Case Date:January 19, 1990
Alaska Ethics Opinion 1990. 90-2. Ethics Opinion No. 90-2 Ethical Obligations of the Attorney Hired by an Insurance Company to Defend Its Insured to the Insured when Company Directs an Offer of Judgment.Question Presented What are the ethical obligations of an attorney retained by an insurance company to represent its insured when the insurance company directs him to make an offer of judgment? When an attorney is hired by an insurance company to represent the insured, the attorney initially meets his ethical obligations by keeping the insured apprised with regard to his activity in the case. Such appraisal should give sufficient notice to the insured so that the insured has reasonable opportunity to inform the attorney of any objection. If the insured makes no objection the attorney can assume tacit consent. However, if the insured instructs the attorney to not make an offer of judgment, the attorney is ethically obligated to honor those instructions. Agreed Statement of Facts Attorney was hired by insurance company to represent its insured in a slip and fall case. The contract of insurance provided that the insurance company would control the insured's defense. At the direction of the insurance company, attorney made an offer of judgment. Attorney did not obtain the consent of the insured before making the offer. Discussion ABA Formal Opinion No. 282, decided in May of 1950 discussed the relationship among the insurance company the insured and the attorney hired by the insurance company to represent the insured. The opinion stated in pertinent part: Whenever the insured is served with the court process as a defendant, the contract of insurance expressly requires him to forward such process to the company so that the company may provide the means of defense. It is elemental that this includes retaining and compensating a lawyer at the company's expense. Under certain circumstances a person may, by contract, clothe another with power to retain a lawyer to conduct a defense. Especially may this be done when, as here, the power is coupled with an interest resulting from covenants of insurance. The essential point of ethics is that the lawyers so employed shall represent the insured as his client with undivided fidelity. . . . There is express consent by the insured in...

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