Disputes Wednesday, February 29, 2012 Crowne Plaza Little Rock What is the ethics hour all about? Less than 125 pages of the most recent rule book is devoted to the Arkansas Rules of Professional Conduct Yet somehow were supposed to have an hour of professional ethics every year in our CLE. In Texas its worse. We have three hours of mandatory CLE. "Legal ethics includes, but is not necessarily limited to, instruction on the Model Rules of Professional Conduct and the Code of Judicial Conduct." Ethics may include professionalism courses addressing the principles of competency, dedication to the service of clients, civility, improvement of justice, advancement of the rule of law, and service to the community.
Professionalism courses may include a
lawyer's responsibility as an officer of the Court; responsibility to treat fellow lawyers, members of the bench, and clients with respect and dignity; responsibility to protect the image of the profession; responsibility generally to the public service; the duty to be informed about methods of dispute resolution and to counsel clients accordingly; and misuse and abuse of discovery and litigation Are there any moral or ethical obligations above, beyond, or different from those imposed by the rules? The Rules do not . . . exhaust the moral and ethical considerations that should inform a lawyer, for no worthwhile human activity can be completely defined by legal rules. The Rules simply provide a framework for the ethical practice of law. Preamble, Arkansas Model Rules of Professional Conduct. Hypothetical You are an insurance defense lawyer for Consolidated Federated. Another Consolidated Federated fender-bender comes across your desk. One Andrew Volstead was rear-ended by Jos Cuervo. Your insured is Guillermo Cuervo, Joss brother, the owner of the car. Jos got a ticket for following too close and driving while intoxicated, his third. Volsteads lawyer demanded the limits. The policy excludes punitive damages, and Volstead wasnt seriously injured. He went to a doctor who treated him for two weeks and released him. The total medical involvement was $625. Volsteads attorney has, of course, sued both Jos and Guillermo, alleging negligent entrustment. Jos and Guillermo come to see you. Guillermo tells you that the car isnt really even his. Its just in his name because Jos couldnt get insurance because of his driving record. Thats why the insurance agent recommended that Guillermo buy his car and take out the insurance in his own name. Discuss Who is the client? Discuss Can/must you inform the insurer of the circumstances? Rule 1.6. Confidentiality of information
(a) A lawyer shall not reveal information relating
to representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b). (b) A lawyer may reveal such information to the extent the lawyer reasonably believes necessary: (1) to prevent the commission of a criminal act; (2) to prevent the client from committing a fraud that is reasonably certain to result in injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services; (3) to prevent, mitigate or rectify injury to the financial interest or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services (4) to secure legal advice about the lawyer's compliance with these Rules; (5) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer's representation of the client or, (6) to comply with other law or a court order STATE BAR OF NEVADA STANDING COMMITTEE ON ETHICS AND PROFESSIONAL RESPONSIBILITY Formal Opinion No. 9 (originally issued on 4/21/88, conclusion amended 9/24/07) QUESTIONS - 1. Is an attorney required to disclose to the insurance company which hires him to defend a personal injury lawsuit arising from a vehicle accident information communicated by the insured client as to potential fraud of the client in obtaining vehicle liability insurance? 2. Does the client's communication of information as to potential fraud in obtaining vehicle liability insurance create a conflict of interest which requires or suggests a) the attorney withdraw his representation from client or b) terminate his employment by the insurance company? 3. Does the client's disclosure create a conflict of interest which precludes the attorney from accepting compensation from the insurance company for representing the client? 1. Information communicated by an insured client to his attorney as to potential fraud in obtaining vehicle liability insurance is confidential. Unless the client consents to disclosure, it would be a violation of Nevada Supreme Court Rule 156 (hereinafter SCR) for attorney to reveal such information to the insurance company which hired him because a) disclosure is not impliedly authorized to carry out attorney's representation, b) there is no threatened criminal act likely to result in death or bodily harm, c) the attorney's services have not been used in the commission of the fraud, and d) disclosure is not necessary for the attorney's self-defense. 2. Information of the potential fraud communicated by client to the attorney does not create a conflict of interest within the meaning of SCR 157 to require that attorney withdraw his representation from the client or terminate his employment by the insurance company provided that: a) the attorney believes his representation of client will not be adversely affected and b) the client consents to continuing representation. Nor does the communication suggest the attorney should consider withdrawal under SCR 166 because a) continuing representation does not violate the Nevada Rules of Professional Conduct or other law, b) the client has not used the attorney's services to perpetrate the fraud and c) the fraud does not involve continuing use of the attorney's services. 