99 N.J.L.J. 1074
December 2, 1976
Conflict of Interest
Representing Plaintiff and His Insurer
An attorney asks whether he may, with the informed consent of
the parties, represent an insured plaintiff in a tort action and
also plaintiff's insurance carrier. The carrier has paid
plaintiff's medical expenses, and is subrogated under the policy to
plaintiff's rights to the recovery of such expenses to the extent
of the payment. The inquirer recognizes the existence of a
potential conflict in the area of prospective settlement
negotiations and related decisions as to whether or not to proceed
with trial in light thereof. He has advised the carrier of a
proposed course of action to protect the plaintiff at the carrier's
risk in the event that such conflict arises, and the carrier has
agreed to the proposed course of action and given its consent.
Similarly, we assume the consent of the plaintiff to the dual
representation and that the conditions of DR 5-105(C) have been
met. Otherwise the inquiry would be meaningless, and our decision
would, of course, be that the dual representation would be
DR 5-105 does not forbid all employment involving conflicts and in fact permits it when it comes within the purview of DR 5-105(C). That applies where the attorney believes he can adequately represent the interests of each party and "each consents to the representation after full disclosure of the facts and of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each". The American Bar Association, Committee on Ethics and Professional Responsibility, Formal Opinion 282, interpreting Canon 6 of the Canons of Professional Ethics (predecessor to DR 5-105), specifically recognized that such consent was available in situations involving conflicts relating to subrogor and subrogee. Further, the ethical considerations adopted by the American Bar Association and relating to DR 5-105 take specific note of potential conflict situations in the case of insureds and insurers, and recognize that representation after informed consent may be undertaken in such cases where all the conditions of DR 5-105(C) are met. See EC 5-17.
It seems to us that in this case dual representation with informed consent is permissible. We presume, under the facts as stated, that the plaintiff is a competent adult, acting in his own self-interest, and the corporate carrier is certainly presumed to be similarly competent to make its own decisions based on considerations of self-interests. This self-interest would, naturally, include a desire to avoid payment of two sets of legal fees from one potential fund under circumstances where, on the merits of the issues in suit, the interests of both parties are identical.
Under these circumstances, it appears that the parties may consent to the dual representation in question under such conditions as may be agreed to regarding future anticipated situations relating to conflict and, upon such consent, the representation in question is proper, provided that all the other conditions of DR 5-105(C), referred to above, are met.