Deposition Outline: Breach of Fiduciary Duty

Following is a list of code words to conveniently customize the following deposition outline by using the “find and replace” function of a wordprocessor.

&Client& means the defendant/policyholder/client.

&ClmAgt& means the insurer’s claims agent.

&Date& means that the Model documents needs to be supplemented with a date.

&DependentCounsel& means insurer appointed defense counsel who was selected by and represents the interests of the liability insurance company.

&InsCo& means the client’s insurance company.

&Plaintiff& means the plaintiff who sued the defendant/policyholder/client.

“The elements of a cause of action for breach of fiduciary duty are: 1) existence of a fiduciary duty; 2) breach of the fiduciary duty; and 3) damage proximately caused by the breach.”1 “The standards governing an attorney’s ethical duties are conclusively established by the Rules of Professional Conduct. . . . If an expert testifies contrary to the Rules of Professional Conduct, the standards established by the rules govern and the expert testimony is disregarded.”2

1. Identity of Witness:

Are you licensed to practice law in California?

Does Exhibit 1 (such as a CV from the firm’s website) accurately describe your professional credentials?

2. Ethics:

Do you consider yourself to be an ethical lawyer?

Do you think that it is important for a lawyer to be ethical? Why?

Describe to me the training, education, or experience you have regarding the California Rules of Professional Conduct governing the representation of multiple clients?

Which Rule is it? Why don’t you know?

Will you please summarize what it says?

Does Rule 3-310 imposed on attorneys any duties?

What are they?

Describe the requirements imposed on attorneys by the Rule?

Is it your understanding that when an attorney represents more than one client that the attorney has a duty to analyze “the relevant circumstances and . . . the reasonably foreseeable adverse consequences”?

What does that mean to you?

Is it your understanding that when an attorney represents more than one client that the attorney has a duty to make written disclosure to the client of potential conflicts of interest?

Is it your understanding that when an attorney represents more than one client that the attorney has a duty to make written disclosure to the client of actual conflicts of interest?

Do you know the difference between potential and actual conflicts of interest?

Will you please describe the difference to me?3

Is it your understanding that when an attorney represents more than one client that the attorney has a duty to obtain the informed written consent of all clients to potential conflicts of interest prior to starting work?

By your understanding, as between the attorney and the client, which one has the burden of analyzing potential conflicts of interest?

Why?

By your understanding, as between the attorney and the client, which one has the burden of making disclosure regarding conflicts of interest?

Why?

By your understanding, as between the attorney and the client, which one has the burden to obtain informed written consent for an attorney to represent multiple clients with conflicts of interest?

Why?

3. Representation of &InsCo&:

Was &DependentCounsel& hired by &InsCo& to represent &Client& in the &Plaintiff& lawsuit? When?

What were the terms of the engagement?

Did &InsCo& agree to pay &DependentCounsel& to defend &Client&?

Did &DependentCounsel& agree to adhere to any guidelines imposed upon it by &InsCo& to defend &Client&?

Does &DependentCounsel& adhere to &InsCo&’s litigation guidelines in the &Plaintiff& lawsuit?

Does &DependentCounsel& have an attorney-client relationship with &InsCo&?

Does &DependentCounsel& have a legal relationship with &InsCo&?

Does &DependentCounsel& have a business relationship with &InsCo&?

Does &DependentCounsel& have a financial relationship with &InsCo&?

Does &DependentCounsel& have a professional relationship with &InsCo&?

Does anyone at &DependentCounsel& have a personal relationship with anyone at &InsCo&?

Does &DependentCounsel& know that &InsCo& would be affected substantially by resolution of the &Plaintiff& lawsuit?

Should it reasonably have known? What did you do to find out? Who will have to pay for the defense? Who will have to pay a judgment? Who will have to pay a settlement?

Was &DependentCounsel& hired to protect the interests of &InsCo& in the &Plaintiff& lawsuit?

Does &DependentCounsel& believe that &InsCo& is its client in the &Plaintiff& lawsuit?

