Auto insurance companies routinely adjust personal injury cases which involve two of their insureds, the auto owner and the auto driver. For example, an auto owner may be sued for negligent entrustment or supervision of the driver, who also is sued for negligent driving. When a business is the auto owner, the business can be sued for vicarious liability due to the negligence of the employed or hired driver. Regardless of the identities of the two insureds, both need a legal defense to the plaintiff’s case.
Usually, the best strategy for a successful case resolution for both owner and driver is when they are unified in their defense against the plaintiff. “Joint engagements can be attractive. Clients like them because they can reduce cost, simplify the prosecution or defense of a matter, and bind partners, joint venturers, or corporate affiliates closer together. Lawyers like them because they please clients, bring a larger role in a matter, and simplify the prosecution or defense of a matter.” See Bradford S. Babbitt, How to Avoid Attorney-Client Privilege Problems in Joint Representations, Am. Bar Ass’n Practice Points (July 11, 2018), https://tinyurl.com/25wk8cnf. Infighting between defendants draws the court’s focus away from the original dispute between the plaintiff and the defendants. By presenting a united front, the defendants can strategically avoid this litigation pitfall.
Like it or not, because of the accident, the two insureds are joined at the hip. In some ways, the relationship can be likened to a marriage. Joint representation is similar to the common interest doctrine in that: “The interests of the parties need not be identical, and may even be adverse in some respects. It is only when the clients’ interests are completely adverse that the privilege will be denied.” Andritz Sprout-Bauer, Inc. v. Beazer E., Inc., 174 F.R.D. 609, 634 (M.D. Pa. 1997). The two may not like each other all of the time, but in a battle against a common foe, disagreements or differences that can be worked out should be. Unrelated differences not central to the litigation rarely should be an impediment to a unified defense. The specter of the owner and driver actively blaming each other for the accident in open court reinforces this conventional wisdom.
Regardless of the utility of presenting a united defense, ethical considerations must first be considered. The lawyer’s job is to determine whether a conflict of interest exists, then decide whether the joint representation may be undertaken despite the existence of a conflict, and if so, consult with the clients to obtain their informed consent, confirmed in writing.
A concurrent conflict of interest exists if:
(1) The representation of one client will be directly adverse to another client; or
(2) There is significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client.
Model Rules of Pro. Conduct r. 1.7(a) (Am. Bar Ass’n 2020). (Each state’s rule may have different wording or comments.)
Notwithstanding the existence of a concurrent conflict of interest, a lawyer may represent a client if:
- the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;
- the representation is not prohibited by law;
- the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and
- each affected client gives informed consent, confirmed in writing.
Model Rules of Pro. Conduct r. 1.7(b) (Am. Bar Ass’n 2020).
ABA Model Rule 1.7(b) is a conjunctive rule, meaning that all of its components must be satisfied before the lawyer can undertake the representation. If a situation arises impacting even one of the four parts of the rule, representation is not permitted.
Specifically with the joint representation of parties in the same litigation, the most challenging aspect for the lawyer is to determine the likelihood that a difference in interests will materially interfere with the lawyer’s independent professional judgment in considering alternatives or foreclose courses of action that reasonably should be pursued on behalf of one or both clients. See Model Rules of Pro. Conduct r. 1.7 cmt. 23 (Am. Bar Ass’n 2020).
The rule permits the lawyer to seek to resolve disagreements between the parties by developing the parties’ mutual interest in presenting a unified defense. Id. at cmt. 28 (“[A] lawyer may seek to establish or adjust a relationship between clients on an amicable and mutually advantageous basis.”)
Whether an argument could and should be waived in favor of a unified defense requires the lawyer to carefully review the evidence, discuss alternative strategies with each client, and if agreed, waive those arguments in favor of a unified defense.
Sometimes, a unified defense may not be possible. For example, there may be a substantial discrepancy in the parties’ testimony, particularly when the owner was a passenger in the insured auto and became a witness to the accident. If the owner’s auto suffered significant damage, the lawyer may learn that the owner has a different narrative than the driver as to how the accident happened. Id. at cmt. 29 (“Generally, if the relationship between the parties has already assumed antagonism, the possibility that the clients’ interests can be adequately served by common representation is not very good.”) If the clients’ testimonies about the accident are irreconcilable, each will need a separate lawyer.
Similarly, joint representation may not be possible if there is an incompatibility in the positions of the parties in relation to the plaintiff. For example, an injured plaintiff could allege negligent entrustment against the owner and negligent driving against the driver. If the owner’s best argument is that the driver lacked permission to drive, but the driver may lose insurance coverage if found not to be a permissive driver, each party will need a separate lawyer.
Further, co-defendants likely require separate representation when there is a substantially different possibility of settlement of the claims. This can occur when the parties’ personal financial exposure varies widely, such as when the driver only has minimum limits coverage, but the owner has layers of excess coverage. If the driver is facing personal exposure from an excess verdict, it may be best for the driver that the lawyer develops and advocates a theory that the driver was not properly trained or supervised by the owner, to shift the financial impact onto the owner should there be a finding of fault. Unless there was truly some reason it would be advantageous for the driver to refrain from asserting such a theory, each co-defendant would need their lawyer.
Another scenario that may require separate representation is when the driver suffered personal injuries in the accident due in whole or part to a mechanical defect only known to the owner. This might occur when the owner has failed to maintain the auto in a safely operable condition. A joint lawyer would be unable to file a cross-claim for the driver’s damages against the owner, as this would violate ABA Model Rule 1.7(b)(3). Any strategic advantage of presenting a unified front against the plaintiff likely will be outweighed by the driver’s need to recover damages.
A lawyer who proceeds with the joint representation of the auto owner and auto driver but fails to recognize and navigate conflicts of interest between the parties faces a litany of possible, undesirable consequences: required withdrawal from the legal representations, disqualification from the trial court (with possible sanctions), a larger verdict than expected, two upset former clients, a malpractice lawsuit, being called as a witness in a bad faith lawsuit against the insurance company, lost future business from the insurance company, and perhaps a bar complaint.