Start out right: identify your client or clients.

• Position: Part 2 - Manual for lawyers representing insured defendants

Identify Your Client or Clients

Whom does an insurance defense lawyer represent? In the simplest case, where there is but one policyholder and one insurer, the possibilities are three: only the policyholder, only the insurance carrier, or both the policyholder and the carrier as co-clients. Unless coverage is disputed and the coverage dispute is of a particular kind, all three options are both available and ethically proper. On being asked to handle a new file, a defense lawyer should discuss the options with the insurance carrier's claims professional in charge and reach a decision concerning the number of clients.

Most jurisdictions have adopted the view that a defense lawyer ordinarily has two clients. A smaller but growing number hold that the policyholder is the only client and that the carrier holds the status of a non-client contractor.

Courts that follow the majority rule that defense counsel has two clients include but are not limited to:

* Mitchum v. Hudgens, 533 So.2d 194, 198 (Ala. 1988) ("the attorney represents the insured as well as the insurance company");

* Home Indemnity Co. v. Lane, Powell, Moss and Miller, 43 F.3d 1322, 133031 (9th Cir. 1995) (applying Alaska law) (lawyer represents both insured and insurer if there is no reservation of rights and no actual conflict);

* Parsons v. Continental National American Group, 550 P.2d 94, 98 (Ariz. 1976) ("lawyer represents both the insurer and the insured," quoting Arizona Ethics Opinion No. 282); but see Paradigm Insurance Co. v. Langerman Law Offices P.A., 24 P.3d 593, 597, 602 (Ariz. 2001), vacating 2 P.3d 663 (Ariz.App. 1999) ("lawyer's primary obligation is to the insured" and "when an insurer assigns an attorney to represent an insured, the lawyer has a duty to the insurer arising from the understanding that the lawyer's services are ordinarily intended to benefit both the insurer and insured when their interests coincide. This duty exists even if the insurer is a non-client.").

* Gulf Insurance Co. v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone, 93 Cal.Rptr.2d 534, 543 (Cal.App. 2000), rev. denied, May 17, 2000 (Cal.) ("Counsel retained by an insurer to defend its insured h as an attorney-client relationship with the... insurer."); Bogard v. Employers Casualty Co., 210 Cal.Rptr. 578, 582 (Cal.App. 1985) (the "attorney hired by the insurance company to defend in an action against the insured owes fiduciary duties to two clients: the insurer and the insured"); American Mutual Liability Insurance Co. v. Superior Court for Sacramento County, 113 Cal.Rptr. 561,571 (Cal.App. 1974) ("the attorney has two clients");

* Novella v. Hartford Accident and Indemnity Co., 316 A.2d 394, 405 (Conn. 1972) (defense counsel "was the attorney for both"), but see Higgins v. Karp, 687 A.2d 539, 543 (Conn. 1997) ("[E]ven when an attorney is compensated or expects to be compensated by a liability insurer, his or her duty of loyalty and representation nonetheless remains exclusively with the insured.");

* Boston Old Colony Insurance Co. v. Gutierrez, 325 So.2d 416, 417 (Fla.App. 1976) (both insured and insurer were clients);

* Waste Management Inc. v. International Surplus Lines Insurance Co., 579 N.E.2d 322, 329 (Ill. 1991), aff'g in part, rev'g in part and remanding 560 N.E.2d 1093 (Ill.App. 1990) (when insurer retains attorney to represent insured, attorney represents both insured and insurer in furthering interest the interests of each) (citing Rogers v. Robson, Masters, Ryan, Brumun, infra); Cincinnati Insurance Co. v. Wills, 717 N.E.2d 151, 161 (Ind. 1999) ("We think it unrealistic to ignore the client relationship with both [insured and insurer where their interests are aligned]."); Rogers v. Robson, Masters, Ryan, Brumun, 392 N.E.2d 1365, 1370 (Ill.App. 1979) (the "attorney represents both the insured as well as the insurance company");

* Henke v. Iowa Home Mutual Casualty Co., 87 N.W.2d 920, 925 (Iowa 1958) (both insured and insurer are clients, citing Klefbeck v. Dous, 19 N.E.2d 308, 312 (Mass. 1939));

* Hodges v. Southern Farm Bureau Casualty Insurance Co., 433 So.2d 125, 132 (La. 1982) (both insured and insurer are clients); Brasseaux v. Girouard, 214 So.2d 401, 410 (La.App. 1968) (same);

* McCourt Co. Inc. v. FPC Properties Inc., 434 N.E.2d 1234, 1235 (Mass. 1982) (retained defense law firm "is attorney for the insured as well as the insurer");

* Central Cab Co. v. Clarke, 270 A.2d 662, 666 (Md. 1970) ("[c]ounsel... represents the insured as well as the insurance carrier");

* Hartford Accident & Indemnity Co. v. Foster, 528 So.2d 255, 270 (Miss. 1988) ("insured and the carrier are both clients");

* In re Allstate Insurance Co., 722 S.W.2d 947, 952 (Mo. 1987) (defense counsel represents both);

* State ex rel. U.S. Fidelity & Guaranty Co. v. Montana Second Judicial District Court, 783 P.2d 911,913 (Mont. 1989) ("[i]t is well established that the attorney hired by the insurer to represent its insured, actually is representing both the insurer and the insured"), Baker v. CNA Insurance Co., 123 F.R.D. 322, 326 (D. Mont. 1988) (applying Montana law) (same); Jessen v. O'Daniel, 210 F.Supp. 317, 331-32 (D. Mont. 1962) ("insurer... employs the attorney to represent the interests of both the insured and the insurer"); but see In Re Rules...