*1
Justice further stated: only except malpractice attorney client liable for to a An is relationship special an The between circumstances. insured, attorney its the insurer to defend and an hired unquestionably attorney-client, from the less differs while than party-opponent. relationship counsel and a between a defense obligate liability policies the insurer Because provide the insurer the insured with a defense and entitle defense, right duty both a and the insurer has control insured, regard defense to the defense with fiduciary relationship as as with the insured well counsel has a required addition, the insurer is because the insurer. malprac- resulting satisfy judgment from defense counsel’s tice, to sue defense counsel. no real incentive the insured has analysis inadequacy predicating the reveals the This case liability solely malpractice the lack of an on presented relationship: between conflict of interest is No ensuring public policy of and the interests of the insurer insured, loyalty by nature of and the counsel to undiluted presents special relationship cir- counsel the insurer-defense practical of the it from the ambit that remove cumstances third-party liability. imposition general rule Cavanagh, joined by Justices Levin Justice Chief Mallett, stated: further Liability to all fore- not be extended for should duty essentially parties. question involves seeable injured the actor and the between whether obligation part gives any legal person on the actor’s rise to gives injured person. The of the the benefit legal malpractice is the in a case rise to the relationship. an insurer to is hired Where required to exercise insured; independent professional judgment on behalf might significantly separate duty recognition to the insurer of a *3 appro- attorney’s ability to choose the most with the interfere Therefore, attorney’s priate the insured. course of action for duty to the insurer. should not be extended case, support subrogation public policy does not In this by negligent it hired for the insured The cornerstone of an insured. duty To of to the client. is the directly, on the the insurer either liable to hold equitable negligence, indirectly, on the basis of or basis of impair attorney’s ability subrogation, substantially could require the best interests a choice between make decisions interests of the insured. of the insurer and the best negligent party only a direct owes Because those whom action, case, may of in this the cause maintain a cause insured, legal malpractice with the not the for rests action insurer. (1989) 272; part App affirmed in and 181 Mich 448 NW2d part. reversed — Attorney — Insurers Insureds. and Client attorney, an insurer to between an hired The attorney-client. and the insurer is not one defend its Co Bell Ins Brickley, Jr.), (by Dise, Gurewitz, for John H. Dise & P.C. plaintiff. (by Cooney, Jacobs, P. P.C. John Plunkett & Barrett), Oldani, for Patrick M. Christine D. the defendants.
Amici Curiae: Cooper Seward, Becker, Lucow, Miller,
Garan, & Gross), (by G. for Auto Club Insurance P.C. James Company, Association, Castle Insurance Auto Club Group Company, Hoc Commit- and Ad Insurance Accounta- tee of Defense Counsel for Professional bility. Perry, (by Kerr, Kenneth Russell & Weber C. Furioso) Cutlip, Jr., A.
Jr., C. Janice Edward Institute, Inc. for Defense Research (by Lower, Treado, Kallas, Henk & P.C. Constan- Kallas), Michigan for Association Insur- tine N. Companies & American Insurance Associa- ance tion. (by Farrell, L.
Collins, P.C. Noreen Einhom & Slank), Michigan Defense Trial Counsel. for presents issue first J. This case an Brickley,
impression: retained whether defense counsel company to defend its insured can be professional the insurer held answerable Appeals malpractice. de- held that Court insurer for sued fense not be counsel malpractice. analysis agree articu- of the dissent
We with the *4 principles of common-law in that lated section (i)(b) imposition generally require negligence do not liability third-party context. We in the Mich Brickley, something agree with the dissent less also relationship plenary attorney-client exists than a a counsel and an insurer. How- between defense ever, of the Court of we would reverse the decision Appeals in this case the and would hold equitable subrogation permits a mal- doctrine of practice under action defense counsel presented.1 facts opinion three Section i
This contains sections. procedural history of the recites the facts and the inadequacy ii case. Section denying demonstrates liability purely because the for the the insurer and retained counsel between comprises mere insured rather contractual relationship.
than an Sec- equitable subroga- hi outlines the doctrine tion tion and ticularly subrogation par- explains why equitable applies policy under reasons these facts.
i
August
Harvey
31, went
Herbert H.
On
site,
work as a tilesetter at a construction
now
Sterling Heights. At the
Mall
con-
Lakeside
struction
Security
site,
Inc.,
Services,
was
em-
safeguard
premises.
ployed
Harvey
Mr.
