Professional liability insurance policies each contain limits of liability that set the upper threshold that the insurer will fund. However, a policy’s stated limit does not necessarily correlate to the amount that will be available to resolve a claim. Instead, many policies provide that the costs of defense are included within the coverage limit—every dollar spent on defense correspondingly erodes the amount available to resolve the claim. These so-called eroding limits, or defense-within-limits policies become particularly important in heavily litigated cases, where high defense …
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Certificate of Merit Blunder Results in Dismissal
A growing number of states have enacted some version of an “affidavit of merit” statute in professional malpractice matters. The intended purpose behind these laws is to reduce “unnecessary” or unsupported lawsuits. In states such as Pennsylvania, New Jersey, and others, plaintiffs in malpractice litigation must certify through an impartial professional in the defendant’s field that there is a fundamental basis for the complaint. While the specifics of the particular statute in each state may differ in terms of scope and application, the …
Continue ReadingLaw Firm Denied Coverage Due to “Fraud Exclusion”
Most professionals are governed by this universal rule: always act in the best interests of the client. But, there is an unspoken footnote to that rule: unless the client engages in unethical, illegal or otherwise improper conduct. Make no mistake, when a professional cooperates in the client’s foul play, she is also exposed to liability and perhaps a denial of coverage due to a fraud exclusion existing in many professional malpractice policies. This limitation became a reality for a Colorado law firm accused of assisting …
Continue ReadingDealing with the Problem Client
We’ve all been there. Inevitably, every professional encounters a client whose demeanor or attitude make the representation difficult. As a result, the professional may be tempted to ignore the situation and limit contact with these clients. But, that would be a mistake. Pursuant to a recent ethics ruling in Matter of Azar, DRB 13-041, the New Jersey Disciplinary Review Board determined that providing the cold shoulder to problem clients warranted disciplinary action.
In Azar, the Board evaluated three ethics grievances against an attorney. In …
Continue ReadingResponding to Legal Audit Letters = Risk Management Headache
As many of you probably know, auditing standards require that an auditor confer with the attorneys for the audited entity about certain types of loss contingencies, such as pending litigation and unasserted claims. During this process, the audited entity/client asks that its attorneys respond to the “legal audit letter.” Some attorneys may view this procedure as cumbersome and perhaps even annoying, but it is a required element of the auditing process and must be taken seriously. This is especially so because the attorney’s response …
Continue ReadingUnringing the Bell: Clawback Provisions and Inadvertent Document Production
Technological advancements have prompted an explosion in electronically stored information (ESI). A single laptop computer is capable of holding more than 2,000 banker’s boxes of paper, and a smart phone with 16 GB of memory can hold roughly the equivalent of 1,000,000 printed pages. Given the potential value of this data, litigants are routinely requesting ESI during discovery. At the same time, lawyers responding to these requests are faced with the Herculean task of sorting through mountains of evidence to remove privileged or confidential documents. …
Continue ReadingEmotional Distress Damages in Professional Malpractice Matters
Many aspects of litigation involve high levels of emotion when reputations, resources, pride, and goals are on the line. Nonetheless, it is highly unusual for an attorney to be subject to mental distress damages arising from a legal malpractice claim. Recoverable damages are usually limited to compensatory losses. However, a recent decision from Iowa’s highest court suggests that the tide may be turning.
In last week’s decision by the Iowa Supreme Court, an attorney’s former clients were permitted to collect emotional distress damages arising …
Continue ReadingNY Attorney’s Attempt to Recover Legal Fees Backfires
Let it be said: we don’t work for free. The business of law, like any profession, is based on a simple formula: quality work + results = payment. Sometimes obtaining payment can be the most difficult piece of the equation. When a fee dispute does arise, an attorney may be required to strike a balance between demanding full compensation and maintaining a productive and ongoing relationship with the client.
We’ve previously warned of the risks of engaging in collection proceedings against former clients. However, that …
Continue ReadingWanna be Starting Something? Michael Jackson’s Publicist files Legal Mal. Suit
Despite his untimely death, Michael Jackson continues to generate considerable media attention, tabloid fodder, and litigation. Most recently, Jackson’s former publicist, Raymone K. Bain, filed a malpractice suit to recover from her former attorneys. In Bain v. Gary Williams Parenti Watson & Gary PL et al., the King of Pop’s publicist alleges that her attorneys were negligent in a breach of contract suit she filed against Jackson in 2009. According to the suit, Bain could not recover considerable royalties from Jackson associated with …
Continue ReadingAttorneys on the Move Leads to More Malpractice Claims
Legal malpractice claims are on the rise…again. According to a recent study, lateral transitions by attorneys may be to blame. Professionally Liability Matters previously discussed an uptick in malpractice claims, particularly those stemming from attorneys handling real estate matters. However, a new survey released last week by Ames & Gough demonstrated an overall increase in legal malpractice claims and suggested that swapping firms is a main culprit.
Reportedly, the majority of major insurers surveyed reported an increase in malpractice claims in 2012. Most stated that …
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