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Compliance with Insurance Carrier's Billing Requirements and Guidelines

Adopted: January 15, 1999

Opinion rules that a lawyer may not comply with an insurance carrier's billing requirements and guidelines if they interfere with the lawyer's ability to exercise his or her independent professional judgment in the representation of the insured.


Law Firm represents Insurance Company and defends its insureds under its liability insurance policies. Insurance Company implemented a compliance review program that includes billing requirements and guidelines. The billing requirements and guidelines provide, among other things, that Insurance Company will not pay for the following: summer associate and law clerk time; research exceeding three hours per case (except with prior written approval); making deposition arrangements or arrangements for meetings or conference calls; intra-office conferencing and memoranda; trial preparation (i.e., preparation of jury instructions, motions in limine, trial notebooks, page/line deposition summaries, etc.) prior to the time a trial date is set; and working on any given day in excess of ten hours, regardless of the number of Insurance Company files on which the timekeeper is working, in the absence of identifiable extraordinary circumstances such as trial, lengthy depositions, and travel.

May the lawyers with Law Firm comply with the billing requirements and guidelines?


No, unless the insured consents after disclosure.

The insured, rather than the insurance carrier, is the lawyer's primary client. See RPC 56. Therefore, the lawyer must be free to exercise his or her independent professional judgment on behalf of the insured. Rule 1.8(f) of the Revised Rules of Professional Conduct provides as follows:

[A] lawyer shall not accept compensation for representing a client from one other than the client unless:

(1) the client consents after consultation;

(2) there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship; and

(3) information relating to representation of the client is protected as required by Rule 1.6.

Similarly, Rule 5.4(c) states: "A lawyer shall not permit a person who recommends, engages, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services."

The billing requirements and guidelines described in the inquiry are designed to regulate the allocation of time and resources to the representation of the insured and thereby reduce the cost of representation. However, such cost saving measures may restrain a lawyer's exercise of independent professional judgment when determining the tasks and services necessary to represent the insured competently. If the requirements and guidelines will restrain a lawyer's professional judgment in representing a particular insured, the lawyer is ethically prohibited from complying with the guidelines and restrictions. See Informal Opinion of the Office of General Counsel of the Alabama State Bar (June 16, 1998). However, a lawyer may comply with billing restrictions and guidelines if the insured consents to the cost saving measures after full disclosure of the benefits and risks involved. See Rule 1.2(c) (permitting a lawyer to limit the objectives of representation with client consent) and Rule 1.7(b) (permitting multiple representation with client consent).

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