ETHICS OPINION 342-1937

NUMBER 342 1937

Question. An insurance company agrees directly with the parent or guardian of an infant upon the amount of a settlement of the infant’s claim or cause of action. The insurance company then requests a lawyer engaged in independent general practice, who had no part in the negotiations for settlement, to act as attorney for the guardian ad litem of the infant in the preparation of the necessary petition, affidavits, and compromise order to effectuate the settlement, and in securing court approval of the compromise. The insurance company forwards its file in the case to the attorney, who examines the same, interviews the infant and the guardian as to the circumstances of the accident and the nature and extent of the injuries, and also obtains an affidavit from an attending physician not connected with the insurance company as to the injuries sustained by the infant and the permanency thereof. If the attorney is satisfied from this examination of the facts that the settlement is fair and reasonable, he accepts the employment and proceeds to submit the matter to the court.

The parent or guardian is informed of the fact that the attorney has come into the matter at the suggestion of the insurance company and that his fees are to be paid by the insurance company and not out of the proceeds of the settlement. Full disclosure of these facts is made to the court, before whom the guardian, the infant, and the attorney personally appear when application for leave to compromise is submitted. The affidavit of the attorney setting forth these facts includes a statement that in his opinion the settlement is fair and reasonable.

Is it professionally proper for the attorney to accept such employment: if the attorney is retained by the insurance company only in matters of this type and in similar death claims, the settlement of the latter requiring the approval of the Surrogate’s Court; if the attorney also acts as attorney for the insurance company in the making of first mortgage loans?

Answer. The Committee disapproves of the practice, answers both questions in the negative, and calls attention to the fundamental principle that no man can serve two masters.