Indiana Law Review Survey of the Law of Professional Responsibility Charles M. Kidd* Greg N. Anderson** Very often, an examination of the role of professional responsibility of lawyers takes the form of a recitation of the latest and most significant disciplinary actions from the state's highest court. During the period covered by this Article, a number of significant developments occurred that provide important guidance to practicing lawyers with regard to the standards ofcivility and professionalism expected ofthem in day-to-day practice. Moreover, many of these guideposts have appeared in the form of opinions about areas of substantive law rather than in opinions directly disciplining a member of the profession. In other words, the Indiana Supreme Court is taking a proactive approach to defining the roles oflawyers and the legal profession. This approach may be at odds with the common understanding of lawyers as zealous advocates within the legal system. The court's stated vision may be described as a required balancing ofthe lawyer's role as advocate, limited by the judicial system's duty to uncover the truth. Put another way, the practicing lawyer must recognize that enforceable duties are owed to third parties outside the attorney-client relationship. On another front, the supreme court addressed a "hot button" topic among litigators during this survey period: the use of salaried in-house lawyers to defend insureds in claims against their policies. As several other states have done, the Indiana Supreme Court held that the attorney-employer relationship was not a per se conflict of interest or inherently problematic.^ Further, the court reftised to condemn the arrangement on ideological grounds and decided to examine every such allowed problem on a case-by-case basis.^ As long as the relationship between the lawyer and the insurance carrier is made clear to the insured client, there is no ethical problem assumed at the outset of the relationship.^ Although dangers clearly exist, conscientious and ethical lawyers can avoid these shoals. The in-house lawyer must not, however, represent himself as somehow independent of the insurance carrier."* I. Civility and Professionalism in the Seventh Circuit and Indiana The Honorable Marvin E. Aspen, Chief Judge of the United States District Court for the Northern District ofIllinois, dates the "modem" civility movement * Staff Attorney, Indiana Supreme Court Disciplinary Commission. J.D., 1987, Indiana University School of Law—Indianapolis. The opinions expressed herein are solely those of the authors and do not represent a statement of law or policy by the Indiana Supreme Court, and of its staffer attendant agencies. ** Staff Attorney, Indiana Supreme Court Disciplinary Commission. J.D., 1994, Indiana University School of Law—Indianapolis. 1 . See Cincinnati Ins. Co. v. Wills, 7 1 7 N.E.2d 1 5 1 (Ind. 1 999). 2. See id. Jii\55. 3. Seeid.?X\m. 4. See id. at 165. 1366 INDIANA LAW REVIEW [Vol. 33:1365 back at least to 1 97 1 / Judge Aspen chose this date because that was "when then- ChiefJustice Warren Burger remarked that *overzealous advocates seem to think the zeal and effectiveness ofa lawyer depends on how thoroughly he can disrupt the proceedings or how loud he can shout or how close he can come to insulting all those he encounters.'"^ In the Interim Report ofthe Committee on Civility of the Seventh Federal Judicial Circuit, the Committee defined civility as "professional conduct in litigation proceedings of judicial personnel and attorneys."^ The Committee, however, "did not limit the term to good manners or social grace."* Monroe Freedman, a critic of the proponents for civility and professionalism in the legal profession, has noted the lack of a clear definition of the term "civility."^ Monroe Freedman stated that: Everyone is for civility and courtesy, but everyone is defining those terms differently. In a recent series of exchanges on the online service Lexis Counsel Connect, for example, definitions of incivility ranged from fraud and deceit to failure to return telephone calls. In between were: being a junkyard dog; being sneaky, mean, or misleading; not being ethical; failing to provide discovery; obstructing discovery; badgering witnesses; ignoring deadlines; being rude; and being a jerk. Obviously, "civility" means radically different things to different people. ^° As Freedman notes, civility and professionalism are frequently discussed topics in the literature of today's legal community. ^^ 5 . Hon. Marvin E. Aspen, A Response to the Civility Naysayers, 28 STETSON L. Rev. 253, 254 (1998) (Judge Aspen was appointed by President Carter to the United States Court for the Northern District of Illinois on July 24, 1979. On July 1, 1995, he was elevated to Chief Judge. Judge Aspen served as chair ofthe Committee on Civility ofthe Seventh Federal Judicial Circuit); see also Monroe Freedman, Civility Runs Amok, Legal Times, Aug. 14, 1995, at 54 (crediting a series of speeches by then Chief Justice Warren Burger with creating "[t]he push for civility, courtesy, and professionalism. . . in the early 1970's"). 6. Aspen, supra note 5, at 254 (quoting Chief Justice Warren E. Burger, in The Necessity for Civility, 52 F.R.D. 21 1, 213 (1971)). Judge Aspen also notes: "Efforts toward civility in law, of course, date back much further." Id at 254 n.4. Further, Judge Aspen refers to a Nineteenth Century barrister's thoughts on civility and Dean Roscoe Pound's 1906 address to the American Bar Association. See id; see also Freedman, supra note 5, at 54, paraphrasing then-Chief Justice Warren E. Burger's comments in The Necessityfor Civility, 52 F.R.D. 211 (1971). 7. Interim Report ofthe Committee on Civility ofthe Seventh FederalJudicial Circuit, 1 43 F.R.D. 371,374(1992). 8. Id 9. Freedman, supra note 5, at 54. 10. Id, 1 1 . See, e.g., Christopher W. Deering, Candor Toward the Tribunal: ShouldAn Attorney Sacrifice Truth arui Integrityfor the Sake ofthe Client?, 31 SUFFOLK U. L. REV. 59 (1997); Daisy Hurst Floyd, Candor Versus Advocacy: Courts ' Use ofSanctions to Enforce the Duty ofCandor Toward the Tribunal, 29 Ga. L. Rev. 1035 (1995); Austin Sarat, Enactments ofProfessionalism: 2000] PROFESSIONAL RESPONSIBILITY 1367 Members of the Indiana and Seventh Circuit courts have informally joined in this discussion through their participation in symposiums and by writing law review and bar journal articles.