[textbook]Traversing the Ethical Minefield Problems, Law, and Professional Responsibility by Susan R. Martyn (z-lib.org)(1) (1)

be vicariously liable for abuse of process by independent contractor defense counsel it selected where insurer knowingly
authorized or directed the acts in question).
6. RLGL § 75.
7. E.g., Unauthorized Practice of Law Comm’n v. American Home Assurance Co., 261 S.W.3d 24 (Tex. 2008); In re
Youngblood, 895 S.W.2d 322 (Tenn. 1995).
8. See Charles Silver, The Future Structure and Regulation of Law Practice: When Should Government Regulate Lawyer-
Client Relationships? 44 Ariz. L. Rev. 787 (2002).
9. E.g., Brown v. Kelton, 2011 Ark. 93 (2011); Am. Ins. Assn. v. Ky. Bar Assn., 917 S.W.2d 568 (Ky. 1996) (a
lawyer cannot agree to do all of an insurer’s defense work for a set fee because it would violate MR 1.7(b) and 1.8(f)).
10. ABA Formal Op. 01-421.
11. E.g., In re R. of Prof. Conduct, 2 P.3d 806 (Mont. 2000) (detailed descriptions of professional services can only
be provided to third-party auditors after first obtaining contemporaneous fully informed consent of insureds).
12. Fla. R. Prof. Conduct 1.8(j).
13. ABA Formal Op. 01-421 cites these state opinions.
14. Id.; In re R. of Prof. Conduct, 2 P.3d 806 (Mont. 2000).
15. RLGL § 134(2).
16. Id., ill. 5.
17. MR 1.2 (a); RLGL § 134, Comment f. See also Kent D. Syverud, The Duty to Settle, 76 Va. L. Rev. 1113 (1990).
18. Betts v. Allstate Ins. Co., 201 Cal. Rptr. 528 (Cal. App. 1984) (insurer and defense counsel jointly and severally
liable for excess verdict, emotional distress, and punitive damages for failing to settle within policy limits where liability
was clear).
19. Courts construe ambiguous policies against the insurer drafter. Saucedo v. Winger, 915 P.2d 129 (Kan. App.
1996) (insurance policy that did not specifically give insurer the right to settle without insured physician’s consent was
ambiguous and interpreted to mean that insurer could not settle without insured’s consent).
20. Rogers v. Robson, Masters, Ryan, Brumund & Belom, 392 N.E.2d 1365 (Ill. App. 1979), aff’d, 407 N.E.2d 47
(Ill. 1980) (failure to inform insured of settlement offer and option of releasing insurer from its contractual obligations
and defending suit at insured’s own expense creates malpractice liability for damages caused by lack of disclosure).
21. E.g., Fla. R. Prof. Conduct 4-1.8(j) (2017); Ohio R. Prof. Conduct 1.8(f) (2017).
22. See, e.g., Perez v. Kirk & Carrigan, supra Chapter 6.
23. Emp’rs. Cas. Co. v. Tilley, 496 S.W.2d 552 (Tex. 1973) (insurer estopped to deny coverage because it attempted
to use insured’s statements obtained by lawyer hired by insurer to defend insured).
24. Parsons v. Contl. Natl. Am. Group, 550 P.2d 94 (Ariz. 1976) (insurer estopped from denying coverage under its
policy when its denial was based on confidential information obtained from insured’s lawyer, and insurer’s refusal to
settle within policy limits after it learned of the policy defense constituted bad faith, resulting in an obligation to pay all
of the underlying judgment, which was twice the policy limit).
25. For a case involving sexual misconduct by a physician where the court found that the lawyer offered a “splendid”
defense under a reservation of rights, see St. Paul Fire and Marine Ins. Co. v. Engelmann, 639 N.W.2d 192 (S.D.
2002).
26. Beckwith Mach. Co. v. Travelers Indem. Co., 638 F. Supp. 1179 (W.D. Pa. 1986) (where the failure to send a
reservation of rights letter or file a declaratory judgment action estopped the insurer from denying coverage and created
liability for bad faith and breach of contract).
27. See Shaya B. Pacific, LLC v. Wilson, Elser, Moskowitz, Edelman, & Dicker, LLP, 38 A.D.3d 34 (N.Y. App.
2006) (law firm hired to defend an insured may have a duty to investigate issue of excess coverage by another insurer).
28. ABA Formal Op. 96-403.
29. Behn v. Legion Ins. Co., 173 F. Supp. 2d 105 (D. Mass. 2001) (insurer acted reasonably in refusing to settle
medical malpractice case where expert witness opined that defendant psychiatrist complied with the standard of care,
facts indicated comparative fault of plaintiff, and insured refused consent to settle).
30. E.g., Wolpaw v. General Accident Ins. Co., 639 A.2d 338 (N.J. Super 1994).
31. Haddick ex rel. Griffith v. Valor Ins., 763 N.E.2d 299 (Ill. 2001) (cause of action for bad-faith refusal to settle
found where liability conceded, medical expenses were in excess of policy limits, and insurer did not offer to settle for
policy limits until one year after settlement demand initially made).
1. For instance, in the ordinary case in which liability is probable, even if somewhat questionable, it would almost
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