Articles Tagged with Insurance coverage

Illinois does not require a lawyer to have insurance. However, the ARDC requests that you inform it each year whether or not you have insurance.

My advice to the public is that you should never hire a lawyer who is uninsured. First, if something goes wrong, you have little chance of any recovery. Second, the insurance process forces lawyers to look at their own conduct and consider whether certain practices are appropriate. Third, most policies have coverage for any grievance that someone may file with the bar association or attorney regulator. Having insurance gives you access to free CLE and you can usually call your insurer and ask questions about some practices. (Not every policy has all of these benefits, but your policy might have them.)

Most important of all, having insurance will discourage you from filing a lawsuit for legal fees against a former client.

This is a lawsuit between an attorney and his malpractice carrier. The lawyer, Thomas Edwards, handled a personal injury lawsuit on behalf of a commercial diver against the diver’s former employer, Cal Dive. He obtained a multi-million dollar settlement. The victory was short-lived as one year later Cal Dive filed suit against the diver and Edwards alleging that the diver had exaggerated his injuries. Cal Dive sued Edwards for restitution and unjust enrichment.

Edwards requested that his insurance company defend him, but they declined. Edwards filed suit. While he obtained summary judgment in the trial court, the Fifth Circuit reversed that ruling and entered judgment for the insurance company.

The Fifth Circuit held that claims for unjust enrichment and restitution were not legal malpractice claims because they asserted no breach of the standard of care. Therefore, the policy did not provide a duty to defend or require any other coverage. The pertinent reasoning is as follows:

This case presents an all too familiar story: a lawyer obtains malpractice insurance but does not realize or understand that the insurance policy contains an exception for any outside business interest.

David Marks was the trustee of two trusts that owned a controlling interest in Titan Global Holdings, Inc. Marks purchased professional liability insurance but the policy contained this exclusion:

This Policy does not apply either directly or indirectly to any Claim and Claim Expenses: a) Based upon or arising out of any dishonest, criminal, fraudulent, malicious or intentional Wrongful Acts, errors or omissions committed by or at the direction of the Insured.