*^ In 1989, the Seventh Circuit formed a nine- member committee to determine whether a civility problem existed in the Seventh Circuit and, if so, to recommend what can be done about the problemJ^ Indiana's judiciary and the Seventh Circuit's judiciary have not limited their discussion of the civility and professionalism problem to these more or less informal forums. The Seventh Circuit adopted the Standardsfor Professional Conduct within the Seventh FederalJudicial Circuit^^ as a result ofthe findings ofits Committee on Civility. Recently, Indiana courts have addressed the civility and professionalism issue in several cases. Members of the judiciary in the Seventh Circuit and Indiana state courts have expressed the view that a lack of A Study ofJudges ' and Lawyers ' Accounts ofEthics and Civility in Litigation, 67 FORDHAM L. Rev. 809 (1998); Edward M. Waller, Jr., Professionalism: The Client May Come Second, 28 Stetson L. Rev. 279 (1998); Kathleen P. Browe, Comment, A Critique ofthe Civility Movement: Why Rambo Will Not Go Away, 11 Marq. L. Rev. 751(1 994); Brenda Smith, Comment, Civility Codes: The Newest Weapons in the "Civil" War over Proper Attorney Conduct Regulations Miss Their Mark, 24 U. DAYTON L. REV. 151 (1998); Paul Lowell Haines, Note, Restraining the Overly ZealousAdvocate: TimeforJudicial Intervention, 65 IND. L.J. 445 (1990); Arthur Garwin, Uncivil Temptations: Lawyers Who Indulge in Hardball Tactics Could Face Suspension, Fee Reduction or Other Penalties, A.B.A. J., June 1999, at 81; Jerome J. Shestack, Advancing Professionalism Needs Judicial Help, A.B.A. J., Apr. 1 998, at 8. 12. See, e.g.. Aspen, supra note 5; Marvin E. Aspen, The Searchfor Renewed Civility in Litigation, 28 Val. U. L. Rev. 513 (1994) (this issue ofthe Valparaiso University Law Review was from symposium entitled Professionalism in the Practice ofLaw: A Symposium on Civility and Judicial Ethics in the 1990s); Brent E. Dickson & Julia Bunton Jackson, RenewingLawyer Civility, 28 Val. U. L. Rev. 53 1 (1994) (from the same symposium issue ofthe Valparaiso University Law Review); Hon. Larry J. McKinney, Some Thoughts on Civility and the Practice ofLaw, 38 RES Gestae, Apr. 1995, at 7; Justice Randall T. Shepard, What Judges Can Do About Legal Professionalism, 72 Ra. B.J., Mar. 1998, at 30. This list of law review and barjournal articles is by no means a complete list ofthe informal comment that thejudges ofthe Seventh Circuit and the Indiana courts have made on the topic of civility and professionalism. 13. See Aspen, supra note 5, at 254. Three of the nine members of the Seventh Circuit's Committee on Civility were judges in the Seventh Circuit: Hon. Marvin E. Aspen, Chairman and U.S. District Judge, Northern District of Illinois; Hon. Larry J. McKinney, U.S. District Judge, Southern District of Indiana; and Hon. John C. Shabaz, U.S. District Judge, Western District of Wisconsin. The other members of the Seventh Circuit's Committee on Civility were lawyers in firms practicing in the Seventh Circuit's jurisdiction: William A. Montgomery from SchiffHardin & Waite in Chicago, Illinois; David E. Beckwith from Foley & Ladner in Milwaukee, Wisconsin; GeorgeN. Leighton from Earl L. Neal & Associates in Chicago, Illinois; Bernard J. Nussbaum from Sonnenschein Nath & Rosenthal in Chicago, Illinois; Nancy Schaefer from Schaefer Resenwein & Fleming in Chicago, Illinois; and Stephen W. Terry, Jr. from Baker & Daniels in Indianapolis, Indiana. 1 4. Final Report ofthe Committee on Civility ofthe Seventh FederalJudiciary Circuit, 1 43 F.R.D. 441 (1992) [hereinafter 5evg/ir/i Circuit's Standards]. 1368 INDIANA LAW REVIEW [Vol. 33:1365 civility and professionalism is currently a problem in the legal profession. These members believe part of their judicial duties is to advance the values of civility and professionalism in the legal community. A. The Seventh Circuit's Standards On December 14, 1992, the Seventh Circuit adopted the Standards for Professional Conduct within the Seventh Federal Judicial Circuit ("Seventh Circuit's Standards").'^ The Seventh Circuit's Standards are the result ofwork done by a committee of lawyers and judges from the Seventh Circuit that investigated the issue of civility.'^ The committee was formed in 1989 by then- Chief Judge William J. Bauer, who gave the committee the mandate to "determine whether there is a civility problem in litigation in the Seventh Circuit and, if so, what should be done about it."*^ In its Final Report, the committee made the following recommendations: 1. The Proposed Standards for Professional Conduct within the Seventh Federal Judicial Circuit . . . should be adopted. 2. Each lawyer admitted to practice (or appearing pro hac vice) in any court in the Seventh Federal Judicial Circuit should receive a copy of the Standards for Professional Conduct. Each court within the Circuit should consider adoption of a local rule requiring each lawyer admitted to practice (or appearing pro hac vice) to certify, as a precondition to admission and to filing an appearance in any court within the Seventh Federal Judicial Circuit, that he or she has read and will abide by the Standards. 3. Civility training, including education regarding the Standards for Professional Conduct, should be implemented by public law offices, private law firms, and corporations with in-house counsel. This training should also be available at federal judicial workshops. 4. All lawyers and judges within the Seventh Federal Judicial Circuit should consider participation in civility, professionalism, or mentoring programs in professional legal associations and bar associations as well as participation in one ofthe American Inns of Court. 5 . Ifa professional legal organization or bar association does not have a civility, professionalism, or mentoring program, or an American Inn of Court does not exist in a particular area, lawyers and judges should consider establishing such a program or an Inn of Court. 15. Id. 16. See id. 1 7. Id. ; see also Aspen, supra note 5, at 254. 2000] PROFESSIONAL RESPONSIBILITY 1369 6. Law schools should encourage discussion of the Standards of Professional Conduct in the classroom and, especially, in clinical training programs, and should encourage discussion among faculty members.'