4. Limited Scope:

Is the scope of &DependentCounsel& representation of &Client& limited?

How?

Did &DependentCounsel& advise &Client& that its representation was limited?

In writing?

May I see it?

Did &DependentCounsel& obtain &Client&’s informed written consent that its representation may be limited?

May I see it?

5. Representation of &Client&:

Does &DependentCounsel& have an attorney-client relationship with &Client&?

Was the attorney-client relationship between DependentCounsel& and &Client& established by contract?

Who negotiated the contract?

What are the terms?

Have you even spoken to &Client&?

Did you first speak to &Client& before making an appearance in the &Plaintiff& lawsuit?

Does &DependentCounsel& have a fiduciary relationship with &Client&?

Was &DependentCounsel& hired to protect the interests of &Client& in the &Plaintiff& lawsuit?

Does &DependentCounsel& believe that &Client& is its client in the &Plaintiff& lawsuit?

Has &DependentCounsel& ever represented itself to be counsel for &Client&?

Has &DependentCounsel& ever made an appearance in the &Plaintiff& lawsuit as attorneys for &Client&?

Did it have &Client&’s authority to do so? How do you know?

6. Fiduciary Duties:

Does &DependentCounsel& have a fiduciary relationship with &Client&?

Does &DependentCounsel& have fiduciary duties to &Client&?

In your own words, will you please describe all of those duties?

Does &DependentCounsel& have a fiduciary duty to &Client& to act competently?

Describe that duty.

Does &DependentCounsel& have a fiduciary duty to &Client& of confidentiality?

Describe that duty.

Does &DependentCounsel& have a fiduciary duty to &Client& of disclosure?

Describe that duty.

Does &DependentCounsel& have a fiduciary duty of undivided loyalty &Client&?

Describe that duty.

Does &DependentCounsel& have a fiduciary duty to advise &Client&?

Describe that duty.

Does &DependentCounsel& have a fiduciary duty to &Client& to analyze conflicts of interest? Describe that duty.

Does &DependentCounsel& have a fiduciary duty to &Client& to comply with Rule 3-310?

Describe that duty.

Does &DependentCounsel& have a fiduciary duty to &Client& to respond to inquiry?

Describe that duty.

Does &DependentCounsel& have a fiduciary duty to &Client& to advise that the scope of representation was limited?

Describe that duty.

Does &DependentCounsel& have a fiduciary duty to &Client& to advise regarding settlement?

Describe that duty.

(Repeat all of these questions substituting &InsCo& for &Client&)

7. Consent of &Client&:

Does &DependentCounsel& have &Client&’s consent to represent &Client&?

How was  &Client&’s consent communicated to you?

Does &DependentCounsel& have &Client&’s consent to represent &InsCo&?

How was  &Client&’s consent communicated to you?

Does &DependentCounsel& have &Client&’s consent to represent &Client& in court?

How was  &Client&’s consent communicated to you?

Does &DependentCounsel& have &Client’s authority to appear in court?

How was  &Client&’s authority communicated to you?

Does &DependentCounsel& have the authority to bind &Client& in court?

How was  &Client&’s authority communicated to you?

8. Breach of Duties: What did &DependentCounsel& do to fulfill each of these duties?

Duty to act competently?

(If there have been acts of incompetence, explore them.)

Duty of confidentiality?

Have &DependentCounsel& and &Client& had any confidential communications?

When? How? Any in writing?

Has &DependentCounsel& shared any of these confidential communications with anyone else?

Who?

Has &DependentCounsel& shared any of these confidential communications with anyone at &InsCo&?

Have these confidential communications been oral, written, electronic, or communicated by any other means?

Do you recall the substance of any of these communications?

Do you have any writing (as defined by Evid. Code § 250) evidencing such communications?

May I see them?

Will you give copies of them to &Client&?

Have you given copies of them to &InsCo&?