3. Client's communication of potential fraud in obtaining vehicle insurance does not create a conflict of interest under SCR 158 to require the attorney decline compensation from the insurance company provided a) the client consents after consultation, b) there is no interference with the attorney's independence of professional judgment or the client-lawyer relationship and c) information relating to representation of the client is protected as required by SCR 156. From the discussion: Whether the client actually committed fraud is a question of law beyond the scope or jurisdiction of this Committee. It is suggested the attorney advise client that fraud may have been committed, and if discovered independently by the insurance company, this may be grounds for denial of coverage and possible criminal prosecution. Accordingly, client should be advised of his right to consult with other counsel as to these matters. First, the client's fraudulent conduct in obtaining vehicle insurance for his brother occurred before attorney's representation and not in the course of representation. Discovery of the fraudulent conduct was "incidental" to the attorney's representation. The attorney's conduct was not "instrumental" in the commission of the fraud. Secondly, the fraud has already occurred and cannot be prevented by the attorney's disclosure. Amended in 2007 NOTE: The Nevada Supreme Court has expressly held that when an insurer retains a lawyer to represent an insured, the lawyer represents both the insured and the insurer. Nevada Yellow Cab Corp. v. Eighth Judicial District Court, 123 Nev. Adv. Op. No. 6 (March 8, 2007). Although the insured remains the lawyers primary client, the retention also establishes an attorney-client relationship between the lawyer and the insurer, absent a conflict of interest. Id. While statements to the contrary in this opinion are thereby superseded, the Courts holding does not otherwise overrule or alter this opinion or its conclusions. Compare Arkansas law First American Carriers, Inc. v. Kroger Co., 302 Ark. 86, 787 S.W.2d 669 (1990). Attorney is attorney for insured, not insurer. Dr. Dan Detroit is a chiropractor in Little Rock. In order to increase his business, Dr. Detroit hires Roger Rabbit and his wife, Jessica Rabbit to find new patients for him. Roger and Jessica go to the police station and gather police reports. They then contact the injured partiesboth by telephone and in personand encourage them to see Dr. Detroit. Sometimes Roger will make statements that are strictly speakingnot true. Roger Rabbit frequently poses as a former patient of Dr. Detroit, although he has never in fact had any chiropractic treatment whatsoever. He has also made promises of success that may or may not have any basis at all in fact. Jessica, on the other hand, has not engaged in any false or misleading statements. Dr. Detroit treats the accident victims and bills their automobile insurance company. Amazingly, the average course of treatment costs just under $5,000.00. Then the patient is released as healed. Note that Arkansas chiropractors are twice as efficient as chiropractors in Florida, where the minimum limits on med-pay are $10,000. Insurers become suspicious of Dr. Detroit and stop paying his bills. At first, he begins contacting insurers and negotiating settlements of his patients injury cases. His patients agree to sign releases in order to get the matter resolved. Some of them even get money left over after the chiropractic bills have been paid. He charges no fee for this service, but he does make sure that his bill gets paid out of the proceeds. Some insurers, however, refuse to deal with him. He contacts you about a claim against those insurers: Can you represent Dr. Detroit in private suits against the insurance companies? Can you represent his patients that he brings to you? Can you, while youre at it, represent those patients in personal injury actions against tortfeasors? Is there any difference in how you may treat cases involving persons solicited by Roger and those solicited by Jessica? The chiropractor himself does not have a cause of action against the insurer in his own name. Elsner v. Farmers Ins. Group, Inc., 220 S.W. 3d 633 (2005). The chiropractor has engaged in solicitation that would be a violation of the code of professional conduct if you did it. But does it violate chiropractors ethics? Culpepper v. Arkansas Board of Chiropractic Examiners 343 Ark. 467, 36 S.W.3d 335 (2001) Unethical adjustors The adversary nature of the relationship between an insured and the insurer makes it difficult to deal with unethical practices unless youre prepared to file suit. Unfair Claims Practices Unfair claims settlement practices means committing or performing with such frequency as to indicate a general business practice any of the following: [the list is in the handbook] An important thing to remember about the statutory grounds is that a single violation will not ordinarily serve to be an unfair practice. The statute requires committing or performing the unfair practice with such frequency as to indicate a general business practice. Penalty and Attorneys fees Bad faith
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