As
premises,
passed
departing
he
entered
two
Security
employees,
approximately
and,
Services’
site,
into
120 feet
into the construction
fell
Harvey
inju-
his
20
ries.
20 foot hole. Mr.
died from
X
pause
application
equitable subroga
here to stress that
We
proceed
case-by-case analysis
and must
on the
tion should
tic of
characteris
(On
jurisprudence.
Chrysler Corp
equity
we noted
As
Solo
(1980):
345, 353;
Rehearing), 408 Mich
In the administrator of brought Harvey’s numer- estate an action parties, including plain- Security ous Services. The Company, tiff, Atlanta Insurance International part Security insured Services. As of Atlanta’s obligation, John contractual Bell, Atlanta retained W. Hertler, Hertler, David H. and Bell & P.C. (hereinafter defendants), represent Security Ser- vices in the suit. Defendants answered the com- plaint, comparative negligence failed to raise
but judgment subsequently A en- as a defense.2 was against Security Services, Atlanta, tered which as required Security primary insurer, Services’ was satisfy. alleging suit,
Atlanta then filed this these failing legal malpractice by defendants committed to negligence comparative as a defense. After raise partial discovery, sum- Atlanta filed a motion for mary disposition on the issue whether an relationship Atlanta and client existed between the defendants. Atlanta also filed a motion to original complaint a breach of amend its to add contract claim. The defendants countered with motion for disposition, alleging summary that no At- existed between lanta and the defendants. The circuit court denied Atlanta’s motions and
granted the defendants’ sought summary disposition. motion for reversal Appeals. in the Court of stating: Appeals affirmed, "No The Court deposition Bell’s he stated: defendant your experience attorney since do Based on as an Q. required you you met the standard of care believe failing Metropolitan practicing attorney in Detroit area in comparative negligence prior plead to file a motion to motion May 1984? I not to the A. I would have to admit did conform that I have. standard of care should Mich Brickley, J. in- exists between an representing company surance company’s Rather, . . . insured. the insurance is owed to sole being alone, the client App company.” 272, 274; 448 181 Mich (1989). Appeals also af- The Court of NW2d its motion to amend firmed the denial Atlanta’s complaint.
n general implicated in case rule of law this held liable "an will be dictates negligence only cannot, . to for . . his special circumstances, held of in the absence anyone flatly to This refused to else.”3 Court liable malpractice liability against opposing coun- extend party-opponent Dozorc, in Friedman v sel (1981). 1, 24-25; 312 NW2d held: Friedman adversary in favor of an creation of a [The] unaccept- create an attorney’s
of the client would seriously of interest which would able conflict hamper attorney’s an effectiveness as counsel only adversary’s the interests client. Not would his interests, attorney’s the interfere with client’s being negligence sued for justifiable concern with attorney- detrimentally would interfere with the relationship. client only
Traditional doctrine thus mandates that person special privity in relationship sue for mal- client practice. ity This rule exists ensure the inviolabil- loyalty attorney’s duty client. Allowing third-party liability generally would de- 2d, Law, 232, Attorneys p 274. Jur at § Am Bell Co v Ins Brickley, J. attorney’s duty tract from diligently The es- reservation. and without general purpose mal- rule sential practice liability prevent parties is thus third from derailing un- conflicts from representation swerving duty to the client. relationship the insurer
However, between counsel, less than a while retained defense and the client-attorney relationship, unquestionably differs relationship counsel a defense between The from the party-opponent. be- differs and a policies typically "[liability in- cause obligate provisions the insurer to that both clude provide and entitle with a defense the insured ...[;] the insurer defense to control the regard 'right’ 'duty’ to the and a both a has appro- .”4 . . . It has been of the insured defense priately recognized counsel] occu- "[defense pies fiduciary insured, as well to the implicitly, company . . . [and] the insurance as to if not represents explicitly, insured the to the competence professional ability to exercise conducting Fur- defense.”5 the insured’s skill thermore, company, not the the insurance because *7 arriving satisfy judgment required to is malpractice, the client counsel’s from a defense defense counsel. to sue has no real incentive time, and commentators courts At the same tripartite recognize universally relation- the ship insurer, counsel insured, defense and between possibility interest of conflict.6 The of rife contains the insured frequently Ac- differ. insurer