^ The Seventh Circuit's Standards, as adopted on December 14, 1992, contain a Preamble, a section on Lawyer's Duties to other Counsel, a section on Lawyer's Duties to the court, a section on the Court's Duties to Lawyers and a section on Judges' Duties to Each Other. '^ Even though the Seventh Circuit's Standards specify certain types of conduct that are not acceptable in the legal community, these standards are not regulatory (i.e., not enforceable by a disciplinary body), but rather, these standards are aspirational. The Preamble provides, in part: The following standards are designed to encourage us, judges and lawyers, to meet our obligations to each other, to litigants and to the system of justice, and thereby achieve the twin goals of civility and professionalism, both of which are hallmarks of a learned profession dedicated to public service. We expect judges and lawyers will make a mutual and firm commitment to these standards. Voluntary adherence is expected as part of a commitment by all participants to improve the administration of justice throughout this Circuit. These standards shall not be used as a basis for litigation or for sanctions or penalties. Nothing in these standards supersedes or detracts from existing disciplinary codes or alters existing standards of conduct against which lawyer negligence may be determined.^^ The first paragraph ofthe Preamble to the Seventh Circuit's Standards points out that lawyers' advocacy ofclients is limited by their duties to the legal system: A lawyer's conduct should be characterized at all times by personal courtesy and professional integrity in the fullest sense ofthose terms. In fulfilling our duty to represent a client vigorously as lawyers, we will be mindful of our obligations to the administration ofjustice, which is a truth-seeking process designed to resolve human and societal problems in a rational, peaceful, and efficient manner.^' By adopting a voluntary and aspirational code of civility, the Seventh Circuit provides to lawyers a guide to the proper limits of advocacy within a system of justice that is a truth-seeking process. As an aspirational guide to the proper limits ofadvocacy in the legal system, these standards, however, do not mandate 1 8. Seventh Circuit Standards, 1 43 F.R.D. at 447. 19. 5'ee/d at 448-52. 20. Mat 448. 21. Id 1370 INDIANA LAW REVIEW [Vol. 33:1365 an end to the incivility among the members of the legal profession. The Committee on Civility was aware that the Standards would not change the incivility among the members ofthe legal profession, and asserted that if change in the incivility ofthe bar "is to come, it must stem from the individual effort of each participant in the litigation process as part ofa personal obligation assumed equally by lawyers andjudges."^^ In short, what is needed to bring emd end to the incivility among the members of the bar is a matter of integrity and character, neither of which may be gained by a mere reading the Seventh Circuit's Standards. Improving one's character is an obligation that each member of the bar must do on his or her own, according to the Committee on Civility.^^ Accordingly, the Seventh Circuit's Standards are to act as a bench-mark to help each member ofthe bar to measure his or her own progress in this endeavor. In 1998, however, the United States Court ofAppeals in the Seventh Circuit criticized a lawyer, Grun v. Pneumo Abex Corp.,^^ for conduct that did not measure up to aspirational goals ofthe Seventh Circuit's Standards. The Pneumo Abex case involved a suit against a corporation brought by a former president of a corporate division alleging that the corporation breached a severance compensation agreement and a management incentive compensation plan.^ The district court dismissed the former president's case against the corporation after neither party appeared for a trial date.^^ Neither party had received notice ofthis trial date.^^ After dismissing the case, the district court sent notice of the dismissal to the parties.^* The corporation's lawyer received notice of the dismissal; however, the former president's lawyer did not receive notice of the dismissal. Eight months after the case had been dismissed, the former president ' s lawyer sent a change of address form to the corporation's lawyer. The corporation's lawyer chose not to inform the former president's lawyer that the case had been dismissed when the corporation's lawyer received the change of address form from her.^^ In a footnote, the Seventh Circuit Court criticized the decision of the corporation's lawyer "to remain silent when he admittedly knew that Grun [the former corporate president] was unaware ofthe dismissal order, ant/that neither party had received notice of the trial date."^^ The Seventh Circuit Court was offended that the corporation's lawyer admitted that he had researched whether he had a duty to inform the former president's lawyer ofthe dismissal notice and, when he found no such affirmative duty "in the rules, he chose to remain 22. Id. at 446. 23. See id. 24. 163F.3d411(7thCir. 1998). 25. 5eeiV/. at 417-18. 26. See id. zi AM. 27. See id. 28. See id 7ii An. 29. See id. 30. Id at 422 n.9. 2000] PROFESSIONAL RESPONSIBILITY 1371 silent."^* The Seventh Circuit Court based its criticism of the corporation's lawyer on the Rules ofProfessional Conduct for the Northern District ofIllinois and the Seventh Circuit's Standards.^^ Local Rule 83.58.4(a)(5) ofthe Rules of Professional Conduct for the Northern District of Illinois prohibits an attorney from engaging in conduct that is prejudicial to the administration ofjustice." Duty 18 in the section on Lawyers' Duties to Other Counsel in the Seventh Circuit's Standards provides: "We will not cause any default or dismissal to be entered without first notifying opposing counsel, when we know his or her identity."^^ The Seventh Circuit recognized that the corporation's lawyer "did not affirmatively 'cause' the case to be dismissed, but counsel was well aware that things were amiss and chose not to fix them even though doing so would have promoted the interest of fair play."^^ Although the court recognized that the corporation's lawyer had no affirmative duty to alert the former president's lawyer of the dismissal, the Seventh Circuit Court criticized the corporation's lawyer because "the spirit of the rules required such a result."^^ Clearly, the Seventh Circuit Court seriously takes a lawyer's duty to improve civility among the members ofthe bar and, by criticizing uncivil conduct by lawyers who appear before it, is willing to guide lawyers toward the aspirational goals ofcivility and professionalism. B, Indiana Courts and Civility Addressing a notice issue similar to that in Pneumo Abex, the Indiana Supreme Court in 1 999 tackled the civility and professionalism problem in a case entitled Smith v. Johnston?