Duty to analyze conflicts of interest

When &InsCo& hired &DependentCounsel& to represent &Client& in the &Plaintiff& lawsuit, did &DependentCounsel& conduct any analysis of potential conflicts of interest between &InsCo& and &Client&?

Before starting work, did &DependentCounsel& ask &InsCo& whether it had reserved its rights to deny coverage to &Client& in the &Plaintiff& lawsuit? Why not?

At any time was &DependentCounsel& aware that &InsCo& had reserved its rights to deny coverage to &Client& in the &Plaintiff& lawsuit? When?

Upon becoming aware of the reservation of rights between &InsCo& and &Client&, did &DependentCounsel& do anything to analyze potential conflicts of interest between &InsCo& and &Client&?

What facts did &DependentCounsel& consider in analyzing potential conflicts of interest?

What relevant circumstances did &DependentCounsel& consider in analyzing potential conflicts of interest?

What actual adverse consequences did &DependentCounsel& consider in analyzing potential conflicts of interest?

What reasonably foreseeable adverse consequences did &DependentCounsel& consider in analyzing potential conflicts of interest?

What law did &DependentCounsel& consider in analyzing potential conflicts of interest?

What conclusion did &DependentCounsel& reach regarding potential conflicts of interest between &InsCo& and &Client&?

Duty of disclosure

Did &DependentCounsel& disclose to &Client& any analysis of potential conflicts of interest?

In writing? Why not?

Did &DependentCounsel& disclose this conclusion to &InsCo&?

In writing? Why not?

Related Issue?

Has &InsCo& raised any coverage question that is logically related to any issues in the &Plaintiff& lawsuit?4

Do all factual or legal disputes in the &Plaintiff& lawsuit have anything to do with any coverage question raised by &InsCo&?5

Are all factual or legal disputes in the &Plaintiff& lawsuit irrelevant to all coverage questions raised by &InsCo&?6

Are all factual or legal disputes in the &Plaintiff& lawsuit independent of all coverage questions raised by &InsCo&?7

Are all factual or legal disputes in the &Plaintiff& lawsuit extrinsic to all coverage questions raised by &InsCo&?8

Do any factual or legal disputes in the &Plaintiff& lawsuit overlap any coverage questions raised by &InsCo&?9

Is it possible that any coverage dispute could prejudice the policyholder’s defense?10

How?

Is it possible that &DependentCounsel& could control the outcome of any coverage issue reserved by &InsCo&?11

How do you know?

If you have not analyzed potential conflicts arising from &InsCo&’s reservations of rights, how can you possibly know whether your conduct of &Client&’s defense may affect coverage?

Does &InsCo& insure both the &Plaintiff& and &Client&?12

Have you ever asked? Why not?

Has &Insco& sued &Client&?13

Will you give copies of them to &Client&?

Has &Insco& pursued settlement in excess of policy limits without the insured’s consent?14

Has &Insco& pursued settlement so as to leave &Client& exposed to claims by third parties?15

Is &DependentCounsel&’s representation of &Client& rendered less effective by reason of its representation of &InsCo&?16

How do you know? Are you willing to guarantee it? How can you guarantee it?

Does &InsCo& have any incentive to attach liability to &Client&?17

Does &DependentCounsel& have any incentive to attach liability to &Client&?18

Duty to advise regarding settlement

Have there been any settlement negotiations in the &Plaintiff& lawsuit? Why not?

Has the &Plaintiff& made any offer to settle with &Client&?

What were the terms? Was it written? May I see it?

Has &DependentCounsel& advised &InsCo& of this offer?

Has &DependentCounsel& advised &Client& of this offer? Why Not?

Has &Client& made any offer to settle with &Plaintiff&?

What were the terms? Was it written? May I see it?

Has &DependentCounsel& advised &InsCo& of this offer?

Has &DependentCounsel& advised &Client& of this offer? Why Not?

Duty to respond to inquiry

I am handing you Exhibit 2, a letter from &Client& to you dated __.

Did you receive this? With enclosures?

Did acknowledge receipt of it as requested? Why not?

