OPINION 179
June 1958

 CONFLICTING INTERESTS - Necessity of an attorney retained by an insurance company to defend it and the assured in a damage suit for an amount in excess of the policy limits to inform the assured of the holding in Stowers v. American Indemnity Co., 15 SW (2) 544.

 Canon 6.

Question

P and D are involved in an automobile collision. D has a "5 and 10" insurance policy issued by I. P sustained such injuries that if it finds in his favor on liability, an average jury would allow him $20,000.00 damages. The evidence, both physical and eyewitness testimony, is such that it is a toss-up whether the jury will hold for P or D on the question of liability. P employs Attorney A to handle his case. Before suit is filed, A writes D, informing him that P has employed A to handle his case; and P has assigned to A an undivided one-half interest in his cause of action; and offering to settle the cause of action for $10,000. A hears nothing from D, and A file's suit for P against D for $40,000.00. I employs Attorney B to defend the suit, and B files an Answer for D.

1. Was A guilty of unethical practice in writing said letter to D?

2. Is D B's client in the case?

3. If the answer to question No. 2 is "Yes," at what instant did D become B's client?

4. As between D and I, does B owe more duty to one than he does to the other?

5. If the answer to question No. 4 is "Yes," to which does B owe his primary duty?

6. Is there a conflict of interest between D and I?

7. If the answer to question No. 6 is "Yes," does Canon 6 require (not whether B may do it, or whether the Attorney for the insurance company usually would do it; but would it be a violation of Canon 6 if he did not do it) B to fully inform D of the conflict between his interest and that of I?

8. If the answer to question No. 7 is "Yes," at what stage of the case is B required to make such disclosure to D?

9. Would Canon 6 require that B go so far as to inform D of the holding in the Stowers case?
 

Opinion

It is the opinion of the Committee that the above questions should be answered as follows:

1. No, if D is not represented by an attorney with respect to the accident and claims growing out of it at the time A writes to D. (See Opinion 97.) (8-0.

2. Yes. (8-0.)

3. When B accepted employment from I with respect to the matter. (8-0.)

4. No. One member while stating that ordinarily "No" would be the correct answer to this question, there could be a conflict between D and I in some circumstances and in the event of such conflict he is of the opinion that D will owe his primary duty to I. (7-1).

6. Yes. (7-1.)

7. Yes. (7-1.)

8. Immediately upon his accepting employment in the case from I. (7-1.)

9. Yes. (6-2.)