Do Not Forget Client Consent
Wednesday, November 15, 2017
by: Christopher Howard

Section: Fall 2017

Author Biography

Christopher Howard is a Shareholder at Schwabe, Williamson & Wyatt and serves on the WDTL Pro Bono Committee. He focuses his practice on commercial litigation, the Food and Beverages and Hospitality Industries, and the defense of professionals in the medical, legal, financial, hospitality and real estate industries. He has extensive trial and appellate experience in state, federal and administrative law courts.
All insurance defense attorneys representing an insured hopefully know who the client is. Historically, there may have been some confusion, but when you are retained to represent an insured, the engagement should be clear that the client is the insured. Washington’s Tank v. State Farm standard, which clarifies insurance defense lawyer loyalties, is revisited in the recent Arden v. Forsberg case. Because Arden will be thoroughly addressed in a future Defense News, this article considers an occasionally overlooked requirement: the insured consent to representation under RPC 1.8(f). This issue has been illuminated recently by Washington courts.

Under 1.8 (f), a lawyer shall not accept compensation for representing a client from anyone other than the client, including the client’s insurer, unless (1) the client gives informed consent and (2) there is no interference with the lawyer’s independence of professional judgment or with the attorney-client relationship. The rule further requires that information related to the represented person be protected as required by RPC 1.6 (confidentiality). The confidentiality issue should not be taken for granted and it should also should be communicated to the client. Confidentiality can be a major source for misunderstanding when a lawyer is hired to represent another family member.  In such an instance, it is prudent to address this issue up front with both the payor and the client. Although, the rule does not require written consent for disclosure of confidential information, memorialization in writing is the safest practice.

[W]here the insurer has a contractual duty to defend a party, it necessarily has implicit authority to authorize defense counsel to represent its insured, even in the absence of the insured’s express authority.

Although the consent required by RPC 1.8(f) also does not have to be in writing, it does have to be obtained. Under Comment [7] to RPC 1.0A, consent can only be inferred by behavior when there is a basis for drawing such an inference and the client has reasonably adequate information about the matter. A lawyer relying upon an assumption of consent, or who relies upon another to obtain that consent, does so at his or her own peril. Comment [6] to RPC 1.0A (“a lawyer who does not personally inform the client or other person assumes the risk that the client or other person is inadequately informed and the consent is invalid”).

Comment [6] to RPC 1.0A provides that the amount and content of the communication surrounding this consent to representation ordinarily includes a disclosure of the facts and circumstances giving rise to the situation, and an explanation sufficient to inform the client of the material advantages and disadvantages of the proposed course of conduct. Once again, although this specific consent is not required to be in writing, recall that a typical engagement in insurance defense context is a limited engagement and does not include representation such as coverage advice adverse to the carrier retaining the lawyer. Limiting scope is an appropriate step for an insurance defense engagement, as set forth in RPC 1.2(c), and, once again, should be confirmed in writing for your own safety. Certainly any insurance carrier representing lawyers will stress the importance of clear documentation of limited scope when defending malpractice actions.

This brings us to the times when an attorney is asked to represent a client who cannot be found, such as a defunct company or simply a missing client. Insurance carriers have policies that might still be in effect for such corporations and for defendants that have been served by publication or by other special means such as service on the secretary of state or the insurance commissioner. Consent may not be possible before the client’s interests are harmed. This non-existent or missing client may be at risk of default or other adverse action. Can the lawyer take action without consent? At least part of this question has now been addressed in Washington.

The procedural facts underlying Kruger-Willis v. Hoffenburg, 198 Wn. App. 408 (2017) are complex. The matter went up on appeal three times, including twice over whether the law firm hired by the insurer was authorized to represent the absent client. In this case, the defense lawyer successfully defended the absent client in a motor vehicle accident case. They did so well, they obtained an award for fees and costs (under RCW 4.84.250) along with the defense verdict.  The first appeal was on the fee award, which was upheld at 173 Wn. App. 1024, 2013 WL 663710 (2013) (“Kruger-Willis I”). On the first remand, when the defense lawyer asked to have the check made payable to the carrier, plaintiff’s counsel balked. During this process, plaintiff’s counsel learned, apparently for the first time, that defense counsel had no contact with the client, the defendant.

When the defense in Kruger-Willis filed a motion to enforce the award, plaintiff moved to have defense counsel prove authority to represent the client. The trial court denied that motion, but that was appealed and the Court of Appeals reversed and remanded that order requiring a hearing on counsel’s authority to appear. 187 Wn. App. 1010, 2015 WL 1866089 (2015) ‎(“Kruger-Willis II”)‎. On remand, the trial court held a hearing and found authority to retain the lawyer existed under the omnibus clause of the client’s insurance policy. This was upheld in Kruger-Willis III, the reported opinion, where the court held that RPC 1.8(f) does not always require express authorization from the client. An attorney’s representation may be authorized “by law” to represent a client. In addition, where the insurer has a contractual duty to defend a party, it necessarily has implicit authority to authorize defense counsel to represent its insured, even in the absence of the insured’s express authority.

Kruger-Willis provides guidance when a client cannot be located.  But it does not absolve a lawyer from the need to seek and obtain a client’s informed consent for representation in the vast majority of occasions when the client can be located. Where appropriate, informed consent might include explanation that a client can reject the insurer’s choice of counsel, but that doing so would probably imperil their coverage, similar to how a client has the ultimate right to agree to a settlement, but not cooperating with a carrier’s decision to settle would probably negate coverage. In all cases, remember that although the RPCs may not require written documentation of some of these informed consent decisions, those written confirmations protect you, the lawyer.  So get consent, and document.