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Defending the Missing Defendant

By: Jason Gardner

Insurance defense lawyers will inevitably engage in representation of a client who is absent in some capacity. That client may be deceased, bankrupt, dissolved, out of jurisdiction, or simply unwilling to cooperate in their defense. Regardless of the reason, an absent client presents unique strategic and ethical challenges.

Immediate questions arise regarding the scope of defense counsel’s representation. Without the express authority of a client, how can an attorney bind the client to any affirmative action in the case? Answering factual recitations in a complaint, responding to requests for admission, or authorizing settlement all present sensitive ethical and legal challenges. Oregon’s Rules of Professional Conduct require an attorney to operate with express authority of the client and to keep the client informed of the litigation. Oregon courts have also held that attorneys may negotiate cases on behalf of their clients, but require actual authority to bind them to a settlement agreement. See Johnson v. Tesky, 57 Or App 133 (1982).

These ethical duties to clients inevitably collide with an insurer’s duty to defend a case. Oregon still largely adheres to the “four corners rule” with regard to the duty to defend. When this duty is triggered, it encompasses all of the necessary elements of defending a case, including the duty to settle the claim within policy limits if reasonable. See Goddard v. Farmers Ins. Co., 173 Or App 633 (2001). This may be further complicated if an insurance policy contains a consent to settlement clause, as is common in professional liability policies.

There is no single case, statute, or rule to assist in navigating these competing concerns. The guiding principal should, as always, be attempting to keep the client’s best interests in mind. The case should be vigorously defended with all necessary support, expert and otherwise. All possible avenues for locating the client should be pursued, including retention of an investigator. If an adverse verdict seems likely, settlement should be pursued for a reasonable sum. Of course, the client’s absence itself should be taken into consideration as a potential prejudicial factor against the defense.

Two specific scenarios merit further discussion. First, in defending a “missing” corporation or organization, opposing counsel may issue a notice of deposition pursuant to ORCP 39C(6). The rule requires designation of a witness to testify and answer on behalf of the organization. Failure to designate a witness can result in discovery sanctions. The rule does not require the witness be a current or former member of the organization however.

An expert can be hired to review available information and documentation and provide sufficient answers to preserve the defense, keeping in mind that testimony binds the organization in future litigation. This option should be used with caution and limited in scope. A more conservative approach would be to move for a protective order, noting the defense is unable to produce a witness and requesting the court excuse the duty to produce a witness or the failure to do so.

Second, if the case proceeds to trial, you must prepare for inevitable juror hostility or resentment against a missing client. Whatever inference a juror may draw from a defendant’s absence, it will probably be unfavorable. A special preliminary jury instruction (or question) to the jury pool might make sense. The instruction should state the defendant is absent, the reason for the absence is immaterial to the case, and jurors should neither speculate as to the reason for the absence nor hold the absence against either party. Jurors who state they cannot do so should be stricken for cause.

Insurers can mitigate the inherent disadvantage a missing client presents by approaching each step of the litigation in a preemptive manner and planning for the unique strategic scenarios throughout discovery, negotiations, and trial. While it may be tempting to treat the missing client with less care, our legal and ethical duties require heightened vigilance and representation.