Question

A construction companys equipment and crew were involved in an accident in which a bystander was injured. The construction company notified its insurer, which retained an attorney to defend the company when the bystander sued it. Unknown to the construction company, based on information disclosed by the company to the attorney, the attorney correctly advised the insurer that it had no obligation to provide coverage because the construction company had made a misrepresentation in its insurance application. The insurer subsequently sought a declaratory judgment relieving it of responsibility to the construction company. Is the attorney subject to discipline

Answer 1

Answer:

No, the attorney is not subject to discipline. It is the legal responsibility of the attorney(Retained by the insurer) to advise the insurer accordingly should any case issues arise.

Explanation:

All the parties involved(The Insurer, the construction company and the attorney) have their respective responsibilities in the case issue.

The Insurer under normal situation must be responsible for the construction company, in case of any accident or loss, if the issuance application is adequately represented by the company

The company must represent the insurance application correctly. If the Insurance application is misrepresented, the Insurer reserve a legal right of refraining from its responsibilities to the construction company

The attorney's duty is to ensure if the insurance application is correctly respresented also defend the isurer's client(The construction company) legally. He/She discovering a misrepresention in insurance application by the construction company can advise the insurer that it had no obligation to provide coverage, and He/She is not subject to discipline by doing so.

Answer 2

Answer:

Yes

Explanation:

The attorney breached the confidentiality policy. The consequences of breaching confidentiality are possible lawsuits, loss of business and more. Client confidentiality says that one cannot disclose information about their clients to a third party without the knowledge or consent of the client. The attorney was told information by the construction company in confidence that they would receive help from the attorney but the attorney went behind the construction company's back and told the insurer information about the client that was told in confidence. This resulted in the construction company suffering a financial loss since the insurer will be relieved of its responsibility to pay so if the construction company were to find out, they could file a lawsuit against the attorney.