1. The proposed change would delete the insurance defense exception despite the fact that sound reasons for deleting the exception from the current rule have not been identified.

! Research indicates no substantive problems that would justify this proposed change. There is only one reported decision that addresses the application of SCR 20:1.8(f), Private Reprimand 94-22, and that case did not arise in an insurance context. Staff counsel at OLR advises that in the many years that this rule has been in effect, there has never been a complaint to OLR in which it found a need to address a problem related to the insurance defense situation.

! Requirements of the current rules of professional conduct provide full and complete protection for the client-insured should conflicts exist or evolve relative to coverage. Defense attorneys competently deal with those potential conflicts under the existing SCR without problems or compromises of the rights of the client-insured.

2. The proposed change is unnecessary because the insurance defense exception correctly recognizes the insured's reasonable expectation that the insurer will step in and provide counsel to defend the insured against the claims of third parties.

! The insurance defense exception exists for a perfectly logical reason. The insurance contract purchased by an insured provides coverage for defense costs, which obligates the insurer to pay for the insured's defense and gives it a corresponding right to control the defense. Accordingly, one of the expectations the insured has when purchasing a policy is that the insurer will retain and pay defense counsel should the need for legal representation arise. The proposed change will require counsel retained by the insurer to obtain a separate consent from the insured, beyond that implicit in the purchase of the policy, before they can begin representation. This despite the fact that counsel is simply providing legal services the insured expects the carrier to provide and pay for under the terms of the insurance contract.

3. The proposed change will undermine the insurer/insured relationship.

! By its nature, a consent requirement would imply the existence of a right to refuse consent that an insured may not have under the terms of the insurance contract. Creating such a requirement in the Rules of Professional Responsibility will increase the possibility of conflict between the insured and the insurer over appointment of counsel. Such conflicts would delay the provision of legal services, increase costs, and jeopardize coverage for the insured based on a failure of cooperation. Ancillary litigation may be triggered to resolved those issues.

WHAT TO DO

This, and other, rule changes are pending before the Wisconsin Supreme Court which will hear oral arguments next February. It is expected that both the Civil Trial Counsel of Wisconsin (CTCW) and Wisconsin Insurance Alliance (WIA) will submit briefs and oral arguments in opposition to this specific change.

The STATE BAR OF WISCONSIN has not yet taken a position on the full package of changes pending before the Supreme Court. They are expected to do so at their January 14 meeting.

Interested parties are invited to contact their representative(s)(some districts have more than one representative) on the Board of Governors at the State Bar. If you do not know who represents you on the Board of Governors go to their web page at http://www.wisbar.org/bar/bog.html and follow the link to the "Map of Membership Districts." The map will take you to the "Board of Governors Roster." From there you can send an e-mail message. If you do know your representative(s) on the Board of Governors simply go to http://www.wisbar.org/Committees/CommList.cfm?CommID=BOG and send your representative(s) a note commenting on this proposed rule change. As an option to making the contact thru the State Bar web pages go to http://www.wisinsal.org/boardmap.html and click on the county where you live or practice, that will provide you with a pre-addressed e-mail to the representative(s) for that geographic area and you can send them a note commenting on the proposed rule change.

One page follows which lists concerns raised about this proposed rule change.

Opposition Points Relating to the Proposed Amendment of SCR 20:1.8(f)

> No problem with the current tripartite system has been clearly identified or articulated that requires deletion of the insurance defense exception.

The proposed change appears to be offered in the interest of greater transparency in the insurance defense relationship, yet no general shortcoming in the tripartite system as it currently operates in Wisconsin has been identified that warrants abolition of the insurance defense exception. Isolated problems that arise can and should be dealt with individually under already-existing rules.

> The proposed change is unnecessary because there are appropriate safeguards in place under the existing rules.

Compliance with SCR 20:1.6, Confidentiality, SCR 20:1.7, Conflicts of Interest, and SCR 20:5.4(c), Independence of Counsel presently requires attorneys to clarify their relationships with clients in appropriate circumstances.

> The existing insurance defense exception should be retained because it correctly recognizes the insured's reasonable expectation when purchasing the policy that the insurer will step in and provide counsel to represent the insured against the claims of third parties.

A standard part of liability insurance policies is a defense provision, which obligates the insurer to defend the insured and gives the insurer a corresponding right to control the defense. Accordingly, one of the expectations the insured has when purchasing a policy is that the insurer will retain and pay for defense counsel should the need for legal representation arise. Requiring counsel retained by the insurer to obtain a consent from the insured, beyond that implicit in the purchase of the policy, is unnecessary given that counsel's representation of the insured is consistent with the insured's reasonable expectations under the policy.

> The introduction of a "consent" requirement beyond that implicit in the purchase of the policy may undermine the insurer/insured relationship and trigger ancillary litigation.

A separate consent requirement under the Rules of Professional responsibility suggests the existence of a right to refuse consent that an insured may not have under the terms of the insurance contract. Refusal of a consent to which an insurer is entitled under a policy would place the insured in violation of the duty to cooperate and jeopardize coverage. The resulting conflict between the insurer and the insured may trigger ancillary litigation to resolve those issues.

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