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Opinion 696

Question Presented

Do the Texas Disciplinary Rules of Professional Conduct prohibit staff counsel employed by an insurance company from representing insured clients if the insurance company considers the results of performance surveys in deciding the lawyer’s compensation or continued employment?

Insurance companies often employ in-house defense counsel to represent the company’s insureds in litigation (sometimes called “captive” counsel or “staff” counsel). Some insurance companies use post-representation surveys to monitor the performance of staff counsel. In these performance surveys, both the insurance claims adjuster to whom the lawyer reported and the insured whom the lawyer represented “grade” the lawyer subjectively after a matter is concluded. At some companies, the results of these performance surveys can directly impact a lawyer’s eligibility for a promotion or raise, and unsatisfactory performance ratings can result in internal discipline and even termination.

This survey system potentially places the lawyer in a quandary: a lawyer’s candid advice can lead to friction and disagreement with the insured client or the claims adjuster. For example, the client or adjuster may disagree with a lawyer’s negative evaluation of the case or the insured’s performance as a witness. As a result, exercising independent professional judgment and being honest with the insured client and adjuster may lead to unfavorable performance surveys for the lawyer, jeopardizing the lawyer’s chances for a raise or continued employment.

Bluebook Citation

Tex. Comm. On Professional Ethics, Op. 696 (2023)