On September 14, 2017, the Washington Supreme Court held in Arden v. Forsberg & Umlauf, P.S., No. 93207-7, that lawyers who represent insurance companies in coverage disputes may also defend their insureds provided they adhere to the Rules of Professional Conduct.
In the underlying matter, Hartford retained Forsberg & Umlauf P.S. (“Forsberg”) to defend Hartford’s insureds in a civil matter. Forsberg had represented Hartford in other matters but did not disclose this relationship to the insureds or otherwise obtain their informed consent. The underlying case settled, with Hartford paying the entire settlement amount. However, the insureds sued Forsberg for breaches of fiduciary duty and legal malpractice.
The trial court granted summary judgment in favor of Forsberg. The Washington Court of Appeals affirmed. The Washington Supreme Court also affirmed, but on a different basis. After discussing the lawyers’ obligation to disclose actual and potential conflicts of interest under the Rules of Professional Conduct, the Supreme Court found there was no evidence that the insureds suffered any damages.
In its decision, the Washington Supreme Court rejected the argument that a lawyer who represents an insurer is automatically disqualified from representing the company’s insureds. Thus, lawyers are not precluded from representing both an insurance company and its insured; however, lawyers must follow the Rules of Professional Conduct including obtaining informed written consent from both clients when required.
Disclaimer: The opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.