2008-2.

• Case Date: September 11, 2008
• Court: Alaska

Alaska Ethics Opinion 2008. 2008-2. ALASKA BAR ASSOCIATIONETHICS OPINION NO. 2008-2Where A Lawyer Represents An Insured Party Whose Claim Is Subrogated To A Third Party Insurer, Does The Insurer Become A "Client" Of The Insured's Lawyer Under Alaska's Rules Of Professional Conduct?Conclusion The subrogated insurer's right to receive proceeds from the insured plaintiff's recovery in a lawsuit does not make the insurer a "client" of the lawyer under the ethics rules. Background It is not uncommon for a lawyer to represent a plaintiff who has been injured by a third party, but has had some portion of his or her losses (such as medical expenses) paid by their own insurer. In such cases, the insurer may be entitled under the insurance policy, or by law, to "subrogation" of the claim, that is, the right to either (1) step into the plaintiff's shoes to sue the third party defendant directly as a means of recovering of its own payments to plaintiff or (2) let plaintiff bring suit against the third party and receive repayment from the proceeds of any recovery by plaintiff. The Alaska Supreme Court has recognized the right of the insurance company to take either course, at its option. In Ruggles v. Grow, 984 P.2d 509 (Alaska 1999), the Court stated:

When an insurer pays expenses on behalf of an insured it is subrogated to the insured's claim. The insurer effectively receives an assignment of its expenditure by operation of law and contract. If the insurer does not object, the insured may include the subrogated claim in its claim against a third-party tortfeasor. Any proceeds recovered must be paid to the insurer, less pro rata costs and fees incurred by the insured in prosecuting and collecting the claim. But the subrogated claim belongs to the insurer. The insurer may pursue a direct action against the tortfeasor, discount and settle its claim, or determine that the claim should not be pursued.

Id. At 512 (emphasis added).

The question presented here is whether an attorney pursuing an insurer's subrogated claim at the request of the insured may also be said to "represent" the insurer for purposes of the Alaska Rules of Professional Conduct, at least in the absence of an express disclaimer of such representation by the insurer itself.(fn1) The question is significant. For example, if the insurer were automatically deemed a "client" in this...