and the 4 Law, Widiss, p 822. Keeton & Insurance 5 835-836. Id. at 6 356, 263, recogniz Levit, Malpractice, p See, Legal e.g., § & Mallen temptation favor "[tjhere great to ing [the defense counsel] [for business, pays further company] the bills and will send who may personal . . . .” Keeton long-standing exist relations where and 438 512 Mich Brickley, consistently
cordingly, held that the courts have loyalty attorney’s primary duty of lies defense insured, the with the and not insurer. relationship between The entire structure company, the attor- the the insurance ney duty pillars of to rests on the twin of of counsel and conflict the insured defense prevention. The case at bar reveals interest inadequacy malprac- analysis predicating of
of solely liability on lack an tice relationship the insurer and de- between present a The case does not fense counsel. instant of the insurer and conflict the interests between ensuring loyalty by public policy of undiluted to of the insurer- counsel the insured. nature presents spe- defense counsel thus by the dissent cial circumstances alluded general case from the rule removes this imposition liability.7 third-party For these justly efficiently reasons, most the case is subrogation. principle equitable resolved an hired an The issue whether may liable for defend its insured professional malpractice to the insurer cannot be determining adequately whether resolved without to the in- counsel should be held liable defense vindicating public policy ration- surer and without undergirds ale that
in the insurance defense context.8 Widiss, supra employed by an insurer & represent at 829-830: "An an insured be confronted with serious conflict relationship.” very issues almost from the outset of interests 531, 200; Post, Ward, p citing Savings 100 US 25 Ed Bank v L (1879). maintaining public policy vigorous "a Friedman vindicated the outweighs advantages adversary system of find the asserted [which] attorney’s legal opponent.” ing Obviously, of due care an tripartite presents analyt unique insurance context public policy. ically different *8 Co Bell Ins 521 Opinion by Bkickley, To hold that an ex- ists between insurer and defense counsel could yet mischief, indeed work to hold that a mere commercial exists would work obfus- injustice. gap bridged by cation and is best equitable subrogation resort to the doctrine of recovery by Equitable subroga- allow the insurer. tion best vindicates the relation- properly ship and the interests of the imposing the social costs of where they belong. Allowing the insurer to stand in the equita- shoes of the insured under the doctrine of subrogation public policy ble best serves the under- lying attorney-client relationship.
Subrogation, simply defined, involves "the sub- person place stitution of one reference to a lawful claim or in the of another with
right.”9 Subrogation has been described courts as flexible and elastic equitable doctrine, and hence "the mere fact subrogation previ- the doctrine of has not been ously particular invoked in a situation is not a prima applicability.”10 types facie bar to its Two subrogation exist in the insurance context: "con- [subrogation, product agree- ventional the] of an parties legal subrogation,] ment [and (or accurately equi- creation of the law more ty.)”11
Equitable subrogation has been described as a "legal permits party fiction” that one to stand 2d, Subrogation, p 73 Am Jur 598. § 10Id., Thus, p reality applied that no case has the doctrine application partic under dissimilar facts does not bar its under these ular facts. Davis, subrogation, Kimball & The extension of insurance (1962). LMich R 841 *9 Opinion Brickley, J. eminently is The doctrine shoes of another.12
applicable rule case. A under the facts of this attorney- parameters expanding of the law relationship in the defense counsel-insurer attorney’s might from context duty well detract potentially in the client con- setting. completely Yet absolve flict-ridden negligent malpractice from liabil- defense counsel ity rationally not advance would relationship. Moreover, counsel’s defense client immunity place insurer would
from suit on the insurer. misconduct loss for the analysis preclud- only produced by an The ing liability winner malpracticing attorney. be the would application Equity under such circum- cries out for stances.13 is
The defense counsel-insurer
pays,
typically
unique.
hires,
and
The insurer
possibility
defense counsel.
consults with
against
unquestionably
conflict
considering
runs
and the insurer
that defense counsel
collegial,
longstanding,
frequently
if not
have a
relationship.
Co,
109,
Co v
Protective
Commercial Union Ins
Medical
(1986).
