In the tripartite relationship (the relationship between the insurer the insured and the attorney retained by the insurer to represent the insured is commonly described as a tripartite relationship the attorney has an attorney-client relationship with the insured and a fiduciary one with insurer.
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Code of Ethics
In addition, under Rule 1.8(e):
A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the
clients … unless each client consents after disclosure, including disclosure of the existence in nature of all the claims or pleas
involved and of the participation of each person in the settlement.
134 Ill. 2d Rule 1.8(e).
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1.7
While not designed specifically to govern the tripartite relationship, the rules of professional conduct referenced above, have clear implications and application to an attorney representing an insured pursuant to an assignment from an insurance carrier. Given the fact that both the insurer and the insured constitute “clients” of the attorney, the provision of Rule 1.7(a) come into play if the interest of an insurer and its insured become adverse during the course of the attorney’s representation. Furthermore, the provisions of Rule 1.7(b) can be triggered in the tripartite relationship as well, in a situation in which the attorney feels constrained or materially limited in his ability to represent one of his clients (either the insurer or the insured) as a result of the lawyer’s responsibilities to his other client in the tripartite relationship.
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