^ Like the Pneumo Abex case, the court in Smith v. Johnston looked deeper than the legal duties of lawyers as spelled out in the various codes and rules of professional conduct. The court noted: The [Indiana Rules of Professional Conduct] are guidelines for lawyers and do not spell out every duty a lawyer owes to clients, the court, other members of the bar and the public. The preamble to the Rules is clear that "[t]he Rules, do not, however, exhaust the moral and ethical considerations that should inform a lawyer, for no worthwhile human activity can be completely defined by legal rules." Thus lawyers' duties are found not only in the specific rules of conduct and rules of procedure, but also in courtesy, common sense and the constraints ofour judicial system. As an officer of the Court, every lawyer must avoid 31. Id. 32. See^id. 33. See id. (citing ILCS S. Ct. Prof. Conduct Rule 8.4, providing "[a] lawyer shall not , . . engage in conduct that is prejudicial to the administration ofjustice."). 34. Seventh Circuit 's Standards, 143 F.R.D. 441, 450 (1992). 35. Grww, 163F.3dat422n.9. 36. Id 37. 71 1 N.E.2d 1259 (Ind. 1999). 1372 INDIANA LAW REVIEW [Vol. 33:1365 compromising the integrity of his or her own reputation and that of the legal process itself.^* To put it another way, lawyers, according to the Smith v. Johnston court, are more than mere advocates, zealously representing their clients; lawyers are officers ofthe court and owe a duty to the integrity ofthe "legal process itself."^^ This duty to the integrity ofthe legal process, according to Smith v. Johnston, is based partially on the specific rules governing procedure and lawyer conduct; however, this duty is also based partially on amorphous ethical norms that the court called "courtesy, common sense and the constraints of the judicial system."^^ Before looking at the Smith v. Johnston analysis in detail, this section will contain an analysis of the development of civility and professionalism in the Indianajudicial system. First, this section will review an early Indiana Supreme Court case entitled Pittsburgh, C.,C. & St. L Railway Co. v. Muncie & Portland Traction Co.^^ addressing the issue ofwhat is the appropriate level ofadvocacy for a lawyer. Second, this section will address the issue of lawyer incivility in appellate briefs. Finally, it will examine a few Indiana cases in which the Indiana Supreme Court has initiated a discussion on the proper limits that should be placed on a lawyer in the course of his or her advocacy for a client, returning to Smith V. Johnston. 1. An Early Case.—^In 1 906, the Indiana Supreme Court addressed the issue of a lawyer's use of language in an appellate brief that was "discourteous" in a case styled as Pittsburgh, C, C. & St. L. Railway Co. v. Muncie & Portland Traction Co.^^ This case involved a railroad company's action to enjoin the construction of a grade crossing over a railroad."*^ The construction company filed a cross-complaint to enjoin the railroad company from interfering with the construction of the grade crossing.'*'* The trial court found in favor of the construction company and granted an injunction against the railroad company. The railroad company appealed and filed its brief in support of its appeal.'*^ The briefwas 142 pages long and included language the court considered improper.'*^ The court quoted the following passage from the railroad company's brief: But the court, instead of granting appellant relief, has concluded and decreed that the operation of appellant's railroad is subservient to the rights ofappellee, and that appellee [the construction company] may tear up and destroy its railroad, and obstruct and prevent appellant's 38. Id. at 1263-64 (quoting IND. Professional Conduct preamble). 39. Id at 1264. 40. Id 41. 77N.E.941(Ind. 1906). 42. Id 43. See id. 44. See id. 45. See id. 46. See id. 2000] PROFESSIONAL RESPONSIBILITY 1373 operation thereof, and appellant is enjoined from interfering with whatever appellee may do or desire to do. A more outrageous decree never disgraced the record of any court/^ The court in Muncie & Portland Traction Co. ordered the railroad company's brief to be stricken/* The Muncie & Portland Traction Co. court referred to lawyers as "officers of the court" and "assistants in the administration of justice.'"*^ Anticipating language of the proponents of "modem civility," the court in Muncie & Portland Traction Co. reasoned: [T]he purpose of a brief is to present to the court in concise form the points and questions in controversy, and by fair argument on the facts and law of the case to assist the court in arriving at a just and proper conclusion. A brief in no case can be used as a vehicle for the conveyance of hatred, contempt, insult, disrespect, or professional discourtesy ofany nature for the court ofreview, trial judge, or opposing counsel. Invectives are not argument, and have no place in legal discussion, but tend only to produce prejudice and discord. The language referred to is offensive, impertinent, and scandalous.^° The Muncie &. Portland Traction Co. court draws a distinction between what is proper advocacy in an appellate brief and what is improper (i.e., professional discourtesy). The Muncie & Portland Traction Co. court concludes that argument on the facts and law of a particular case is proper advocacy, but invectives have no place in legal discussion.^' 2. Incivility in Appellate Briefs.—In the 1990s, the Indiana courts have addressed the issue of incivility in the legal profession in several cases involving lawyers' duties to the integrity ofthe legal profession while representing a client in a civil case. The significance of these cases is that the Indiana courts have begun to make a distinction between proper and effective advocacy within the limits of professionalism and civility and zealous advocacy (which the Indiana courts have often found ineffective) without limits. Several ofthese cases, like the Muncie & Portland Traction Co. case, look at the issue of lawyer civility in appellate briefs.^^ In 1991, the Indiana Court of Appeals addressed an example of incivility in an appellate brief in Clark v. Clark.^^ The Clark case involved an appeal by the 47. Id. 48. See id. at 942. 49. /t/. at 941. 50. Id. dk 942 (emphasis added). 51. See id. 52. Seeh&h Appliances & Servs., Inc. v. McFerran, 712 N.E.2d 1033 (Ind. Ct. App. 1999); Bloomington Hosp. v. Stofko, 709 N.E.2d 1078 (Ind. Ct. App. 1999); WorldCom Network Servs., Inc. v. Thompson, 698 N.E.2d 1233 (Ind. Ct. App. 1998); Amax Coal Co. v. Adams, 597 N.E.2d 350 (Ind. Ct App. 1992); Clark v. Clark, 578 N.E.2d 747 (Ind. Ct. App. 1991). 53. C/arit, 578 N.E.2d at 747. 1374 INDIANA LAW REVIEW [Vol. 33: 1365 wife from the trial court's property settlement in a divorce.^"* The appellate court noted that the lawyer for the wife had used "intemperate language" in the wife's brief.^^ The C//a//?M/e 60(B)(3)." Id. (Rucker, J., concurring). An interesting question is whether Justice Rucker would have found that the conduct of the husband's lawyer in the Smith v. Johnston case constituted misconduct. 204. See Smith, 71 1 N.E.2d at 1264. 205. See id at 1262-64. 