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Finley v. Home Insurance Company12/30/1998
by the same high standards which govern all attorneys, and owes the insured the same duty as if he were privately retained by the insured.") (Internal quotation marks and citation omitted.) See also Tripartite Relationship at 294 ("Defense counsel must treat the insured as the client. Recognizing the insured as the attorney's sole client is consistent with recent judicial decisions.") (Footnote omitted.) We therefore reject the Finleys' implied assertion that retained counsel had two clients, HIGA and the Aaron Defendants.
b. To satisfy the requirements of the HRPC, the arrangement between the insurer and retained counsel must assure the attorney's professional independence, and the insurer may not interfere with the attorney's professional judgment.
In addition to comment 10 to HRPC Rule 1.7, the following provisions are relevant to the relationship between the insurer, the insured, and the retained attorney:
"[Rule 1.2] (a) A lawyer shall abide by a client's decisions concerning the objectives of representation, subject to paragraphs (c), (d) and (e), and shall consult with the client as to the means by which the objectives are to be pursued. A lawyer shall abide by a client's decision whether to accept an offer of settlement of a matter. (c) A lawyer may limit the objectives of the representation if the client consents after consultation."
"[Rule 1.8(f)] 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 5.4(c)] A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services."
We believe that an attorney may accept payment for a defense of the insured without compromising his or her duty of loyalty to the client. Having determined that the sole client of the attorney is the insured, an attorney who follows the above-cited requirements of the HRPC must: (1) consult with the client as to the "means by which the objectives [of the representation] are to be pursued"; (2) not allow the insurer to interfere with the attorney's "independence of professional judgment or with the client-lawyer relationship"; and (3) not allow the insurer "to direct or regulate the lawyer's professional judgment in rendering such legal services." Only if these requirements are met will the representation of an insured, paid for by an insurer with a conflicting interest in the outcome of the litigation, comport with the mandates of the HRPC.
Some courts lack faith in the ability of retained counsel to place the interests of the insured above the attorney's alleged interest in future employment by the insurer. See, e.g. United States Fidelity & Guar., cited supra. However, we agree with the following passage:
"To hold that the insurer who, under reservation of rights, participates in selection of counsel, automatically breaches its duty of good faith is to indulge in the conclusive presumption that counsel is unable to fully represent its client, the insured, without consciously or unconsciously compromising the insured's interests. The Court is unable to conclude that Michigan law professes so little confidence in the integrity of the bar of this state." Federal Ins. Co. v. X-Rite, Inc., 748 F.Supp. 1223, 1229 (W.D. Mich. 1990).
We require attorneys to foll
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