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Desmond v. Liberty Northwest Insurance Corp.9/23/1991
but that remains to be determined by the trial court.
The Richter court also noted that the insured had agreed to pay one-third of "any settlement" to his attorney, that he voluntarily agreed to the PIP carrier's right of subrogation by purchasing the policy and, accordingly, had no cause for complaint, receiving the benefit of both his bargains. Richter, at 512 n.5. Although consigned to a footnote, I consider this very significant because it focuses on the ultimate issue underlying these lawsuits: should any attorney fees be paid when the PIP subrogation funds are included in a settlement or a judgment and if so, who should pay -- the insured or the PIP carrier?
Pena and Richter recognize recovery of attorney fees from the PIP carrier as a legal possibility. However, I find serious conceptual difficulties in placing responsibility for the attorney fees on the PIP carrier.
First, in this case Graham was required to perform all the same services on behalf of his client regardless of whether there was a PIP obligation or not. He has identified nothing that he would have done differently without his client's receipt of the PIP payments.
Second, the attorney-client relationship must be consensual. It is highly questionable whether in the face of Liberty's rejection of Graham's offer of his services that the court should impose a liability for those same rejected services. Moreover, Graham has acted adversely to Liberty in regard to the continuance of the PIP payments and in regard to UIM coverage.
Third, Graham's claim is necessarily based on his performing services for both Liberty and Desmond. However, such a claim of dual representation would involve a potential conflict of interest contrary to the Rules of Professional Conduct. This is demonstrable by a simple hypothetical. Assume (1) a case with substantial damages and very thin liability; (2) $20,000 in PIP payments to the injured plaintiff; (3) an offer by the liability carrier to settle for $39,000. Any independent attorney representing the PIP carrier would wish to accept such settlement since it would produce a full recovery (less attorney fees) of the PIP payments. However, an attorney representing the injured plaintiff might well recommend that the plaintiff go to trial in hopes of a substantial recovery, knowing that in the event of no recovery there would be no obligation to repay the PIP payments.
Although not before us in this appeal, the issue as to the client's obligation to pay attorney fees from the PIP payments might arise on remand. There is a suggestion in Richter that the plaintiff's agreement to pay his attorney a percentage of "any settlement" means that he is to pay one-third of the PIP payments. While I agree with the Richter holding as to the effect of the policy language, I do not accept its dicta as to the client's obligation. An insured has an unequivocal legal right to receive PIP payments. To me it is anomalous to require him to pay a percentage of that sum to his attorney merely because in the course of litigation or negotiation the liability carrier reimburses the PIP carrier for those sums. At an absolute minimum, such a
fee agreement would require full disclosure by the attorney to the client as to all the relevant facts and circumstances.
I find serious policy objections against, and no very compelling policy reason for, imposing attorney fee liability for PIP payments on either the client or the PIP carrier. However, these issues are not briefed and it is unnecessary to resolve them in the present appeal.
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