117;
It
fiction
13See, Widiss, e.g., supra, pp n 4 & 220-221: Keeton appears subrogation if it that a tend to favor Courts also escape likely party re- would be financial third tortfeasor subrogation sponsibility right. if the were not accorded Thus, subrogation appropriately as an often is viewed placing technique serving justice by important for the ends of responsibility injuries party on whose the economic the loss .... fault caused Ins Co Bell Brickley, In a action a defense coun- sel, however, the interests of the insurer and the generally merge. insured The client and the in- having surer both have an dismissed because of interest the case attorney malpractice. Allow- , ing recovery for the insurer on the basis of the failure of defense counsel to adhere to basic norms "substantially of impair of care thus "would not attorney’s ability to make decisions that require a choice between the best interests of the insurer and the best interests of the insured.” 535.) (Post, p The best interests of both insurer converge expectations competent and insured representation.14 *10 being
Defense counsel is not held accountable to perceived the insurer for over errors strategy of trial in which a different situation presented.15 alleged would However, this con- comprised professional duct, practice. true, if serious mal- attorney-client In such cases the relation- ship, the interests of the the interest of the ultimately public, insurer, and which other- malpractice, wise would absorb the costs of the all exposure benefit from to suit. The dissent errone- ously persuasive public policy asserts that no clear support right subrogation reasons exist to of for the insurer.16 Levit, supra See Mallen & n 6 at 356-357: "The attorney is to defend the A insured. successful defense is the common
goal parties.” of all and is consonant with the interests of [all] certainly recognize Here courts must that "in some circumstances conflicting companies interests [between and defense regarding counsel dation is tactical are so decisions] intense that no accommo possible possible between the views as to which of the tactics employed.” Widiss, supra should be Keeton & at 820-821. This case in presents way no such a circumstance. professional malpractice provides The law of itself an inherent brought by limitation on unwarranted lawsuits an insurer to the showing malpractice essentially requires showing extent that a error, plaintiff prevailed that but for the would have the action. Boyle, J. foregoing approve reasons, the rem- we
For the sweeping, subrogation equitable edy rigid less less —a attorney-client of an solution than creation defense coun- the insurer and between equitable sel, flexible, solution more but a more professional liability for mal- from than absolution practice.17
Riley JJ., with Brick- Griffin, and concurred ley, J. (concurring). forth For the reasons set
Boyle, Cavanagh’s dissent, I un- would in Chief Justice equivocally recognize direct cause decline legal malpractice. I would the insurer for action go beyond thing majority’s that "some- observation attorney-client plenary relation- than a
less ship counsel and an between a defense exists clearly insurer,” relationship no state counsel and exists between a defense is with an insurer. The only. the insured reasoning Brickley’s
I concur Justice equitable subroga- doctrine conclusion appropriately applied to the circumstances tion is perceive record, I no diver- this On this of gence case. insurer and between the interests any evident of the insured. Nor is there those protected by threat the interests relationship. However, the trial because *11 parties that did not indicates court record focus on subrogation, only specu- equitable we can privilege regarding of the and the the effect late recognition court, in extent to which equitable represents application subrogation here thus of principled use fiction: fiction shall extend to most "[N]o mischief, being prevent injury; proper operation or work an [its] inconvenience, general might remedy an result from the rule of that Blackstone, Commentaries, 4, p ch law.” 3 Bell Atlanta Ins Co Dissenting Opinion Cavanagh, C.J. privilege, may objection testimony sustain an effectively preclude evidence, or would 2.116(C)(8), (10), going case from forward. MCR 2.504(B)(2),2.515. agree
Thus, I on while this record with proposition equitable abstract subrogation the action in go forward, this conclusion is subject to reexamination when the record this fully presents case or for a another more basis public policy support claim that interests protected by attorney-client re- quires barring such a cause of action. (dissenting). accept
Cavanagh, C.J. We the ma- jority’s analysis statement of facts and limit our arguments major- the three of Atlanta.1 Since ity permits proceed theory Atlanta to under equitable subrogation, we dissent.
i argument first is that there is an Atlanta’s between the insurer and the for the insured when the interest and the insured do not conflict. of the insurer argument if there is Atlanta’s second is that even relationship, this Court not an legal malpractice liability to all should extend argument parties. third foreseeable Atlanta’s the defendants liable this Court should find equitable subrogation. theory will under a address Atlanta’s We arguments seriatim.
