Ethics Beyond the Rules:

Transcription

1 Ethics Beyond the Rules: A Virtually Insolvable Ethical Dilemma Facing Defense Lawyers The Hon. Alexander M. Sanders, Jr. Sanders & Nettles LLC 19 Water Street Charleston, SC (843) (843) [fax] goffp@cofc.edu Return to course materials table of contents

2 The Honorable Alex M. Sanders, Jr. has been a lawyer, a state representative, a state senator, an appellate judge and a college president. He has also been a soldier, a soybean farmer and a circus performer. He taught law for 25 years as a member of the Adjunct Faculty of the Harvard Law School. He is a founder and Chairman of the Board of the Charleston School of Law, a patron of the National Baseball Hall of Fame, a member of the Harvard Club of New York and Sam s Wholesale Club.

3 Ethics Beyond the Rules: A Virtually Insolvable Ethical Dilemma Facing Defense Lawyers Table of Contents I. Introduction II. Hypothetical III. The Answers Ethics Beyond the Rules: A Virtually Insolvable Ethical Dilemma Facing Defense... v Sanders v 145

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5 Ethics Beyond the Rules: A Virtually Insolvable Ethical Dilemma Facing Defense Lawyers A not-so-hypothetical case involving the inherent difficulties in simultaneously representing an insurance company and an insured with different and conflicting interests; the goal being to make the audience so uncomfortable they can only escape by thinking. I. Introduction The presentation begins with a fictional account of three American lawyers captured by the Taliban in Afghanistan, calling attention to recently-arising changes in the relationship between defense lawyers and their clients including revised corporate billing practices, alternative billing, blended rates, flat fees, billing audits, and precisely how outside counsel will be compensated by liability insurance companies sufficient to drive defense lawyers absolutely crazy. II. Hypothetical The presentation continues with the following hypothetical: Scene: Office of defense counsel Others present: Truck driver for an insured freight company and the Vice President of Operations for the company Counsel: Come in. I appreciate your coming down here. The freight company s insurance carrier has sent this suit to our firm to defend both of you. Please understand that even though the insurance company is paying my fee, I am your lawyer. Anything you tell me will be kept in confidence. Mr. Truck Driver, why don t you tell me what happened? Truck Driver: Well, I had just delivered a load and was on the way back to the warehouse when this little car pulled out in front of me. I hit the brakes but nothing happened. (To the Vice President) I told you those brakes were going bad. (To Counsel) Anyway, I hit the car broadside, and I can t remember anything else. I was in the hospital for two months. Just got out last week and I still have a lot of pain. Counsel: I m sorry you ve had so much trouble. Hopefully, this case will settle soon and you can put all of this behind you. Truck Driver: What about my case against that other driver? My doctor said that some of my injuries may be permanent. Counsel: I ve looked at the accident report and unfortunately it appears that the driver did not have any insurance. The freight company does have uninsured motorist coverage under its policy. Vice Pres.: How would that affect our rates? Counsel: Well, any claim under a policy may increase your rates, but I m not sure how much. Vice Pres.: I don t believe the company could authorize a claim under the uninsured motorist provision if it would affect our rates. There is one other thing I want to mention to you. The truck that was involved in this accident had been retired from our Ethics Beyond the Rules: A Virtually Insolvable Ethical Dilemma Facing Defense... v Sanders v 147

6 Truck Driver: Counsel: fleet about a month ago and removed from the list of trucks covered under the policy. We just used it that day because one of our other trucks was broken down. Fortunately, the company doesn t know about this, but I wanted to let you know about it so that you wouldn t raise it as an issue if it comes up. Do I have to get the company s permission to make a claim against the car I hit? Um. I ll have to give these matters some thought. Counsel asks your advice about how he should proceed. What advice would you give? III. The Answers 1) Model Rules 1.7, 1.8(f) and comments. 2) The Restatement and comments. 3) Amber Czarnecki, Ethical Considerations within the Triparite relationship of Insurance Law Who is the Real Client?, 74 Def. Couns. J. 172 (2007). See generally Symposium: Liability Insurance Conflicts and Professional Responsibility, 4 Conn. Ins. L.J. 1 ( ). 4) Richard L. Neumeir, Serving Two Masters: Problems Facing Insurance Defense Counsel and Some Proposed Solutions, 77 Mass. L. Rev. 66, 67 (1992); Charles Silver & Kent Syverud, The Professional Responsibilities of Insurance Defense Lawyers, 45 Duke L.J. 255, (1995). 5) Douglas R. Richmond, Lost in the Eternal Triangle of Insurance Defense Ethics, 9 Geo. J. Legal Ethics 475 (1996); Symposium: Liability Insurance Conflicts and Professional Responsibility, 4 Conn. Ins. L.J. 1 ( ). 6) Nevada Yellow Cab Corp. v. Eighth Judicial Dist. Court, 152 P.3d 737 (Nev. 2007) (adopting majority two-client rule). 7) Laura A. Foggan, The Tripartite Relationship: Insurer Issues in Selection and Supervision of Defense Counsel, 690 PLI/Lit 579 (2003) (surveying two-client rule cases). 8) Stephen L. Pepper, Applying the Fundamentals of Lawyers Ethics to Insurance Defense Practice, 4 Conn. Ins. L.J. 27 ( ) (comparing one- and two-client models). 9) Guiding Principles of the National Conference of Lawyers and Liability Insurers, reprinted in 20 Fedn. Ins. Couns. Q. 93 (# ). 10) See generally, Professional Responsibility, Problems of Practice in the Profession, (4th ed. 2008) the book by Nathan M. Crystal, Professor of Professional Responsibility and Contract Law, University of South Carolina School of Law and Distinguished Visiting Professor, Charleston School of Law. Note: The hypothetical, although not precisely the same, is derived in large part, with his permission, from Professor Crystal s book. 148 v Product Liability Conference v April 2011