TO: Commission on Evaluation of the Rules of Professional Conduct
FROM: William T. Barker
on behalf of American Insurance Association
RE: Model Rule 1.8(f) DATE: June 30, 2000
At last year’s Annual Meeting, I presented comments urging the Commission to follow the Restatement by codifying and generalizing the procedure approved by ABA Standing Committee on Ethics and Professional Responsibility regarding third-party payment and direction in cases where there is no conflict of interest. (Rule 1.7 would govern in cases where there is a conflict, and it is not affected by the proposal.) This procedure would be applicable primarily in insurance representations, but might apply in other cases where the third-party is obliged to indemnify the client. It would allow the lawyer to inform the client in writing of the third-party’s contemplated role and then to proceed on the basis described if the client acquiesced after being so advised.
Because Rule 1.7 would be unaffected, this proposal would not allow the lawyer to accept any direction which the lawyer knew to pose a substantial adverse effect on the client who had acquiesced to such direction generally. The lawyer would remain obligated by Rule 1.2 to keep the client fully informed with respect to all matters affecting the client’s known interests. So any client who cares or has reason to care about the direction should be informed and have the opportunity to object to that direction. As a practical matter, this means that the procedure described would be operative only as to those representations or parts of representations about which the client neither cares nor, so far as the lawyer knows, has reason to care. For reasons described in our submission last year, we believe that many insurance representations fall in this category and that the Commission’s Public Comment Draft would create practical problems in such representations.
We now supplement our prior submission by attaching a copy of the June 2, 2000 Report of the Insurance Practices Special Study Committee of the Florida Bar. The Committee unanimously recommended that the Bar propose to the Florida Supreme Court an amendment to the Florida version of Rule 1.8 requiring that insured clients receive a written Statement of Client’s Rights, appearing at page 17 of the Report. The Florida Bar Board of Governors has now approved that recommendation. This Statement would be one way to provide the sort of written advice that our proposal contemplates. Of course, providing a form Statement would not excuse the lawyer from advising the client of other matters, if the lawyer believed that those matters were likely to be important to the client.