A that when an is hired asserts convenience, purposes arguments, made For all whether curiae, having supporting amici will be referred to as been Atlanta or made "Atlanta.” *12 Mich by Opinion Dissenting Cavanagh, C.J. company insured its the insurance attorney-client relationship exists with both recognizes that insurer. Atlanta
insured and the and the insured can between the insurer conflicts involving rights, defense of reservation of arise coverage, policy limits, claims, alternative multiple arises, If a conflict attorney clients. defense primary obligation is to the in- case, however, no of interest In this conflict sured. According Atlanta, the interests arose. throughout the entire insured and underlying exactly the same—to lawsuit were possible. exposure Since their as much as limit the in- no conflict of interest between there was insurer, and the a concurrent sured relationship and the existed between insured and the insurer. promulgated code
Atlanta relies on the model Michigan American Bar Association and Responsibility.2 Specifically, Rules of Professional Opinion Bar Formal No. the American Association p provides: 1950, 622, 282, issued respective analysis their undertak- From an ings community it is evident at the outset and the in- company between the interest exists growing out of the contract of insurance sured respect any brought action a third with insured person against policy limi- within are virtu- company tations. The and the insured ally one in their common interest. 5-17 of the Bar
Plaintiff also cites EC American adopted by Responsibility, We note that the Code of Professional 4, 1971, Michigan superseded by the Court on was Rules this of Responsibility, October 1, Professional Conduct on 1988. The Code of Professional October however, governs occurring conduct before October Ins Co Bell Dissenting Cavanagh, C.J. Michigan Association Model Code3 and Rule of 5-105(C).4 Responsibility, Professional ing DR Accord- contemplate Atlanta, these rules the exis- tence of an between *13 attorney the contrary and the insurer, insured and the Appeals.5
to the decision of the Court of provides: EC 5-17 Typically recurring involving potentially differing situations lawyer interests are defendants in case, represent those which a is asked to co- case, co-plaintiffs personal injury a criminal in a insurer, an insured and his and beneficiaries of the estate lawyer of a fairly decedent. adequately Whether a can and protect situations multiple the interest of clients in these and similar depends upon analysis of each case. 5-105(0 provides: DR 5-105(A) by (B), In the lawyer situations covered DR and may represent multiple if clients it is obvious that he can adequately represent the interest of each and if each consents representation possible the after full disclosure of the effect representation of such independent on the exercise of his professional judgment on behalf of each. Opinion provides: See also Informal Ethics CI-1146which ethically permissible It is of social attorney value and for an employed by company represent an insurance to also insured, provided that the interests of the insurer and the improper insured do not conflict. If the by influences are exerted employer-insurer, independent which interfere with the judgment which, employee-attorney with, complied if attorney having would result in an to violate the Code of Responsibility, attorney Professional must as withdraw counsel for the insured. addition, 1.7, adopted MRPC which was after this suit was initiated, provides: Conflict of Interest: General Rule (a) lawyer represent representation A shall not a client if the directly of that client will be adverse to another unless: (1) lawyer reasonably representation believes the will not adversely client; affect the with the other and (2) each client consents after consultation. (b) lawyer representation A shall not a client if the by Dissenting Cavanagh, C.J. special agree exists be-
We attorney and the in- the insured tween the surer. the unilateral acts insurer. by relationship, however, not does exist The or the of either special relationship results from the the insured enters of the insured. When consent into sent waives insurance, con- the insured contract provided rights normally certain Responsibility. in- For the Rules of Professional required stance, for the insured is Nor- to the offers of settlement. disclose mally, attorney settlement disclosure of an offer of party would be a violation a third confidentiality attorney’s duty client.6 to the lawyer’s respon- may materially by the be limited of that client sibilities person, or or to a third another client interests, lawyer’s own unless: (1) representation reasonably lawyer will believes the affected; adversely (2) representa- client consents after consultation. When undertaken, single multiple the the in a matter tion of clients *14 explanation implications consultation shall include common representation advantages risks involved. and the Responsi- Michigan DR of Professional 4-101 the Rules Canon 1.6) (now provided: bility MRPC (A) protected by the to information "Confidence” refers law, applicable attorney-client privilege and "secret” under gained professional relation- to other information
refers
ship
requested
or the dis-
the client has
be held inviolate
that
embarrassing
likely to be
or would be
closure of which would be
detrimental to the client.
(B)
4-10KC),
permitted
lawyer
Except
under DR
a
shall
when
knowingly:
(1)
Reveal
confidence or secret
his client.
(2)
or secret of his client to
disadvan-
Use
confidence
tage
client.
(3)
advantage
or secret of his client for
Use
confidence
person, unless
consents after
or of a third
the client
of himself
full disclosure.
