ETHICS OPINION 183-1921

ETHICS OPINION 183

NUMBER 183 1921

Question. A defendant covered by insurance injures an infant plaintiff through the negligent operation of his automobile. The insurance company adjustors immediately make overtures to the infant’s parents for settlement, and an amount is agreed upon satisfactory to the parents and the company. Thereupon, the insurance company procures an attorney, not connected with its legal staff but on friendly terms with it, to prepare a petition and order appointing one of the infant’s parents guardian ad litem for the proposed infant plaintiff. This, the outside attorney takes or sends to the parents of the injured infant for execution. The petition is presented and upon motion of the outside lawyer as attorney for the petitioner, an order appointing the parent guardian ad litem is entered. Next, by arrangement, the attorney for the guardian ad litem delivers a summons to the regular attorney for the insurance company, who defends the action on behalf of the assured, and this attorney gives a notice of appearance in the action. As soon as the summons and notice of appearance are filed in court and the action is at issue, the outside attorney for the guardian ad litem prepares a petition for leave to compromise the action for the amount of the agreed settlement. An order granting leave to the guardian ad litem is then entered authorizing the guardian ad litem to receive the amount of the settlement upon his executing a bond in the required sum. The fee for this bond is paid by the insurance company. After the money is paid over, and a general release taken from the guardian ad litem the action is discontinued.

In the opinion of your Committee, is such conduct on the part of the outside attorney, whose fee is paid by the insurance company, proper?

Answer. It does not affirmatively appear by the question that the “outside attorney” makes full disclosure to the Court of his connection with the insurance company. Assuming that there is no such disclosure, the Committee is of opinion that the conduct on the part of the “outside attorney” is highly improper and unprofessional, because in appearing as attorney of record for the plaintiff he represents to the Court that he owes an undivided duty to the infant, whereas in fact he is employed, and is to be paid, by a company whose interest is adverse to that of the infant. (See Matter of Reifschneider, 60 App. Div., 478, Second Department.)

And even if the “outside attorney” does make full disclosure to the Court, still in the opinion of the Committee the practice is not to be commended. The interests of the infant should be represented by independent counsel not biased by such method of employment whose representation of the infant before the Court should be based upon his independent and unbiased judgment. (See Opinions 25 and 171.)

addendum to 183 january 27, 1921

Since the publication of this Answer, the attention of the Committee has been called to local rules in certain jurisdictions, guarding more or less completely against the dangers apprehended by the Committee in framing its answer, The Committee would not be understood to reprehend the attorney for following the practice where the rules of the Court having jurisdiction require full disclosure of the attorney’s part, if any, in negotiating the settlement, of his connection with the party at whose instance the compromise is proposed, and of the fact that he is to be paid by such party, and also provide for the protection of the infant’s interests by the Court itself, or by an independent guardian ad litem, or by means of a referee, or by any other means that will insure the adequate and impartial protection of the infant’s interests.

whether against the defendant, or against the parent whose claim for loss of service may be concurrently in course of settlement.