The tripartite relationship is a term of art which describes the complex relationship between (1) an insurance company, (2) it’s insured, and (3) defense counsel retained to represent the insured. The relationship arises when an insurance company retains counsel to defend a claim or lawsuit against a policyholder. While the relationship benefits all three parties, it also gives rise to a complicated set of duties and ethical responsibilities that can create conflicts and other issues that must be effectively managed.
The benefits of the tripartite relationship are easy to spot. All parties benefit from an aligned relationship with privileged communications. The insured benefits from experienced defense counsel paid for by the insurer. The insurer also has a relationship with defense counsel through which it can participate in litigation strategy decisions while managing costs.
The tripartite relationship, however, is not without pitfalls. Indeed, a host of ethical issues arise whenever a carrier retains counsel for its policyholders. And the first question is the most important: “who is the client?” The answer is important for an analysis of whether communications are privileged and a conflicts-of-interest analysis. These are the types of ethical issues that permeate the tripartite relationship.
In general, there are two schools of thought about whether defense counsel represents the insured (the “single-client theory”), e.g., Safeway Managing General Agency Inc. v. Clark & Gamble, 985 S.W.2d 166, 168 (Tex.App.-San Antonio 1998), or both the insured and the insurer (the “dual-client theory”). E.g. Mitchum v. Hudgens, 533 So.2d 194, 198 (Ala. 1988) (both the carrier and the insured are considered clients). Maryland has not expressly adopted one or the other, but cases and ethics opinions suggest that Maryland uses a hybrid approach where defense counsel owes a duty to both the insured and the insurer.
Perhaps the most well-known Maryland case addressing the tripartite relationship is Brohawn v. Transamerica Ins. Co., 276 Md. 396, (1975). In Brohawn, the then-Court of Appeals addressed whether carrier-appointed counsel could defend an insured in a case in which coverage was disputed. The court recognized some aspects of the dual representation theory, including that defense counsel owes a duty to both the insurer and the insured. However, the court did not go as far as to consider both the carrier and the insured as clients. Instead, the court relied upon Fid. & Cas. Co. v. McConnaughy, 228 Md. 1 (1962), holding defense counsel must represent the insured with complete fidelity and cannot advance the interests of the insurer to the detriment of the insured. Ultimately, it can fairly be said that defense counsel owes a duty to both the carrier and the client, but there is a higher duty owed to the insured.
The principle that defense counsel, in the event of a potential or actual conflict, owes his or her loyalty to the insured rather than the carrier has repeated itself in the 50 years since Brohawn. For example, in Maryland Ethics Docket 2000-23 Ethics Opinion, staff counsel for a carrier asked the MSBA Ethics Committee if withdrawal was mandatory when the positions of the insured and insurer were in conflict — such as when there are coverage issues. The committee cited a passage from Ethics Opinion 1999-7 (which I have not been able to locate) with approval: an attorney representing a carrier is impliedly authorized to provide information ordinarily protected by Rule 1.6 so the carrier can evaluate a claim so long as the lawyer does not include information detrimental to the insured. After considering the dual representation theory from the Restatement of the Law Governing Lawyers, and the constraints of Brohawn, the committee concluded withdrawal was not mandatory. The lawyer was directed to look at the specific facts of the case to determine if there was a conflict under the normal conflict rules.
Other authorities support the notion of a duty owed to the carrier arise in the context of addressing whether the attorney client privilege or work product doctrine apply. In Cutchin v. State, 143 Md. App 81 (2002), the court addressed whether statements to a carrier by the insured were privileged. The court held the attorney-client privilege attached to communications with the carrier (1) when the dominant purpose of the communication was to defend the case and (2) when the insured had a reasonable basis for believing the communication was privileged. Similarly, in Allstate Ins. Co. v. Warns, 2013 U.S.Dist. LEXIS 44507 (D.Md. 2013), U.S. Magistrate Judge Stephanie Gallagher held that a carrier has standing to assert the attorney-client privilege and work-product doctrine because the carrier “serves as the ‘client.’ ” Id. at 6-8.
Many jurisdictions have also addressed the question of whether defense counsel can submit confidential information in bills to the carrier. In Ethics Opinion 290, the D.C. Bar of course approved of disclosures to the carrier in the context of the tripartite relationship. While a disclosure to the carrier was generally permitted, if the carrier uses an outside audit service to review legal bills, an additional disclosure should be made to the insured.
In sum, many of the MARPC are implicated when a carrier appoints defense counsel. These include the rules on conflicts, payment of fees by a third party, and the duty to protect client confidences and secrets. Each of these obligations plays out differently and depends on the specific facts in a particular case. However, counsel should remember that while the carrier pays the bills, the highest duty of loyalty is to the insured client.
Craig Brodsky is a partner with Goodell, DeVries, Leech & Dann LLP in Baltimore. For over 25 years, he has represented attorneys in disciplinary cases and legal malpractice cases, and he has served as ethics counsel to numerous clients. His Legal Ethics column appears monthly in The Daily Record. He can be reached at csb@gdldlaw.com.
This article originally appeared in The Daily Record on December 4, 2025.
