The Florida Bar

Ethics Opinion

Opinion 81-5

March 13, 1981
Advisory ethics opinions are not binding.
A lawyer may not ethically accept or continue the representation of either the insured or both the
insurance carrier and the insured under instructions from the insurance carrier that the lawyer is
not to express any opinion as to settlement value of the cases to the insured.

EC 5-14, EC 5-15, EC 5-16, EC 5-17, EC 5-19, EC 5-23, EC 7-5, EC 7-7, EC 7-8,
EC 9-2, DR 2-110(A), DR 4-101, DR 5-105, DR 5-107(B), Canon 9
American Employers Ins. Co. v. Globle Aircraft Specialities, 250 Misc. 1066,
1075, 131 N.Y.S.2d 393, 401 (1954), Motion to withdraw appeal granted, 1
A.D.2d 1008, 154 N.Y.S.2d 835 (1956)
Vice Chairman Livingston stated the opinion of the committee:
A Florida lawyer’s services are regularly engaged by a liability insurance carrier
to defend claims against the carrier’s insureds. The insurance carrier has
instructed that in such cases the lawyer is not to form or express to either the
insurer or the insured any opinion as to settlement value of the case.

The lawyer asks whether he may ethically accept or continue the representation of an
insured under such restraint. The Committee is of the opinion that he cannot.
Under Florida law both the insured and the insurer are real parties in interest in such
matters. As such, their interests may coincide or differ in varying degrees. Typically, the insurer
is contractually obligated to defend its insured as to claims. The insurer may choose to proceed
by employment of counsel for the insured alone, and separate counsel for the insurer, or by
employment of counsel jointly for the insurer and the insured. While the former course of action
(separate counsel) may lend greater clarity to the ethical obligations of counsel, both courses of
action require consideration herein.
If the lawyer is engaged by the insurer to represent only the insured, then the commands
of DR 5-107(B) are applicable. That subsection provides:
A lawyer shall not permit a person who recommends, employs, or pays him to
render legal services for another to direct or regulate his professional judgment in
rendering such legal services.
If the lawyer is engaged by the insurer to represent both the insurer and the insured, DR
5-107(B) continues to be applicable and the provisions of DR 5-105 also come into play. That
rule prohibits acceptance or continuation of multiple representation if the exercise of the
lawyer’s independent professional judgment in behalf of a client “is or is like to be adversely
affected.” Consent of each client will not override this factor of adverse effect unless, in addition,
“it is obvious that he can adequately represent the interest of each.”

In addition, EC 5-17 specifically recognizes the insured and insurer as a recurring
instance of potentially differing interests, and EC 5-23 provides, as to employers of attorneys, in
pertinent part that:
A person or organization that pays or furnishes lawyers to represent others
possesses a potential power to exert strong pressures against the independent
judgment of those lawyers. Some employers may be interested in furthering their
own economic, political, or social goals without regard to the professional
responsibility of the lawyer to his individual client. Others may be far more
concerned with establishment or extension of legal principles than in the
immediate protection of the rights of the lawyer’s individual client. . . . Similarly,
an employer may seek, consciously or unconsciously, to further its own economic
interests through the actions of the lawyers employed by it. Since a lawyer must
always be free to exercise his professional judgment without regard to the
interests or motives of a third person, the lawyer who is employed by one to
represent another must constantly guard against erosion of his professional
See also EC 5-14, EC 5-15, EC 5-16 and EC 5-19.
The duty of the lawyer to accept or continue representation of an insured only where the
insured may have the full benefit of the lawyer’s independent professional judgment is clear. The
standards and responsibilities of counsel retained by a carrier for such purpose are not waived or
relaxed by virtue of the source of employment. See American Employers Ins. Co. v. Globle
Aircraft Specialties, 250 Misc. 1066, 1075, 131 N.Y.S.2d 393, 401 (1954), Motion to Withdraw
Appeal Granted, 1 A.D.2d 1008, 154 N.Y.S. 2d 835 (1956).
It is equally clear that evaluation of a lawsuit is an integral part of defense representation.
Defense counsel ordinarily possesses expertise in the evaluation of likely outcome as a product
of counsel’s training, experience and greater objectivity. If the lawyer is to represent the
client-insured adequately, then the insured is entitled to the benefit and assistance of the lawyer’s
evaluation and opinion as to likely outcome of the case. The lawyer’s duty under Canon 7 to
represent his client zealously within the bounds of the law entitles the client to a full loaf, not one
with several slices missing.
In this vein, EC 7-5 states that the lawyer furthers the interests of his client by giving his
professional opinion as to what he believes would be the decision of the courts on the matter at
hand, and EC 7-7 specifically identifies whether or not to settle as a decision which is for the
client. EC 7-8 provides as to the role of the lawyer in this decision-making process that:
A lawyer should exert his best efforts to insure that decisions of his client are
made only after the client has been informed of relevant considerations. A lawyer
ought to initiate this decision-making process if the client does not do so. Advice
of a lawyer to his client need not be confined to purely legal considerations. A
lawyer should advise his client of the possible effect of each legal alternative. A
lawyer should bring to bear upon this decision-making process the fullness of his
experience as well as his objective viewpoint. In assisting his client to reach a

proper decision, it is often desirable for a lawyer to point out those factors which
may lead to a decision that is morally just as well as legally permissible. He may
emphasize the possibility of harsh consequences that might result from assertion
of legally permissible positions. In the final analysis, however, the lawyer should
always remember that the decision whether to forego legally available objectives
or methods because of nonlegal factors is ultimately for the client and not for
himself. . . . (Emphasis supplied.)
Whether the subject restraint upon counsel’s services to the insured would constitute a
breach of the insurer’s contractual duty to defend is not a matter upon which this Committee may
express any opinion. Whether the lawyer may ethically undertake or continue representation
under such restraint is. While the insurer may be entitled to waive its own right to evaluation and
advice of counsel, it cannot in the opinion of this Committee relieve a lawyer of the
corresponding duty to the insured as a client. The lawyer cannot fulfill this duty under a “gag
order” as to evaluation of settlement value of the case.
It is the opinion of the Committee that a lawyer confronted with the imposition of such a
restraint on the exercise of his professional judgment should seek to have the employing insurer
relieve him of that restraint. If the insurer does so voluntarily, then the lawyer may proceed with
the representation with due and continuing consideration of the requirements of the Florida Code
of Professional Responsibility referred to above.
If the insurer declines to remove such restraint, then it is the opinion of the Committee
that, pursuant to DR 5-105, the lawyer should decline to accept the employment. If the
representation has already been undertaken and commenced when the restraint is imposed, then
it is the opinion of the Committee that the attorney should decline to continue to represent the
insured subject to the restraint, with full disclosure to the insured of the conditions and
circumstances which require this action.
Whether the attorney may thereafter ethically continue in the representation of either the
insured or insurer, or is required to withdraw from representation of both, requires careful
consideration of the commands of DR 4-101 and related ethical considerations, as well as Canon
9 and EC 9-2. Obviously, contractual provisions, applicable law, and other circumstances must
also be weighed in determining whether the interests of the insured, or insurer, would in fact be
served or disserved by continued representation of either. While full withdrawal may be most
frequently required, there may exist circumstances (albeit, rare) wherein representation of one or
the other, but not both, could ethically continue. This determination cannot be made in the
abstract. It must be made by the individual lawyer based upon his careful assessment of
circumstances presented and of his professional responsibility under those circumstances.
If withdrawal from employment is required pursuant to DR 5-105, then that withdrawal
should be effected in accordance with the commands of DR 2-110(A).