NUMBER 377 1948
Question. A, an attorney practicing in New York, is a licensed insurance broker in the State of New York. As such broker he placed liability insurance with the X insurance company for the blank realty corporation. The realty corporation is represented by C & D as attorneys, and by A as insurance broker, all legal work being done by C & D. A has been retained as counsel to institute an action against the realty corporation for injuries sustained by a client in the premises owned by the realty corporation. The attorneys for the X insurance company have appeared in the action on behalf of the realty corporation.
May A represent the client in an action against the realty corporation, or is there a conflict of interest which prevents his employment?
Answer. The danger of conflict of interests between the injured person and the realty corporation has not been eliminated by the fact that a liability policy has been issued by the insurance company. Questions may well arise whether the policy in fact covers the liability asserted or whether damages exceed the limitation of the policy. Moreover, the placing of insurance by a broker frequently involves receipt of confidential information from the assured and an attorney who receives such confidence would be bound to respect it. The mere existence of a possibility of conflict or the reposing of confidence, however, is not conclusive. By the express provision of Canon 6, an attorney may represent conflicting interests “by express consent of all concerned given after a full disclosure of the facts.”
In the opinion of the Committee, therefore, A may represent the injured person in the action mentioned if and only if he makes a full disclosure of his adverse interests both to the injured person and to the realty corporation, and they both consent to his instituting suit on behalf of the injured person. The foregoing conclusion is based upon the Committee’s view that where in respect of a particular set of circumstances, an attorney acts qua broker as well as qua attorney, his conduct qua broker must conform to the high standards of professional conduct imposed by our Canons of Professional Ethics.
The Committee assumes that the attorney here acted in the usual brokerage capacity in writing the liability insurance and not as the agent of the insurance company and that accordingly, he has no fiduciary duty to the latter.