In Re Illuzzi

¶1dissenting. I dissent from the sanction imposed because I believe it to be too severe. We have said that the purposes of sanctions are to protect the public from persons unfit to practice, to maintain public confidence in the bar and to deter others from similar conduct. In re Berk, 157 Vt. 524, 532, 602 A.2d 946, 950 (1991). The infractions found do not reflect upon respondent’s fitness to practice law. They resulted from his erroneous belief that it was not improper to make direct contact with insurers that had retained counsel to represent their insureds. While we proscribed such contact in In re Illuzzi, 159 Vt. 155, 159-60, 616 A.2d 233, 236 (1992), the line had not been clearly drawn before that decision and respondent’s belief was not totally unfounded. Indeed, we were able to find support for *492the holding only from a United States district court and a state intermediate appellate court.

¶2The relationship between an insurer, insured, and counsel retained for the insured by the insurer is confusing at best.1 At the outset, the insurer and insured usually have a shared interest to successfully resist or settle a claim. This common interest permits the retained lawyer to represent ethically both the insurer and the insured in litigation. Difficulties arise when conflicts develop between the interests of the insurer and of the insured, such as a claimed lack of cooperation, claims made in excess of the policy limits, or receipt of information by the attorney that might relieve the insurer of the obligation to defend. When such conflicts arise, the attorney’s sole loyalty and duty is to the insured.

¶3The potential for conflict was great in the Travelers case because the policy limits were low and a wife was suing her husband. Respondent’s inquiry as to whether the attorneys retained to represent the insureds were also representing the Travelers is understandable and should bear on the question of whether the conduct was knowing under the American Bar Association Standards and should also be considered in mitigation.

¶4The offending letter in GEICO was sent after GEICO had contacted respondent in an attempt to settle a companion case being defended by Mr. Miller and arising out of the same accident. During these negotiations, GEICO was also attempting to dispose of the earlier case that had gone to judgment. Although I agree that under the circumstances respondent should have obtained Mr. Miller’s consent to discuss settlement of the earlier case directly with GEICO, I don’t believe the conduct was so egregious as to warrant the sanction of suspension.

¶5I also do not believe that public confidence in the bar is undermined by wholly private contacts between attorneys and employees of insurance companies. The practice exists and undoubtedly will continue. Our determination that the disciplinary rule requires that such contact be consented to does not *493imply that public confidence in the bar is undermined where contact is made without consent. The duty owed was to the profession, not the public.

¶6Respondent was disciplined by the Board for violations of three rules: DR 7-104(A)(l), “by communicating with persons of adverse interest”; DR 1-102(A)(7), “proscribing conduct adversely reflecting on a lawyer’s fitness to practice law, when he disparaged Mr. Miller”; and DR 1-102(A)(5), for “conduct that is prejudicial to the administration of justice by this repeated pattern of contact.” With respect to the latter violation, the contacts arguably were not misconduct when committed. Their repetition adds nothing to the discussion. The majority has concluded, and I agree, that Mr. Miller was not disparaged by the “meter running” letter.

¶7I also do not agree that Standard 6.33 of the American Bar Association Standards applies to the violations found. This standard applies to violations for “improper communication with an individual in the legal system,” American Bar Association, Standards for Imposing Lawyer Sanctions (1991) (ABA Standards) (emphasis added). It is intended to punish attempts to influence a judge, juror, prospective juror, witness or other official, and does not apply to the facts before us.

¶8The appropriate sanctions for improper communications are set forth in 7.0 of the ABA Standards. “Admonition is generally appropriate when a lawyer engages in an isolated instance of negligence in determining whether the lawyer’s conduct violates a duty owed to the profession, and causes little or no actual or potential injury. ABA Standard 7.4. Suspension is generally appropriate when a lawyer knowingly engages °in such conduct with resulting or potential injury. ABA Standard 7.2. Thus, the issues are whether respondent acted knowingly or negligently and the magnitude of any injury. “Negligence” is defined as “the failure of a lawyer to heed a substantial risk that circumstances exist or that a result will follow, which failure is a deviation from the standard of care that a reasonable lawyer would exercise in the situation.” ABA Standards at 7. “Knowledge” is defined as “the conscious awareness of the nature or attendant circumstances of the conduct but without the conscious objective or purpose to accomplish a particular result.” Id.The respondent failed to heed the risk, and his conduct more closely fits the negligence definition.

¶9*494In determining an appropriate sanction we should consider, in addition to the duty violated and the lawyer’s mental state, the potential or actual injury and the existence of aggravating or mitigating factors. ABA Standard 3.0. The only injuries suggested are that the Travelers paid the policy limit on a claim that the adjuster thought could be successfully defended because respondent had intimidated the adjuster and that respondent’s direct contact had a “chilling effect” on the law firm’s relationship with two insurers. The adjuster, Linda Fritsch, testified that at the time she advised the attorney employed by Travelers to settle the case, she “wasn’t as sure as I might have been originally that we would have been successful,” and she was questioning the decision to deny liability. The adjuster was an experienced assistant manager handling property and casualty claims. There is no claim, or even suggestion, by the insurer that it paid more than the claim was worth.2 The evidence established and the hearing panel found that insurers routinely have their adjusters contact plaintiffs’ attorneys after they have retained defense counsel. It is difficult to comprehend how the insurer is not injured by this practice while at the same time is injured simply because retained counsel for the insured has not granted permission for the contact.

¶10Although attorney Miller testified that he thought there had been a chilling effect on his firm’s relationships with the two insurance carriers after the contact by respondent, there was no testimony from the insurers that this was the case. At the time of the hearing in this matter, attorney Miller had been handling cases for both carriers for twenty-five years. He is an experienced and competent trial attorney. His firm continues to handle cases for the carriers, including the unresolved pieces of the case from which the complaint arose. It is inconceivable that an ethics violation by another attorney could impact on this relationship. In short, actual or potential injury is virtually nonexistent. The absence of a knowing violation, combined with the absence of actual or potential resulting injury, suggests the *495sanction of admonition under the ABA Standards, absent aggravating factors. ABA Standard 7.4. Even the application of ABA Standard 6.33 would not warrant suspension as there has been no showing that the respondent knew the communication was improper and no showing of injury or interference.

¶11The final consideration for the Court in imposing a sanction is the existence of aggravating or mitigating factors. ABA Standard 3.0(d). Aggravating circumstances are any considerations that may justify an increase in the degree of discipline to be imposed and include prior disciplinary offenses. ABA Standards 9.21, 9.22. I agree with the majority’s characterization of respondent’s past disciplinary record and conclude that this record warrants a greater punishment than admonition; I would impose a public reprimand.