(C)
lawyer may
A
reveal:
(1)
or
or
the consent of
client
Confidences
secrets with
affected,
only
them.
after a full disclosure to
clients
but
(2)
permitted
Disciplinary
or
when
under
Confidences
secrets
required by
or
order.
or
law court
Rules
Ins Co v Bell
Dissenting Opinion by Cavanagh, C.J.
allowing
reason,
however,
to
make disclosures to the insurance carrier
is not
there is an
be-
attorney,
tween the insurer and the
but that
confidentiality
regard
client waives this
with
agrees
cooperate
the insurance carrier and
upon signing
the defense of a claim
the contract of
Thus,
insurance.7
creates a
ney,
it is the insurance contract
special relationship
between the attor-
unique
and the insurer. This
relationship, however, does not rise to the status of
relationship.
agree
an
We
with the
Appeals
Court of
when it stated:
Indeed, the
is,
insurance company’s relationship
in reality,
insured;
is,
with its
the insurance
company
curred
ered
obligated
pay
in-
attorney fee
its
defending
insured in
litigation cov-
applicable
an
policy.
The fact
that an insurance company may directly pay the
attorney fee rather
than merely reimbursing its
insured does not affect the
nature of the
change
nor does it
the fact that
the attorney represents
the insured client and
(3) The intention of his client to commit a crime and the
necessary
prevent
information
the crime.
(4)
necessary
Confidences or secrets
to establish or collect his
employees
fee or to
against
defend himself or his
or associates
wrongful
an accusation of
conduct.
(D)
lawyer
A
prevent
shall exercise reasonable care to
his
associates,
employees,
and others whose services are utilized
disclosing
using
him from
or
confidences or secrets of a
except
lawyer may
that a
reveal the information allowed DR
4-101(0 through
employee.
policy,
agreed
Under this
Atlanta and the insured
as follows:
company
right
any
shall
[T]he
have the
to defend
seeking damages
suit
the insured
on account of such
*15
bodily injury
property damage,
any
allegations
or
even if
of the
groundless,
fraudulent,
may
the suit are
false or
make
investigation
any
such
and settlement of
claim or
it
suit as
expedient
deems
....
Mich Dissenting Opinion
Cavanagh, C.J.
pp
duty
only
274-275.][8]
[Id.,
client.
insured
owes
B
malpractice
urged
next
to extend
This Court is
parties. Relying
liability
on Moil-
to all foreseeable
(1977),
ing
425;
Alfono,
to a party, third and unless something there is in the circumstances of this case to take it out of that general rule, it proposition seems clear that the the defendant must be sustained. . . . attor- [A]n ney is not liable to negligence, an action for at the suit of one between whom and himself the relation of attorney exist, and client does not giving, for in answer to a casual inquiry, erroneous information as to the contents of the deed.
This Court addressed
an attorney’s
duty to a
Dozorc,
Friedman v
third
in
party
1;
412 Mich
312
(1981),
NW2d 585
holding that an attorney owed
no
duty to an adversary.9
attempts
distinguish this case from Friedman on
ground
in
that
this case the insurer and the insured were
adversaries,
and in fact had identical
interests
in disposing
find,
however,
the case.10 We
that
this is a distinction without a difference.
recognize
Rosenberg
Cyrowski,
508,
We
513;
that
227 Mich
"
(1924),
third
consequence
who have suffered
or loss in
”
part.’
Thornton,
Citing
fraudulent
Attorneys
ground
ney’s
puted
negligence.
or tortious conduct on his
Law,
295, p
distinguish Rosenberg
at
§
We
on the
Rosenberg
plaintiffs
alleging
were
the attor
case, however,
conduct amounted to fraud. In this
it is undis
action amounted to no more than mere
Employers’
Co,
See also American
Ins Co v Medical Protective
657, 660;
App
(1988),
165 Mich
surer to potential with conflict.12 down a road laden barks required According lawyer Canon professional judgment independent on "exercise recognize separate duty to behalf of the insurer attorney’s client.” To might significantly interfere with the appropriate ability the most to choose We, therefore for the insured.13 course action *17 attorney’s duty the insurer. to extend an to decline acknowledge duty judgment in a direct otherwise would owed our attorney and would the insured’s to the excess insurer' attorneys saying that insurance defense do be tantamount representation and zealous the the not owe their holding would contradict insured client alone. Such a personal mits relationship, per- which nature of legal malpractice only a action to accrue to the client. Friedman, p n 10: We stated in questions questions "Most if all of conflict of interest are not above, degree. noted minor and inevitable conflicts inher- As relationships necessarily a conflict of client-lawyer in must be tolerated. ent On the other hand, sharp be so as to interest particular preclude example, represent litigation, are lawyer representing a client. For from properly lawyer a no circumstances could under plaintiff and the defendant in contested both negotiation represent parties to a whose interests or plain fundamentally antagonistic to other. it is each When result, likely prejudice to the interests is the the that lawyer client’s representation with even should not undertake legitimate does consent of the client. A client’s consent lawyer’s not professional abuse of office.” 5.4(c)provides: MRPC recommends, permit lawyer person A who em- shall lawyer legal ploys, direct or pays or to render services for another to professional judgment regulate lawyer’s render- ing such services. Michigan has addressed this note informal ethics the State Bar of twice We opinions CI-866 and CI-876. issue Opinion provides: CI-866 Informal Ethics attorney party obligation runs to the insured Ins Co Atlanta Bell Dissenting Opinion Cavanagh, C.J.
