasonable efforts to expedite litigation consistent with the interests of the client;’ and RPC 1.7(b) states that ‘A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer’s responsibilities to another client or to a third person, or by the lawyer’s own interests,’ unless certain criteria are met that are set forth in detail in the rule.

Each of the foregoing rules make it clear that a contractual relationship between attorney and insurer has the potential to interfere with the attorney’s independent exercise of professional judgment.

If tension arises between the attorney and the insurer during representation regarding pretrial strategy, affirmative defenses, discovery, or other matters relating to the representation of the insured, the attorney should rely on the RPCs for guidance and inform the insurer about their requirements if the insurer is not familiar with them. If conflicts cannot be avoided, the attorney’s proper remedy is generally withdrawal if there is no material adverse affect on the client. See RPC 1.15(b).

Conclusion
Defense counsel for insureds should be aware of the potential for tension between their contractual relationship with the insurer and their duty to their clients. These issues usually can be avoided through clear expectations, clear delineation of roles, and clear communication between attorney and client and attorney and insurer. Given the possibility of these issues arising, defense counsel should be aware of appropriate measures to ensure compliance with their ethical obligations.