NEW YORK STATE BAR ASSOCIATIONProfessional
Ethics Committee Opinion
Opinion #73 - 03/01/1968
Topic: Conflict of interests, disclosure
Digest: Attorney Employed by carrier has superior duty to assured,
Canon: Former Canons 6, 15
A lawyer has been retained by an insurance company to defend its
insured under the terms of a Homeowner's policy in an action commenced
against the assured which alleges two separate and alternative causes of
action, one for an intentional assault committed by the assured and the
second for negligence assuming that the physical contact was accidental.
The policy in question covers the assured for general liability
but expressly excludes coverage for an assault
The insurance company's investigation file contains factual evidence
indicating an intentional assault and there exists a possible conflict
of interest since the assured will undoubtedly claim any harm was
accidental and, of course, the attorney is duty bound to protect the
interests of the assured alone. On the other hand, the attorney
asserts that the carrier's rights are no less entitled to equal justice
and if, in fact, an assault was involved, the facts indicating such
should be developed.
The attorney asks what, if any, protection his firm may have against
a charge by the assured that the attorney's loyalty was not to him but
to his carrier.
Canon 6 of the Canons of Professional Ethics states that, "It is the
duty of a lawyer at the time of retainer to disclose to the client all
the circumstances of his relations to the parties, and any interest in
or connection with the controversy, which might influence the client in
the selection of counsel.
"It is unprofessional to represent conflicting interests except by
express consent of all concerned given after a full disclosure of the
facts. Within the meaning of this Canon, a lawyer represents
conflicting interests when, in behalf of one client, it is his duty to
contend for that which duty to another client requires him to
There is no question but that the assured is the client of the
retained attorney and that the attorney is obligated to represent him
with undivided fidelity regardless of the fact that his fee for legal
services is being paid by another. The insurance company is not a
party to the suit and it has a contractual obligation not to take any
action that would prejudice the assureds’ defense to the
negligence claim. The attorney supplied by it, in addition, has
the duty to defend the suit in its entirety.
It is the opinion of the committee that the attorney is obligated
under Canon 6 to disclose to the carrier and to the assured, the
apparent conflict of interest with a full disclosure of the facts and to
advise the carrier that even though his legal services are being paid by
it, his undivided allegiance and fidelity is to the assured and that it
will be necessary for him to defend the assured in an effort to defeat
recovery on any grounds asserted in the complaint and probably to
contend directly against the interest of the carrier to promote the
interest of the assured.
Canon 15 also applies, and the carrier and assured should be advised
that, "In the judicial forum the client is entitled to the benefit of
any and every remedy and defense that is authorized by the law of the
land, and he may expect his lawyer to assert every such remedy or
defense. But it is steadfastly to be borne in mind that the great trust
of the lawyer is to be performed within and not without the bounds of
the law. The office of attorney does not permit, much less does it
demand of him for any client, violation of law or any manner of fraud or
chicane. He must obey his own conscience and not that of his client"
Questions of law may arise as to whether the lawyer's fee should be
apportioned between the assured and the insurance company (see Prashker
vs. United States Guaranty Co., 1 NY 2d 584 (1956); Hoffman. vs.
Allstate Insurance Company, 188 NYS 2d 408, Sup. Ct., Nassau County,
(1959); O'Morrow vs. Borad, 27 Cal 2d 794, 167 P 2d 483 (1946)), but
from an ethical stand point there is no doubt as to the lawyer's duty to
the assured as his client.
It is further the opinion of the committee, that if the attorney
feels that the apparent conflict is such that he cannot act as indicated
above, then the assured should be advised to retain counsel of his own
choosing and the question of the responsibility for the fees of his
selected counsel will then be decided between the carrier and the
assured or by the Court.