2000] PROFESSIONAL RESPONSIBILITY 1 393 II. "House Counsel" or "Captive Firm" Litigation During the period covered by this Article, the Indiana Supreme Court addressed an important professional responsibility issue regarding the way in which the law is practiced when a third-party payor—an insurer^—is in the mix. The case is Cincinnati Insurance Co. v. Wills?^ At issue is the developing practice by liability insurers of using lawyer-employees to represent insured defendants in personal injury litigation.^^^ The case was also important to other entities which provide lav^ers to render legal services to those other than the insurer proper.^^^ By way of example, some not-for-profit corporations directly provide lawyers to assist non-members of the corporation.^°^ Many policies, meanwhile, contain "duty to defend" clauses which require the insurer to provide counsel.^*^ By way of further example, errors and omissions carriers for corporate officers and directors often use policies containing such language. Hence, the opinion generated fairly widespread interest by the bar.^" On November 1 1, 1994, Betty Suter's dog started to run into the path of Elaine Mellinger's car on State Road 26 in Tippecanoe County.^ ^^ Mellinger lost control ofher car and hit David Wills.^'^ Wills then sued Mellinger and Suter for his resulting injuries.^*'* Suter was insured through the Celina Insurance Group and, under the terms of Suter's policy, Celina assigned attorney Keith Faber to defend Suter.^'^ Unlike the traditional arrangement where an insurance company would hire a lawyer from a private firm to represent a defendant, Faber was a salaried employee of Celina.^ *^ "Suter was advised that although Faber was employed and paid by Celina, his ethical obligations were owed to Suter alone."^^^ After she consulted with another lawyer, Suter agreed to Faber' s 206. 717 N.E.2d 151 (Ind. 1999) (evolving out of personal injury litigation sub nom. Wills V. Mellinger, case number 79D01-9605-CP-I32, which began in the Tippecanoe County Superior Court). 207. See id. at \53. 208. More than a dozen amici curiae participated in the briefing of this case before the Indiana Supreme Court representing all the viewpoints identified in the main body of this Article. See id at 152-53; see also Petition of Youngblood, 895 S.W.2d 322 (Tenn. 1995). 209. 5ee^if//^, 717 N.E.2d at 152-53. 210. Id 211. See id 2 1 2. Fact summary taken from the "Order Disqualifying Keith L. Faber From Representing Betty Suter and Requiring Celina Insurance Group and Cincinnati Insurance Company to Cease and Desist from Engaging in the Unauthorized Practice of Law" issued by the Tippecanoe Superior Court on June 11, 1998. 213. Id 214. See Wills, 717 N.E.2d at 153. 215. See id. 216. See id. 111. Id 1394 INDIANA LAW REVIEW [Vol. 33: 1365 representation.^^* Wills, the plaintiff, moved to disqualify Faber as defendant Suter's lawyer claiming that Celina was engaged in the unauthorized practice of law.^'^ Celina is not the only insurer to use salaried lawyers to represent its insureds.^^^ The Cincinnati Insurance Company moved to intervene in the litigation because, like Celina, they provided Indiana counsel for their insureds through an entity known as Berlon & Timmel.^^^ Berlon & Timmel is staffed by salaried employees ofthe insurance company who represent only insureds and the insurance company itself ''' Cincinnati Insurance Company was allowed to intervene and on June 11, 1998, the trial court entered an order granting the plaintiffs motion to disqualify Faber "so long as he continue[d] to be an employee or agent ofCelina Insurance Group. . . ."^^^ The trial court reasoned that Faber's continued employment with Celina may aid and abet the insurer's unauthorized practice of law by a corporation.^^'* The trial court made a similar finding relative to the Berlon & Timmel lawyers employed by Cincinnati Insurance Company.^^^ Based upon these findings, the trial court ordered Berlon & Timmel to close their Indianapolis office.^^^ The trial court's ordered was stayed by the Indiana Court ofAppeals and the insurers successfully petitioned for immediate transfer to the Indiana Supreme Court.^^^ In a lengthy opinion authored by Justice Boehm, the Indiana Supreme Court identified three central ethical issues associated with the case:^^* 1. Whether an insurance company is engaged in the unauthorized practice of law when it employs house counsel to represent its insureds. 2. Whether there is an inherent conflict of interest where an insurance company employs house counsel to represent its insureds. 3. Whether the representation was properly entered into in each particular case.^^^ 218. See id. 219. See id. 220. See id. 221. See id 222. See id. 223. Id at 153-54. 224. Seeid.^X\5^. 225. See id. 116. See id. 111. See id lis. See id ?it\54'55. 229. Id. at 1 55. In relevant part, Indiana Professional Conduct Rule 7.2 provides, "A lawyer shall not practice under a name that is misleading as to the identity, responsibility or status ofthose practicing thereunder, or is otherwise false, fraudulent, misleading [or] deceptive—" IND. PROF. 2000] PROFESSIONAL RESPONSIBILITY 1395 A. The Jurisdictional Issue At the outset, the Indiana Supreme Court noted that the regulation ofthe bar is, as a general matter, within their exclusive jurisdiction under the Indiana Constitution.^^° The court explained that the trial court had wide authority in regulating the activity in its court in relation to the attorneys who appear before it, but that does not include regulation ofthe bar as a whole.^^' It also noted that the trial court's order to Berlon & Timmel to close its doors was a sweeping remedy that is only available to the Indiana Supreme Court through its constitutional grant.^^^ Finally, the court explained that it granted immediate transfer not only to resolve the jurisdictional issue, but to deal with what it perceived to be an important question for the members ofthe bar.^^^ B. The Unauthorized Practice ofLaw by a Corporation Issue The Indiana Supreme outlined the syllogism used by the trial court in concluding that "house" counsel were assisting their corporate employer in the unauthorized practice of law. (1) the attorney-agents of Celina are engaged in the practice of law; (2) Celina, a corporation, can act only through agents; (3) the acts of the attorneys are those of Celina; (4) Celina is engaged in the practice of law.^^'* After working through the syllogism the trial court concluded "that Celina's practice of law was unauthorized because Indiana's professional corporation statute implicitly prohibits general business corporations and insurance companies from practicing law."