After you received Exhibit 2, did you read it?

Did you read the attached Memorandum of Law?

Did you do any legal research into the subject matters addressed in the Memorandum of Law?

What did you learn?

Do you agree that &DependentCounsel& represents &InsCo&? Why not?

Did you discuss Exhibit 2 with anyone? Who?

Did you advise &InsCo& that you received Exhibit 2?

Did you discuss Exhibit 2 with anyone at &InsCo&?

After you received Exhibit 2, did you analyze potential conflicts of interest between &InsCo& and &Client&? Why not?

After you received Exhibit 2, did you make any written disclosure to &InsCo& and/or &Client&? Why not?

After you received Exhibit 2, did you obtain the informed written consent of &InsCo& and/or &Client& to be their attorney? Why not?

After you received Exhibit 2, did you continue to represent &Client& in the &Plaintiff& lawsuit? Why?

Did you do so knowing that you did not have &Client&’s consent to be represented?

I am handing you Exhibit 3, a letter from &Client& to the State Bar dated __.

Did you receive this?

After you received Exhibit 3, did you read it?

Did the State Bar contact you?

Did you respond to the State Bar? In writing? May I see a copy?

After you received Exhibit 3, did you continue to represent &Client& in the &Plaintiff& lawsuit? Why?

Did you do so knowing that you did not have &Client&’s consent to be represented?

I am handing you Exhibit 4, a letter from &Client& to you dated __.

Did you receive this? With enclosures?

Did acknowledge receipt of it as requested? Why not?

After you received Exhibit 4, did you read it?

Did you read the attached Memorandum of Law?

Did you do any legal research into the subject matters addressed in the Memorandum of Law?

What did you learn?

Do you agree that &DependentCounsel& represents &InsCo&? Why not?

Did you discuss it with anyone? Who?

Did you advise &InsCo& that you received Exhibit 2?

Did you discuss Exhibit 2 with anyone at &InsCo&?

After you received Exhibit 2, did you analyze potential conflicts of interest between &InsCo& and &Client&? Why not?

Do you agree that &DependentCounsel& has a fiduciary duties to &Client&? Why not?

Do you agree that &DependentCounsel& has a duty of disclosure to &Client&? Why not?

Do you agree that a material concealment from &Client& amounts to fraud? Why not?

Do you agree that &DependentCounsel& has a duty to protect &Client& in every possible way? Why not?

Do you agree that &DependentCounsel& has a duty not to assume a position adverse or antagonistic to his client? Why not?

Do you agree that &DependentCounsel& has a duty not to devote his entire energies to his client’s interests? Why not?

Do you agree that an honest practitioner should not put himself in a position where he may be required to choose between conflicting duties? Why not?

Do you agree that &DependentCounsel& has a duty of undivided loyalty to &Client&? Why not?

Did &DependentCounsel& accept representation of &Client& without providing written disclosure? May I see it?

Did &DependentCounsel& continue representation of &Client& without providing written disclosure? May I see it?

Do you believe that &InsCo& could be affected substantially by resolution of the &Plaintiff& lawsuit?

Did &DependentCounsel& have a legal relationship with &Insco&? Why not? [or] Describe it?

Did &DependentCounsel& have a business relationship with &Insco&? Why not? [or] Describe it?

Did &DependentCounsel& have a financial relationship with &Insco&? Why not? [or] Describe it?

Did &DependentCounsel& keep &Client& reasonably informed about significant developments relating to the employment or representation.?

Did &DependentCounsel& volunteer any opinions to &Client& to further &Client&’s objectives.

Did &DependentCounsel& respond promptly to reasonable status inquiries of &Client&?

Did &DependentCounsel& keep &Client& reasonably informed of significant developments in matters with regard to which the attorney has agreed to provide legal services?

Did &DependentCounsel& explain to &Client& the full implications of joint representation in this case where &InsCo& reserved its rights to deny coverage?

Do you agree that the potential for conflict requires a careful analysis of the parties’ respective interests to determine whether they can be reconciled?

