1 ABA Formal Opinion 87-355 (1987) permits lawyers participating in for-profit prepaid
legal service plans if the plan inter alia allows the lawyer to exercise independent professional
Inquiry is made concerning the propriety of accepting employment by an insurer
on behalf of an insured with conditions limiting or directing the scope and extent
of pre-trial discovery.
It is well settled that when an insurer retains an attorney to represent an insured the insured is the
attorney's client. The relationship between the insured-client and the attorney should be direct.
The attorney should devote his complete loyalty to the insured-client and not allow the insurer, or
anyone else, to regulate, direct, control or interfere with his professional judgment. See
Tennessee Formal Ethics Opinions 85-F-100 and 83-F-52; and ABA Informal Opinions 728
(1963), 822 (1965) and 783 (1965). See also ABA Formal Opinion 87-355 (1987).1
The standards of professional conduct expected of lawyers are expressed in general terms in the
Canons of the Code of Professional Responsibility. Canon 5 of the Code states that a lawyer
should exercise independent professional judgment on behalf of a client. This is a basic and
elementary element of the client-attorney relationship. The aspirational objectives toward which
lawyers should strive are stated in the Ethical Considerations of the Code. These provide a body
of principles upon which lawyers may rely for guidance. The Ethical Considerations material to
the issue addressed in this opinion are as follows:
EC 5-1. The professional judgment of a lawyer should be
exercised---solely for the benefit of his client and free of
compromising influences and loyalties. Neither his personal
interests, the interests of other clients, nor the desires of third
persons should be permitted to dilute his loyalty to his client.
EC 5-21. The obligation of a lawyer to exercise professional
judgment solely on behalf of his client requires that he disregard
the desires of others that might impair his free judgment. The
desires of a third person will seldom adversely affect a lawyer
unless that person is in a position to exert strong economic,
political or social pressures upon the lawyer. These influences are
often subtle, and a lawyer must be alert to their existence ---
88-F-113 Page 2
EC 5-22. Economic, political, or social pressures by third persons
are less likely to impinge upon the independent judgment of a
lawyer in a matter in which he is compensated directly by his client
and his professional work is exclusively with his client. On the
other hand, if a lawyer is compensated from a source other than his
client, he may feel a sense of responsibility to someone other than
EC 5-23. 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. ---
an employer may seek, consciously or unconsciously, to further its
own economic interests through the action 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
The aspirational objectives of the Ethical Considerations cited hereinabove become mandatory in
character in Disciplinary Rule 5-107(B) of the Code, to-wit:
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.
In addition, Disciplinary Rules 5-105(A) and (B) of the Code prohibit employment by a lawyer in
instances wherein the exercise of his independent professional judgment in behalf of a client will
be adversely affected or if it is likely to involve the lawyer in representing differing interests.
The term "differing interests" is defined by the Code as:
---every interest that will adversely affect either the judgment or
the loyalty of a lawyer to a client, whether it be a conflicting,
inconsistent, diverse, or other interest.
Tennessee Formal Ethics Opinion 85-F-100 cites certain instances wherein the insured and
insurer may have differing interests. One that is readily apparent and material to the issue herein
is when the insured has been sued in excess of the coverage provided by the insurer. Opinion 85-
F-100 states, in part;
88-F-113 Page 3
In instances wherein an attorney is employed by an insurer to
represent an insured the attorney is in the precarious position of
having a potential, if not actual, conflict of interest. He is bound --
- to represent the client-insured zealously ---.
An attorney may not accept employment by an insurer on behalf of an insured with conditions
limiting or directing the scope and extent off his representation of the insured in any manner,
including pre-trial discovery.
This 2nd day of August , 1988.
Henry H. Hancock
Kitty G. Grubb
Thomas H. Rainey
APPROVED AND ADOPTED BY THE BOARD