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Miami attorney Luis Ordo�ez’s office looks just like a law firm. It’s located on the 18th floor of the same swank, downtown high-rise that houses Akerman Senterfitt. A secretary answers the phone, “Luis E. Ordo�ez & Associates,” the same name listed on the lobby directory. Ordo�ez is the managing attorney of the office, and has 11 attorneys working under him. But John Q. Public can’t walk into Ordo�ez’s office off the street to discuss a slip-and-fall case. That’s because Ordo�ez and his attorneys are employees of State Farm Mutual Automobile Insurance and handle only cases assigned to them by the giant insurance company. The 12 lawyers in Ordo�ez’s “firm” are actually the insurer’s in-house legal team for the Miami region. The insurance industry is waging an aggressive legal battle to preserve its ability to operate these so-called private, or captive, law firms. Several major carriers have petitioned the Florida Supreme Court to vacate a Miami-Dade Circuit Court judge’s order that could make it difficult to continue operating these law offices. Insurance industry representatives admit “private law firms” were created at least partly to prevent juries from knowing when defendants have deep-pocket insurers paying their defense costs and damages. Insurers in Florida and elsewhere are relying more and more on these in-house defense teams, as veteran outside defense counsel exit the insurance field out of dissatisfaction. State Farm maintains 39 other insurer-owned law offices around the country, five in Florida, says Tom Hagerty, a State Farm spokesman. The practice is standard in the industry. Allstate says it has maintained “private law firms” for its in-house lawyers since 1947. Yet many lawyers and judges are in the dark about it. One oblivious jurist was Miami-Dade Circuit Judge Paul Siegel. In June, however, he grew furious when he caught on to the practice and ruled it a violation of Florida Bar ethics rules. He ordered Allstate and several other major carriers and attorneys who work for them to fully disclose the employment relationship on all pleadings and letterhead. “All of the subject ‘law firms’ are fictitious entities, with no real estate leases, occupational licenses, equipment leases or purchases, supplies purchases, income and withholding tax returns,” Siegel wrote in a July 20 order barring Allstate and its Miami staff attorney Timothy W. Harrington from using the name “Law Office Timothy W. Harrington.” The insurance industry is fighting back, challenging Siegel’s authority to force insurers and their staff attorneys to comply with his order. “We’ve done nothing inappropriate,” Ordo�ez says. “This is how insurance companies have operated for decades.” The Florida Bar, however, has launched a fresh ethics investigation, and the issue likely will be decided by the Florida Supreme Court. This is more than just a matter of how a lawyer’s letterhead reads. Observers say it’s about whether insurance companies are improperly hiding their legal representation of insured parties from juries, and whether they are violating Bar ethics rules prohibiting lawyers from falsely claiming to be part of a partnership or law firm. It also raises anew the issue of whether it’s a conflict of interest for defense lawyers to represent both the policyholder and the carrier. EXISTING BAR BAN While the “private law firm” issue flared up suddenly in June in Siegel’s courtroom, it’s been simmering for a while. The matter of “captive law firms” was one of the main issues investigated by an insurance practices special study committee set up by the Florida Bar two years ago. One of the committee’s recommendations was that defense attorneys who have their rent and support staff paid for by insurers should disclose this to the public, says Miami attorney David Bianchi, who chaired the committee. The state supreme court is still mulling whether to implement this and other requirements. The Bar addressed the issue three years ago. After receiving calls to its ethics hot line from concerned lawyers, the Bar issued Ethics Opinion 98-3: “It is impermissible for in-house attorneys who are employed to represent insureds to state or imply that they practice in a separate independent law firm. The relationship between the attorney and the insurer should be disclosed to the client and appear on the letterhead and business card of the attorney.” MISLEADING DEPOSITION? But the ethics opinion apparently didn’t have much effect. Judge Siegel was overseeing a personal injury trial when he became aware that Harrington, Allstate’s defense counsel in the case, was a full-time employee of Allstate. According to court documents, Siegel said that despite sitting on the bench for 10 years, he was completely unaware of carrier-owned “private law firms.” He questioned whether Harrington was being misleading when he said in a deposition that his law firm — not Allstate — was paying for the services of an expert witness. Siegel scheduled a hearing on June 15 to discuss the matter, inviting Florida Bar representatives to attend. He told the parties he was on a “crusade for candor,” Ordo�ez says. Siegel declined to comment. In a ruling issued on that day, Siegel ordered Allstate attorneys to cease using a law firm-type name in all proceedings in his courtroom and on all pleadings and correspondence. “The Allstate attorneys will violate Bar rules if they continue to use this letterhead for their correspondence,” he wrote. “None of the attorneys works for ‘Law Office Timothy W. Harrington.’ “ Siegel wrote that “the possibility of false or misleading testimony at trial is a specific potential evil of the use of fictitious law firm names by insurance house counsel.” Siegel encouraged plaintiffs’ lawyers in the case to comb through transcripts to determine whether the use of the “fictitious” law firm name contributed to any false testimony, and raised the possibility that the plaintiff lawyers could move for a mistrial. He also appealed to his fellow judges to take similar action. “Whether other trial judges or the Florida Bar wish to address this problem is up to them. The problem is one that is statewide and nationwide.” Siegel didn’t limit his scrutiny to Allstate. The judge later identified all cases in his court involving auto insurance companies, and called a hearing on July 18 to discuss the issue with the “private law firms” for those carriers. A local Bar representative attended that hearing, as did a representative from the Florida Insurance Council, an insurance industry trade group. In the July 20 ruling, Siegel prohibited staff attorneys for State Farm, USAA, One Beacon and Nationwide from using the law firm names “Luis Ordo�ez & Associates,” “Law Offices of James Gilmour,” “Law Offices of Robert A. Glassman,” and “Figueroa, Gonzalez & Hoecker.” in his court. He mandated that these attorneys start disclosing the names of their insurance company employers on all pleadings and correspondence. He also chastised the Bar for failing to enforce its ethics opinion in this area. The insurance industry responded quickly and aggressively. State Farm retained former Florida Supreme Court Chief Justice Arthur England, now a partner at Greenberg Traurig. Allstate retained former Chief Judge Joseph Hatchett of the 11th U.S. Circuit Court of Appeals, now a partner at Akerman Senterfitt. Last week, England and Ed Moss, a partner at Shook Hardy & Bacon in Miami who represents USAA, petitioned the Supreme Court, asking the justices to vacate Siegel’s order and address the issue. State Farm contended that only the state supreme court and the Bar have the right to discipline attorneys. England says that if individual judges can impose such restrictions, it could create a crazy quilt of rules for insurance lawyers. “Trial judges do not have this right,” he argues. England also insists in his petition that no deceit was intended by insurers. “The Ordo�ez law firm was not formed as a fictitious entity to mislead jurors, or as a vehicle to defraud the court or jurors,” he wrote. DEEP-POCKET PREJUDICE But the insurer’s real fear may have more to do with their desire to continue concealing from jurors that defendants are backed by deep-pocket carriers. Florida law guarantees that policyholders who are defendants in lawsuits do not have to disclose this to jurors. The rationale for this is that if jurors know there are deep pockets involved, they would be more likely to rule for the plaintiff and to award higher damages. Ordo�ez acknowledges that potential “deep-pocket” prejudice of jurors was one of the reasons insurance companies set up “private law firms” in the first place. “That’s part of it,” he says. But Mike Trevino, a spokesman for Allstate, says there are other reasons as well. One is “to give clients the feeling that they’re dealing with real lawyers who can handle their cases,” says Trevino, who notes that Allstate has 100 staff law offices. England worries that Siegel’s ruling could open the door to alerting jurors that defendants have an insurer to cover their costs. He’s particularly concerned about the judge’s insistence that the identity of who paid for independent medical examinations be disclosed. “We’re concerned that can get in the back door,” he says. Nevertheless, since Siegel’s rulings, Ordo�ez modified his letterhead, moving “Employees of the corporate law department of State Farm Mutual Automobile Insurance Co.” from the bottom of the page to the top. Secretaries in Harrington’s office now answer the phone with this mouthful: “Staff counsel of Allstate and Encompass Insurance, formerly C&A Personal Insurance. May I help you?” Meanwhile, Siegel has scheduled a hearing for Thursday with the five insurance companies to further discuss the matter. But England has asked him to postpone the discussion until the state supreme court decides whether to take up the case.

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