MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 1990-27
Attorney-client relationships - statutory fee provisions as affecting; Conflicts of Interest
You generally request this Committee define the nature and extent of the professional responsibility of an attorney representing both a claimant and insurer where there exists third party liability pursuant to Article 101, Section 58 of the Maryland Annotated Code. You cite the appellate decision of Keyworth v. Israelson. 240 Md. 289, Metz v. Fireman's Fund, 15 Md. App 179, Hubbard v. Livingston Fire Protection, 289 Md. 581, and most recently Collins v. United Pacific Ins. Co., 553 A.2d. 707, 315 Md. 141 and note these cases uphold the statutory direction that the insurer is to be reimbursed for compensation already paid claimant in the Worker's Compensation case less costs and attorney's fees (on a pro-rata basis) incurred by claimant prosecuting the third party action.
You further state in your inquiry that the above cases hold the claimant's attorney "receives a fee from insurer for protecting the lien" and "the insurer becomes another client of the claimant's attorney." Although this Committee is charged with opining on the application of the Rules of Professional Conduct and not with legal opinions or interpretation of substantive law, this Committee's review of those cases cited simply does not indicate that Article 101, Section 58 or its claimant's attorney/third-party plaintiff's attorney (whether one subject statute does not contemplate the paying of a fee by the insurer, but, rather recognition of attorney's fees in third party recoveries so that the reimbursement to insurer is reduced recoveries so that the reimbursement to insurer is reduced by proportional attorney's fees.
The preamble to the Maryland Rules of Professional Conduct states:
"Whether a client-lawyer relationship exists for any specific purpose can depend on the circumstances and may be a question of fact."
Simply stated, this Committee does not equate an attorney's receiving fees subject to the statutory provisions of Article 101, Section 58 with representation of the insurer.
The attorney representing a Worker's Compensation claimant and the attorney representing the same claimant as (plaintiff in the "third party claim") is well advised to consider the dictates of Rule 1.7 in the event and circumstances that he does also form an attorney client relationship with the insurer.
"Rule 1.7 Conflict of Interest: General Rule
(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:
(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
(c) The consultation required by paragraphs (a) and (b) shall include explanation of the implications of the common representation and any limitations to another, or from the lawyer's own interests, as well as the advantage and risks involved."