c
argument,
Atlanta’s
third
and the crossroad
majority
dissent,
between the
and this
it
theory
should be allowed to recover under a
equitable subrogation. Relying
Spra
on Smith v
gue,
(1928),
577;
Responsibility or withdraw. Canon 7
Code of Professional
Responsibility;
5-105;
CI-309;
Opinion
DR
Informal Ethics
(2-10-83)
Consideration,
Ethical
EC-17.
addition,
Informal Ethics
CI-876 states:
company
An
retained
an insurance
defend
legal
relationship
promptly
policy
*18
claim under a
of insurance has an
ethically obligated
with the
and is
to
significant
any
communicate
settlement offer to the
keep
reasonably
insured and otherwise
the client
informed
(6-9-83)
concerning
progress
the
of the matter.
14
Co,
See Commercial Union Ins Co v Medical
426
Protective
Mich
109, 117;
(1986),
greater rights
possessed
subrogor,
than those
the
and that
subrogee may
[Citing
the
not be
"mere
volunteer.”
Foremost
Waters,
599, 603;
App
Life Ins Co v
88 Mich
matter of defendants, it allowed the should be sen to sue prosecute Security to shoes to stand in Services’ Agreeing malpractice Atlanta, the with this claim. attorney-client majority ship, "the relation- reasons that interests] of the interests of the the public, ultimately insurer, the which oth- the malpractice, the absorb the costs of erwise would exposure p Ante, to suit.” 523. We all benefit from disagree the it in the interest of best expose attorney-client to the simply liability stated, insurer, and, we the to to Security do Services believe that "shoes” fit not Atlanta. subrogation majority, has two
As stated contract), (arising out of forms: conventional legal (arising equity). Parts out See Machined Corp Schneider, 567, 574; 831 289 Mich 286 NW (1939).15 requires equitable subrogation
Applying this public policy concerns associ- Court ated with the balance relationship against liability of the to an insurer Balancing policy negligence. concerns, dis- we agree majority with the and would find outweigh policy in favor of former reasons agree finding, majority latter. In so we with the rela- the cornerstone tionship attorney’s duty is an p majority, however, Ante, med- client. allowing relationship by the insurer dles this Although indirectly recover a contractual debt. attempts holding majority limit its to the facts might subrogation, Conventional or what otherwise be termed (in assignment claim), cause of action this case a of a Court, although this to be never addressed has been found Drillock, Appeals. public policy by the Court of See Joos v (1983). App 99, 104; Goodley & See also v Wank NW2d (1976). Wank, Inc, 389; App Rptr 3d 133 Cal 62 Cal *19 Co Bell Ins Dissenting Cavanagh, C. case, of this we dissent from this view because we prophylactic required believe that a rule is guide poten- down a road laden with attorney, tial conflicts. To hold an whose sole runs to the liable to the insurer directly, negligence, either on the basis of or indi- rectly, equitable subrogation, on the basis of could substantially impair attorney’s ability an to make require decisions that a choice between the best interests of the insurer and the best the insured. interests
ii Although unique this case involves the relation- ship insurer, insured, between an and an attor- ney hired to a standard principle applies: negligent Those to whom the party duty may owes a maintain a cause of action. majority, case, In the context of this unlike the we find that the cause of action rests with the insured reasons, and not the insurer. For all the above we dissent. JJ., Mallett,
Levin concurred with Cavanagh, C.J.