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Ethical Considerations: Client Confidentiality Must be Preserved with Withdrawing

In March of 2018, the Professional Ethics Committee for the State Bar of Texas issued Ethics Opinion Number 669, which examined client confidentiality when an attorney withdraws from representing the client. Specifically, the Opinion addressed whether a defense attorney who had been retained to represent a defendant by an insurance company could notify the insurance company that the insured client/defendant was not cooperating.

The Short Answer

An attorney may withdraw from representing an insured/defendant under certain circumstances; however, the defense attorney "must protect the insured's confidential information and may not....disclose to the insurance company their reason for the withdrawal."

The Facts

Ethics Opinion Number 669 arose out of a personal injury lawsuit involving a motor vehicle collision. The plaintiff sued the defendant for personal injuries sustained in the motor vehicle accident, and the defendant's insurance company hired a defense lawyer to represent the defendant in the lawsuit.

Although the defendant initially cooperated with his attorney, Defendant eventually became unresponsive and stopped communicating with his lawyer. Despite numerous attempts by the defense lawyer to contact the defendant, the lawyer received no response.

The defense lawyer even had his private investigator contact the defendant directly to notify him that the lawyer would file a Motion to Withdraw if the defendant did not cooperate. The defendant never responded, so the defense lawyer planned to withdraw under Rule 10 of the Texas Rules of Civil Procedure; however, the lawyer was concerned about what he may disclose to the defendant's insurance company regarding his reasons for withdrawing.

Analysis

The Ethics Committee began its analysis with an explanation that an attorney who has been retained by an insurance company to represent an insured has an attorney-client relationship with the insured. Thus, the Texas Disciplinary Rules of Professional Conduct govern the relationship between the attorney and the insured.

Under Texas Disciplinary Rule 1.15 (b), an attorney may withdraw from representing a client under the following relevant circumstances:

(5) The client fails substantially to fulfill an obligation to the lawyer regarding the lawyer's services... and has given reasonable warning that the lawyer will withdraw unless the obligation is fulfilled;

(6) The representation...has been rendered unreasonably difficult by the client; or

(7) Other good cause for withdraw exists.

The Committee determined (1) that the insured defendant's communication failures amounted to a failure to "substantially fulfill" his obligation to the lawyer, (2) that the insured defendant had been given a reasonable warning that the attorney would withdraw, and (3) that the insured defendant's lack of communication had rendered the lawyer's representation of the insured defendant "unreasonably difficult."

Although the Ethic Committee determined that the lawyer had grounds for withdrawing from representing the insured defendant, it also determined that the lawyer must continue to preserve the insured defendant's "confidential information," both privileged information and unprivileged client information.

The Committee determined that under Rule 1.05(a), that unprivileged client information was "all information related to a client or furnished by the client, other than privileged information, acquired by the lawyer during the course of or by reason of the representation of the client."

The Committee determined that the defendant's failure to communicate with the lawyer qualified as "unprivileged client information." Therefore, the Committee concluded that the lawyer was not allowed to "knowingly reveal a client's confidential information to third-persons the client has not instructed to receive the information and shall not use a client's confidential client information to the disadvantage of the client unless the client consents after consultation."

The Committee also discussed potential disadvantages that would result to the insured client if the lawyer communicated the defendant's lack of communication as the reason for the withdraw to the insurance company. For example, if the insured failed to communicate, under the Insurance Agreement, the insurance company could result in the insured defendant losing his insurance coverage.

Conclusion and Take-Away

Although a defense attorney is obligated to keep the insurer informed of the status of any claims or litigation, a defense attorney has a duty to protect the client. This includes protecting the client's confidential information and taking no action that could injure or disadvantage the client. If an insured client refuses to communicate or cooperate with the attorney, and a withdrawal becomes necessary, the attorney should communicate to the insured defendant that the attorney will withdraw if the insured defendant fails to cooperate or communicate. If the insured defendant does not begin cooperating, then the lawyer should notify the insured defendant and the insurance company that the attorney will withdraw.However, the attorney should NOT disclose the reasons for the withdrawal to the insurance company without the insured defendant's express permission. He should simply notify the insurance company that a Motion to Withdraw is necessary.

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