Did &DependentCounsel& analyze what is the exact nature of the claims asserted in the &Plaintiff& lawsuit? What conclusions did you reach as a result?

Did &DependentCounsel& analyze what defenses to coverage are asserted by &InsCo&?

Did &DependentCounsel& analyze to what extent, if at all, the defenses to coverage are logically related to the liability issues raised in the &Plaintiff& lawsuit?

Did &DependentCounsel& analyze what factual questions have to be resolved in order to sustain or defeat such coverage defenses?

Did &DependentCounsel& analyze what is the likely nature of the available evidence relating to coverage defenses?

Do you agree that the existence of a conflict of interest should be identified early in the proceedings so it can be treated effectively before prejudice has occurred to either party?

Did &DependentCounsel& accept compensation for representing &Client& from &InsCo& &Client&’s informed written consent? Why not?

Does &DependentCounsel& agree that it should disgorge compensation it accepted from &Insco& for representing &Client& without &Client&’s informed written consent? Why not?

Did you read the Ethical Questionnaire?

Did you complete the answers on the Ethical Questionnaire? Why not?

At any time, did &DependentCounsel& have an attorney-client relationship with &Client&?

When? Does it now? Why did it change?

At any time, has &DependentCounsel& had an attorney-client relationship with &InsCo&?

When? Does it now? Why did it change?

At any time, did &DependentCounsel& read any of &InsCo&’s reservation of rights letter(s)?

At any time, did Did &DependentCounsel& read any of &InsCo&’s reservation of rights letter(s) after receiving Exhibit 4?

At any time, has &DependentCounsel& analyzed the relevant circumstances and the actual and reasonably foreseeable adverse consequences to &Client& of &InsCo&’s reservation of rights letter(s)?

At any time, has &DependentCounsel& made written disclosure to &Client& pursuant to Rule 3-310?

Are there any potential or actual conflicts of interest between &InsCo& and &Client&?

Does &DependentCounsel& owe to &Client& a duty of disclosure?

Does &DependentCounsel& owe to &Client& a duty of undivided loyalty?

Does &DependentCounsel& owe to &Client& a duty of confidentiality?

Does &DependentCounsel& owe to &Client& a duty to advise &Client&?

Has &DependentCounsel& preserved &Client&’s secrets from &InsCo&?

Did &DependentCounsel& ever follow &InsCo& directions in conducting &Client&’s defense?

Did &DependentCounsel& ever follow &Client&’s directions in conducting &Client&’s defense?

Did &DependentCounsel& ever follow &InsCo&’s directions over &Client&’s directions?

Did &DependentCounsel& ever assure &Client& that &InsCo& will not interfere with &DependentCounsel&’s independence of professional judgment?

Will &Client& be affected substantially by resolution of the &Plaintiff& lawsuit?

Does &DependentCounsel& have a legal interest in the subject matter of the lawsuit?

Does &DependentCounsel& have a business interest in the subject matter of the lawsuit?

Does &DependentCounsel& have a financial interest in the subject matter of the lawsuit?

Does &DependentCounsel& have a professional interest in the subject matter of the lawsuit?

Does &DependentCounsel& represent &InsCo& in any matter separate from the &Plaintiff& lawsuit?

Is &DependentCounsel& now willing to analyze potential conflicts of interest between &Client& and &InsCo& pursuant to Rule 3-310?

Is &DependentCounsel& now willing to make written disclosure to &Client& and &InsCo& pursuant to Rule 3-310?

Does &DependentCounsel& have &InsCo&’s informed written consent pursuant to Rule 3-310?

_____________________________________________

EXHIBIT 2

&Date&

&DependentCounsel&

Address

City, State Zip Code

Re: &Plaintiff& v. &Client&

Your File No. ___

Dear &DependentCounsel& __:

Enclosed are a copy of a letter dated ____ from &InsCo& saying that it has hired your firm to represent me in the &Plaintiff& v. &Client& lawsuit and a copy of a portion of my insurance policy.

