Direct Contact With the Adverse Insurance Adjuster After Appointment of Counsel

By Allan “Al” P. Root

After fruitless negotiations with an insurance adjuster, you file suit and an attorney is retained to represent the defendant. You have been dealing with the adjuster on this and other claims over many years and have developed a relationship, and when your client calls you saying to settle on any terms because she needs the money, you know that the quickest response will come if you call the adjuster. Does the ethical bar on contacting the attorney’s client extend to the insurance company as well as the insured?

As with a lot of questions, it depends on where you live. New York and North Carolina have considered the question, analyzed the tripartite relationship between the insurer, insured and insurance defense attorney, and reached opposite conclusions.

New York’s response is found at N.Y. State Ethics Opinion 785 (2005). New York takes the position that the lawyer retained by the insurer to represent the insured only represents the insured. The insurance company, and its adjuster, are not clients of that attorney. The opinion notes that the vast majority of the insurance company file constitutes privileged work product that is off-limits to inquiry and can’t be discussed, but holds that the plaintiff’s attorney is entitled to contact the adjuster directly to discuss settlement, even if the insured’s counsel has directed that this not occur.

The opinion contains the limitation that if the insurer has a separate counsel with respect to the claim, then the “no contact” rule would come back into play due to that separate representation. Still, in the typical claim New York finds no ethics violations in the direct contact.

Not so in North Carolina. Our applicable ethics opinion is RPC 39, which dates back to 1988. The inquiry there was whether the plaintiff’s lawyer could copy the adjuster on his settlement demands to defense council. Unlike New York, North Carolina takes the position that the lawyer appointed by the insurance company should be perceived as representing both the insurance company and the insured. Therefore, without the defense attorney’s consent, a North Carolina attorney violates our Ethical Rules by contacting the adjuster directly without the consent of the defense attorney.