^^^ The Indiana Supreme Court, by way of analogy, concluded that the trial court's logic was erroneous.^^^ The supreme court agreed that a legal entity COND. R. 7.2. 230. See Wills, 111 N,E.2d at 1 54. Article 7, section 4 ofthe Indiana Constitution provides in part: The Supreme Court shall have no original jurisdiction except in admission to the practice of law; discipline or disbarment of those admitted; the unauthorized practice of law; discipline, removal and retirement ofjustices and judges; supervision of the exercise ofjurisdiction by the other courts ofthe State; and issuance ofwrits necessary or appropriate in aid of its jurisdiction .... IND. Const, art. Vii, § 4. 231. See Wills, 717 N.E.2d at 154. 232. See id. 233. See id 234. Id at 156. 235. Id 236. 5ee /Wat 159-60. 1396 INDIANA LAW REVIEW [Vol. 33:1365 could be responsible for the professional actions of its partners, employees, and agents under the doctrine of respondeat superior.^^^ The court determined, however, that this fact alone did not demonstrate that Celina was engaged in an unlawful practice.^^* The court held that the practice of law requires a license, and, when licenses are required, agency law permits an unlicensed legal entity to utilize the services of licensed agents.^^^ The court ultimately concluded that the mere fact that a lawyer was an insurance company's employee was no bar to the concurrent representation of the employer and someone else.^"*^ In other words, the situation itself was not inherently problematic.^'*^ C The Inherent Conflict ofInterest Issue The Indiana Supreme Court acknowledged the growing body ofprofessional literature concerning the issue of whom the lawyer owed his duty of loyalty in the situation where the attorney is an employee ofthe insurer and is doing work historically done by outside counsel.^'*^ The court found it "unrealistic" to analyze the arrangement without recognizing the lawyer' s client relationship that exists with both the insurer and the insured.^'*^ The opinion describes two situations where the interests of the two clients are in conflict: the situation where confidences of the two clients are exchanged and the situation where the insured provides confidential information affecting coverage that puts the two parties at odds.^'*^ The existence of a conflict, however, is not the end of the analysis. Using the Indiana Professional Conduct Rules, the court noted that many conflicts can be waived by the parties and, in fact, the rules contemplate that such waivers will take place.^'*^ The existence of a problematic conflict of 237. Seeid.zi\59, 238. See /f/. at 159-60. 239. See id. at 160 (citing RESTATEMENT (SECOND) OF AGENCY § 19, cmt. d (1958)). 240. See id. 241. See id. 242. Seeid.2X\6\. 243. Id 244. See id. 245. See id. In particular, the court reviewed the Indiana Professional Conduct Rule 1.7 which provides, (a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless: (1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and (2) each client consents after consultation. (b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, A. 2000] PROFESSIONAL RESPONSIBILITY 1397 interest will clearly be the exception, rather than the rule: If a conflict arises, it will have to be handled, and there are a variety of means to do that. But a vast number of claims have been and presumably will be handled with no significant issue between the insurer and the policyholder. Interests of economy and simplicity dictate that this be permitted to continue. Any abuses can be handled on a case-by- case basis rather than by adoption of the broad prohibition the Wills seek. Although issues may arise in dual representation, none are apparent in this case.^"*^ The supreme court analyzed the appropriate statutes and provisions in the Indiana Professional Conduct Rules and concluded that the plaintiff failed to present evidence that specifically condemned Faber's conduct.^"*^ In the end, the court concluded that its analysis of a specific situation would depend on the commonality of interests of the jointly represented clients.^"** Even then, the court added, As demonstrated by this case, free access to the market of legal services and the protection ofthe public is a delicate balance with results that are not always predictable. As noted in [its analysis under Indiana's Rules of Professional Conduct], in the realm of insurance defense, the public may ultimately reap the benefits of better service at lower cost through the use ofhouse counsel. Although we find no inherent detriment to the general public in the defense of insurance claims by house counsel, we reiterate the fact that the Rules ofProfessional Conduct, the disciplinary procedures, and other civil remedies exist for the protection of all clients, whether the attorney is house counsel, a sole practitioner, affiliated with a traditional law partnership, or anything else.^"*^ D. The Use ofthe Name "Berlon & Timmel" The trial court found that the use of the name Berlon & Timmel by Cincinnati Insurance Company's employee lawyers violated Indiana Professional or by the lawyer's own interests, unless: ( 1 ) the lawyer reasonably believes the representation will not be adversely affected; and (2) the client consents after consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved. IND. Prof. Cond. R. 1.7. 246. «^/7/5,717N.E.2datl61. 247. See id. at 162. 248. 5ee/flf. atl63. 249. Id. at 163-64. 1398 INDIANA LAW REVIEW [Vol. 33:1365 Conduct Rule 7.2 because the name gave the appearance ofindependence.^^° The Indiana Supreme noted that the letterhead bore the following language: "Berlon & Timmel is an unincorporated association, not a partnership, of individual licensed attorneys employed by The Cincinnati Insurance Company for the exclusive purpose ofrepresenting the Cincinnati Insurance Companies and their policyholders."^^' The supreme court agreed with the trial court's analysis the use of this name was misleading to the public.^^^ The court held that the disclosure language was not sufficient to put Cincinnati's insureds on notice of the actual status of the lawyers who were representing them.^^^ Then, offhandedly, the court noted that perhaps, "the name was adopted without much reflection."^^* In the end, the court resolved this issue by ordering Cincinnati's lawyers to cease using the Berlon & Timmel firm name. In sum, house counsel was permitted to continue to operate as they had been doing, but could not practice under a misleading entity name.^" V. The View IN Other States The Indiana Supreme Court opinion in Wills is epitomizes the view held by a majority ofthe courts nationwide who have confronted the issue either through judicial decision or bar association ethics opinions.