Also enclosed is a copy of a memo including Rules of Professional Conduct, Rule 3-310 that I got off of the internet. Please comply with Rule 3-310.

Very truly yours,

&Client&

cc: &ClmAgt&

Encl. Reservation of Rights Letter, Policy, Memo

MEMORANDUM OF LAW

RULES OF PROFESSIONAL CONDUCT, RULE 3-310

Avoiding the Representation of Adverse Interests

“(B) A [lawyer] shall not accept or continue representation of a client without providing written disclosure to the client where . . . The [lawyer] has . . . a legal, business, [or] financial relationship with another . . . entity [such as an insurance company that] would be affected substantially by resolution of the matter.

“(C) A [lawyer] shall not, without the informed written consent of each client: (1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or . . . actually conflict.

“(A)(1) ‘Disclosure’ means informing the client or former client of the relevant circumstances and of the actual and reasonably foreseeable adverse consequences to the client or former client;

“(2) ‘Informed written consent’ means the client’s or former client’s written agreement to the representation following written disclosure.”

THE INSURER’S LAWYER ALWAYS REPRESENTS THE INSURER AS A CLIENT

“[W]here the insurer hires counsel to defend its insured . . . the attorney has a dual attorney-client relationship with both insurer and insured.” (Gulf Ins. Co. v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2000) 79 Cal.App.4th 114, 129.) “[T]he attorney represents two clients, the insured and the insurer, and he owes to both a high duty of care imposed by statute and the rules governing professional conduct.” (Lysick v. Walcom (1968) 258 Cal.App.2d 136, 146.) “Between the attorney and the insurer who retained the attorney and paid for the defense, there exists a separate attorney-client relationship endowed with confidentiality. [T]he attorney has a dual attorney-client relationship with insurer and insured. In analyzing this attorney- insurer-insured relationship, the courts have acknowledged that, as a practical matter, the attorney may have closer ties with the insurer than with the insured.” (State Farm Mut. Auto. Ins. Co. v. Federal Ins. Co. (1999) 72 Cal.App.4th 1422, 1428-1429)

_____________________________________________

EXHIBIT 4

&Date&

&DependentCounsel&

Address, City, State Zip Code

Re: &Plaintiff& v. &Client&

Your File No. ___

Dear &DependentCounsel&:

Would you please promptly complete and return the attached is an Ethical Questionnaire?

Attached is a memo I got off of the internet.

Very truly yours,

&Client&

cc: &ClmAgt&

encl: Memo

MEMORANDUM OF LAW

FIDUCIARY DUTY

“The duty of a fiduciary embraces the obligation to render a full and fair disclosure to the beneficiary of all facts which materially affect his rights and interests. Where there is a duty to disclose, the disclosure must be full and complete, and any material concealment or misrepresentation will amount to fraud. [A]lthough the defendant makes no active misrepresentation, this element is supplied by an affirmative obligation to make full disclosure, and the non-disclosure itself is a ‘fraud.’” (Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 188-189 (Neel).)

DUTY TO PROTECT CLIENT

“It is also an attorney’s duty to protect his client in every possible way, and it is a violation of that duty for him to assume a position adverse or antagonistic to his client without the latter’s free and intelligent consent given after full knowledge of all the facts and circumstances. By virtue of this rule an attorney is precluded from assuming any relation which would prevent him from devoting his entire energies to his client’s interests. Nor does it matter that the intention and motives of the attorney are honest. The rule is designed not alone to prevent the dishonest practitioner from fraudulent conduct, but as well to preclude the honest practitioner from putting himself in a position where he may be required to choose between conflicting duties, or be led to an attempt to reconcile conflicting interests, rather than to enforce to their full extent the rights of the interest which he should alone represent.” (Anderson v. Eaton (1930) 211 Cal. 113, 116.)

