NYSBA Ethics Opinion 50NEW YORK STATE BAR ASSOCIATION Professional Ethics Committee Opinion
Opinion #50 – 02/17/1967 (3-65)
claims, law practice, legal profession
Topic: Unauthorized Practice of Law, Assisting Client Practice Law
Digest: Improper for lawyer to make limited appearance on behalf of client so client could then privately negotiate a settlement
Canon: Former Canons 29, 47
I have been asked to represent a steamship line, which is the defendant in a Seaman’s action in Federal Court under the Jones Act, in the following limited manner:”This will confirm our instructions that you will arrange at mutual convenience of (Plaintiff’s attorney) and your office for examination before trial of (the Plaintiff).”The purpose of same is to develop a clearer picture of what actually transpired as facts, heretofore, developed appears to be highly controversial.”When examination is completed kindly return the file and E.B.T. to this office at which time we will proceed further with settlement discussions with (Plaintiff’s attorney).”To enable me to conduct the examination before trial, I would, of course, appear as attorney of record in the action. However, it is contemplated that, except for conducting an examination before trial, I would have no further responsibility or authority in connection with the action. Following the E.B.T., settlement negotiations would be conducted by the carrier’s claim department. In the meantime, the carrier’s time to answer the complaint would be indefinitely extended pending negotiations. The procedure outlined above is becoming a fairly common practice with steamship companies and insurance carriers.I would like the opinion of the Committee on Ethics as to whether I can ethically accept this retainer and participate in the limited manner outlined above. It would appear to me that this situation involves both a question of ethics and the question of the unauthorized practice of law by claims adjustors. The Virginia State Bar Association’s Committee on Legal Ethics (Opinion #137 April 19, 1965) and Committee on Unauthorized Practice of Law (Opinion #36 – April 16, 1965) have recently rendered opinions that it is unlawful for an insurance claims adjustor to discuss settlement with a plaintiff’s attorney after there has been an appearance by an attorney on the part of the defendant and further, that it is unethical for the defendant’s attorney to cooperate in this practice.
It is the opinion of the Committee that the retainer under the circumstances set forth above would be improper and in violation of the Canons of Legal Ethics.The essence of this matter is that the client steamship line, in order to assist its laymen claim adjustors to successfully negotiate settlements on their own in pending legal actions, would retain an independent practitioner for the limited purpose of developing the controversial facts in an examination before trial. Upon the completion of that examination, the testimony and the file would be returned to the company to allow the layman claim adjustor to proceed further with settlement discussions. (There is a clear implication in the phrasing of the facts that prior settlement discussions had already been had, that they had proved fruitless, and that it was in the hope that the examination before trial would develop helpful information that the attorney was being retained.)The retaining of a member of the Bar in what amounts to a limited sub-contractor capacity to a layman is demeaning to the legal profession. Accepting such an engagement, for the avowed purpose of providing the client with the tools by which it can itself, to the exclusion of a lawyer, successfully negotiate a settlement, is undignified and is in derogation of the honor of the profession. (Canon 29) The situation would be otherwise, however, if the case were one where an outside independent counsel for the shipping company, having appeared generally as attorney of record in the case, were to engage another attorney for the specific purpose outlined above with instructions to return the EBT and the file to such general counsel of record upon completion of the work for which special counsel was engaged.In addition, if it be assumed that the settlement negotiations by lay adjustors is a form of unauthorized practice of the law, then the acceptance of a retainer in the circumstances outlined above would, in and of itself, be a violation of Canon 47. However, this Committee express no opinion as to whether or not the activities of lay adjustors under those circumstances is unauthorized practice of the law, this question being one for consideration by the Committee on Unauthorized Practice of the Law and, accordingly, it has been referred by this Committee to that other Committee of this Association.(Committee Hembers Dissenting: Messrs. Stephen B. Hughes, Sanford D. Levy, and Gray Thoron.)