^^^ Note that, in Wills, the case came to the Indiana Supreme Court through the plaintiffs motion to disqualify opposing counsel at the trial court level.^^^ This is a procedurally irregular path to the court and, strictly speaking, not an "original action" under the court's constitutional grant or its own "original action" rules.^^^ The analysis in the Wills opinion is very similar to the approach taken by the Tennessee Supreme Court in the case of Petition of YoungbloodP^ Like the lawyers in Wills, the petitioning lawyers in Youngblood were all employees of various liability insurers.^^^ The petitioners contested an ethics opinion issued by the Board of Professional Responsibility that stated: 1 . It is improper for in-house attorney employees of an insurance 250. See id. at 1 64. Rule 7.2(b) provides in pertinent part, "A lawyer shall not practice under a name that is misleading as to the identity, responsibility, or status ofthose practicing thereunder, or is otherwise false, fraudulent, misleading, deceptive, self-laudatory or unfair . . . ." IND. PRO. COND. R. 7.2(b). 251. Wills, 717 N.E.2d at 164. 252. See id. 253. See id. 254. Id at 165. 255. See id. 256. Seeid2i!i\55xmA'5. 257. 5ee/J. at 153-54. 258. See generally Indiana's Rules ofProcedure for Original Actions, Writs ofMandate and Prohibition (1980). 259. 895 S.W.2d 322 (Tenn. 1995). 260. See id. at 325. 2000] PROFESSIONAL RESPONSIBILITY 1399 company to represent individual insureds in legal matters arising under that company's policy. 2. Such an arrangement constitutes a lay corporation practicing law. 3. The holding out of an in-house attorney employee as a separate and independent law firm constitutes an unethical and deceptive practice.^^' The petitioners argued that the Board's construction of the disciplinary rules is subject to review by the court, that the determinations made in the opinion were neither required nor permitted by the rules and that the opinion should be invalidated.^" Like the lawyers in Wills, the petitioners were faced with the desire to have their concerns heard by the state's high court but without a clear procedural mechanism to give vent to their problem. The Board ofProfessional Responsibility insisted that its opinion accurately resolved the ethical issues presented and asked the court to appoint a special master to make findings on the matter.^^^ The Chattanooga Bar Association, meanwhile, filed an amicus curiae brief that argued that the court did not have jurisdiction to review a formal ethics opinion issued by the Board.^^ The court concluded that a special master could not develop determinative findings more instructive than the court's review of three findings already made by the Committee.^^^ The Tennessee Supreme Court ftirther found that because the court, 1) established the Board of Professional Responsibility by court rule, 2) provided its operating rules, and 3) named it the "Board of Professional Responsibility of the Supreme Court of Tennessee" that their claim to jurisdiction over that entity's actions was pretty well beyond dispute.^^ The Chattanooga Bar Association, one oftwenty-two amici involved in the case,^^^ also argued that the petitioners had no standing to file an original petition with the court.^^* The court disagreed and held: In this case, the formal ethics opinion finds that petitioners' employment constitutes unethical conduct for which they are at risk of being sanctioned and, therefore, effectively prohibits their continued employment. No other authority may revise the rules of the Court; consequently, under these circumstances, the petitioners have standing to file an original petition in this Court seeking review ofthe opinion.^^^ 261. Id. at 324 (citation omitted), 262. See id. at 325. 263. See'id 264. See id. 265. See id. 266. Id 267. See id at 324 n.2. 268. See id at 326. 269. Id 1400 INDIANA LAW REVIEW [Vol. 33:1365 The court also discussed the appropriateness ofthe petitioners' challenge in light of the practice in some states, notably Rhode Island, where an attorney is fiilly protected from a charge ofimpropriety ifhe or she conforms to the standards set forth in a state ethics opinion.^^° The Tennessee Supreme Court found these to be sufficient bases for keeping the question before them.^^^ The Tennessee Supreme Court analyzed the three issues presented in a manner similar to the Wills court. First, Board of Professional Responsibility found that it was "improper for in-house attorney employees of an insurance company to represent individual insureds in legal matters arising under that company's insurance policy."^^^ The court discussed the issue at length. It examined those circumstances were conflicts obviously arise from the arrangement and concluded that the simple fact that the employment relationship itself did not create a conflict of interest.^^^ The court determined that because the Board's opinion interpreted Tennessee's Code ofProfessional Responsibility, the appropriate method ofanalysis is to examine each situation on a case-by-case basis.^^"* This is something the Board did not do.^^^ In the end, the court determined that without a specific, problematic fact situation, there was no conflict of interest solely based on the employment arrangement.^^^ Because the opinion bases its finding upon the potential for conflict in the relationship ofemployer-employee rather than particular facts which demonstrate there is, in fact, a conflict of interest, it does not reflect a proper interpretation of the Code. The conclusion stated in the formal ethics opinion on this issue is, therefore, vacated.^^^ The Tennessee Supreme Court then moved on to the Board's second finding that the arrangement between salaried in-house lawyers and the insurers constituted a lay corporation engaging in the practice of law.^'^ The court rejected the lower court's Ending that this constituted fee-splitting.^^' Therefore, the tinancial arrangement between the two parties does not constitute a violation of Tennessee law.^^^ An important feature of the court's analysis on the "corporate practice of law" issue was its use ofthe notion of a "commonality of interests" between the purported antagonists.^'* 270. See id (citing /« re Ethics Advisory Panel Opinion, 554 A.2d 1033, 1034 (R.L 1989)). 271. See id 272. Id Sit 329. 273. See id at 329-30. 274. See id at 327. 275. See id at 330. 276. See id 277. Id at 330. 278. See id. 279. See id. 280. See id. 281. Id 2000] PROFESSIONAL RESPONSIBILITY 1401 The furnishing of legal services to an insured by a liability insurance company has generally been found not to constitute the unauthorized practice oflaw because ofthe identity or community offinancial interest between the insured and insurer in defending the claim and because of the insurer's contractual obligation to defend the insured at the insurer's expense.