DUTY OF UNDIVIDED LOYALTY

“An attorney’s duty of loyalty to a client is not one that is capable of being divided, at least under circumstances where the ethical obligation to withdraw from further representation of one of the parties is mandatory, rather than subject to disclosure and client consent.” (Flatt v. Superior Court (1994) 9 Cal.4th 275, 282.)

DUTY OF DISCLOSURE

“Where there is a duty to disclose, the disclosure must be full and complete, and any material concealment or misrepresentation will amount to fraud. Cases in which the defendant stands in a fiduciary relationship to the plaintiff are frequently treated as if they involved fraudulent concealment of the cause of action by the defendant. The theory is that although the defendant makes no active misrepresentation, this element is supplied by an affirmative obligation to make full disclosure, and the non-disclosure itself is a ‘fraud.”’ (Neel, supra, 6 Cal.3d at 188-189.) “A [lawyer] shall not accept or continue representation of a client without providing written disclosure to the client where . . . The [lawyer] has . . . a legal, business, [or] financial relationship with another . . . entity [that] would be affected substantially by resolution of the matter.” (Rule 3-310(B).)

DUTY TO INFORM

“A [lawyer] shall keep a client reasonably informed about significant developments relating to the employment or representation.” (Rule 3-500.)

DUTY TO ADVISE

“One of an attorney’s basic functions is to advise. Liability can exist because the attorney failed to provide advice. Not only should an attorney furnish advice when requested, but he or she should also volunteer opinions when necessary to further the client’s objectives.” (Nichols v. Keller (1993) 15 Cal.App.4th 1672, 1684-1685.) “It is the duty of an attorney to do all of the following: . . . (m) To respond promptly to reasonable status inquiries of clients and to keep clients reasonably informed of significant developments in matters with regard to which the attorney has agreed to provide legal services.” (Bus.&Prof. Cd. §6068(m); See, Neel, supra, 6 Cal.3d at 188-89.)

DUTY TO EXPLAIN IMPLICATIONS

“[T]he Canons of Ethics impose upon lawyers hired by the insurer an obligation to explain to the insured and the insurer the full implications of joint representation in situations where the insurer has reserved its rights to deny coverage.” (San Diego Navy Fed. Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358, 375 (Cumis).)

DUTY TO ANALYZE CONFLICTS

“There is no talismanic rule that allows a facile determination of whether a disqualifying conflict of interest exists. Instead, ‘[t]he potential for conflict requires a careful analysis of the parties’ respective interests to determine whether they can be reconciled.’” (Gulf Ins. Co. v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2000) 79 Cal.App.4th 114, 131, quoting Dynamic Concepts, Inc. v. Truck Ins. Exchange (1998) 61 Cal.App.4th 999, 1007-1008.) A proper conflict of interest analysis should include: “(1) what is the exact nature of the claims asserted in the underlying action, (2) what defenses to coverage are asserted by the insurers, and to what extent, if at all, are they logically related to the liability issues raised in the underlying action, (3) what factual questions have to be resolved in order to sustain or defeat such defenses, (4) what is the likely nature of the available evidence. . . .” (Haskel, Inc. v. Superior Court (1995) 33 Cal.App.4th 963, 980.) “[T]he existence of a conflict of interest should be identified early in the proceedings so it can be treated effectively before prejudice has occurred to either party.” (Cumis, supra, 162 Cal.App.3d at 371, fn. 7.)

DUTY TO OBTAIN INFORMED WRITTEN CONSENT

“A [lawyer] shall not, without the informed written consent of each client: (1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or . . . actually conflict. ” (Rule 3-310(C).)

DUTY TO NOT ACCEPT COMPENSATION

“A member shall not accept compensation for representing a [policyholder] from [an insurer] unless . . . The member obtains the client’s informed written consent.” (Rule 3-310(F).) An attorney who has accepted compensation from an insurer in violation of Rule 3-310(F), may be required to disgorge it.

CONSEQUENCE OF BREACH OF DUTY

“[A]ny violation of . . . duties as such attorney, constitute causes for disbarment or suspension.” (Bus.& Prof. Cd. §6103.)

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