^^^ In other words, the duty to defend is one that applies to the insurer whether in- house lawyers are used or otherwise. In the end, the court concluded that a lawyer's salaried employment did not, a priori, compromise the lawyer's independent professional judgment.^*^ The court again acknowledged that it would look at the specific facts of each situation before deciding whether a conflict of interest existed or not.^*^ Finally, the Tennessee Supreme Court addressed the issue ofthe name under which the salaried lawyers practiced.^*^ Representing to the public that the lawyers practiced in some separate and independent entity other than the insurance company was found to be forbidden.^*^ The court held. The representation that the attorney-employee is separate and independent from the employer is, at least, false, misleading, and deceptive. It may be fraudulent, depending upon the circumstances under which the representation is made. The petitioners admit that the practice they advocate gives the public the impression that they are engaged in the general practice of law as partners or as sole practitioners. However, they would justify the misrepresentation on the ground that general identification of the attorney-employee with the insurer-employer must be avoided and, public disclosure of the real relationship between the insurer and the attorney would serve no useful purpose. The prohibition contained in the Code is not limited to false, misleading, fraudulent, and deceptive representations which are demonstrated to be harmful, nor will the Code be construed so narrowly on this important principle. And further, false, misleading, fraudulent, and deceptive representation are by their very nature harmful to the profession, whose credibility is dependent upon its integrity.^*^ The Tennessee Supreme Court, following precedent from the New Jersey Supreme Court,^** outlawed the use ofa law firm name or any designation which 282. Mab30-31. 283. Seeid^i33\. 284. See id. 285. See id ^1331-32. 286. See id at 33\. 287. Mat 33 1-32. 288. See id (citing In re Weiss, Healey & Rea, 536 A.2d 266 (N.J. 1988)). 1402 INDIANA LAW REVIEW [Vol. 33: 1365 made the lawyers appear to be independent of the insurance company that paid them.^*^ The Indiana Supreme Court in Wills has taken a similar course in condemning the use of a law firm name by in-house counsel on the basis that it misled the insureds who would be the clients whom the lawyers would represent.^^ F. Indiana 's Opposing View The opposition to house-counsel practice found a strong voice in the dissenting opinion authored by Associate Justice Brent Dickson.^^^ Justice Dickson's opinion discussed at length the Indiana Supreme Court's long line of decisions discussing the privilege to practice law and identifying numerous acts found in the past to constitute the practice of law.^^^ The dissent also recognizes the absence of laws either promulgated by the supreme court or enacted by the General Assembly to prohibit the specific wrong alleged by the plaintiffs in the instant case.^^^ Observing that the practice of law is limited to natural persons. Justice Dickson would have ruled that the use of in-house counsel did, in fact, constitute the corporate practice of law and was, therefore, a relationship which violated both Indiana's Rules of Professional Conduct and Indiana's criminal statute forbidding the unauthorized practice of law: It has been recognized that "[c]onflicts of interest potentially affecting the quality of the representation are inherent in situations in which an insurance carrier has agreed to provide a defense for its insured." Whether the situation is analyzed as one in which the attorney provides dual representation to both insurer and insured or as one in which the attorney represents the insured alone but the legal fees are paid by the third-party insurer, the essential issues are the same: are any material limitations placed on the representation; is there interference with the attorney's independence of professional judgment; or is there interference with the client-lawyer relationship? In this "triangle," the attorney faces conflicting interests—loyalty to the insurer-client or loyalty to the insured-client. Understandably, both insurers and insureds have a common interest in defending against claims brought by plaintiffs. However, they often have different interests in terms of indemnification, confidentiality, trial tactics, willingness and ability to settle, coverage issues, excess liability exposure, etc. These problems are only exacerbated when house counsel represents insureds. While most members of the bar earnestly endeavor to fulfill their obligations under the Rules of Professional Conduct, I believe that the 289. See id at 332. 290. See Cincinnati Ins. Co. v. Wills, 717 N.E.2d 151, 164-65 (Ind. 1999). 291. See id at 165 (Dickson, J., dissenting). 292. See id at 165-83. 293. See id at 116-71. 2000] PROFESSIONAL RESPONSIBILITY 1 403 use of insurer-employed staff attorneys to represent insureds is inherently problematic. This situation present conflicts of interest so inherent in the representation and so serious that the attorney-client relationship and the quality ofthe representation are at risk, despite the possible absence of substantive impropriety in a majority of individual cases. This practice is so fraught with danger that a per se rule of disqualification should be imposed. A prophylactic ban is justified because our interest in maintaining public confidence in the legal system outweighs the interest of individual lawyers and individual clients in freely contracting with each other.^''* The opinion challenges the majority view that, in essence, the plaintiff and defense bar will have to "duke out" this dispute in the marketplace.^^^ The dissent exhorts the majority to, "not abandon to the marketplace our duty and responsibility to regulate the practice of law."^^ Conclusion The most remarkable developments in professional responsibility have, most recently, been associated with questions ofsubstantive law. As cases like Smith V. Johnston and Cincinnati Insurance v. Wills should hopefully demonstrate, the lawyer's ethical duties are not a separate and distinct part ofhis or her life. Duty, integrity, and honesty are part and parcel to the lawyer's day to day practice and the Indiana Supreme Court expects those qualities from all members of its bar. 294. Id. at 181 (citations omitted). 295. Id at 183. 296. Id