Coverage Denied for Attorney Seeking Fee

At its simplest and most basic level, a professional malpractice policy for an attorney serves to insure against claims of malpractice. The devil is in the details, of course. In a recent decision, the Second Circuit affirmed a decision denying coverage to an attorney involved in a dispute over collection of his legal fee. The decision provides an interesting coverage lesson as well as a lesson about the sensitive nature of seeking to collect on a disputed fee.

In Continental Cas. Co. v. Parnoff, …

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When Does an Occurrence Occur? Malicious Prosecution & Coverage

In this era of sophisticated DNA testing, exonerations of incarcerated individuals have become increasingly commonplace. The ensuing malicious prosecution lawsuits have justifiably resulted in high verdicts and settlements. The key issue for many municipalities is whether and under which policies of insurance is coverage triggered for these malicious prosecution claims. On November 21, 2019, the Supreme Court of Illinois, in Sanders v. Illinois Union Insurance Company, definitively determined that claims of malicious prosecution trigger coverage only under policies of insurance in effect on the …

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No Coverage for the Guilty

We know this, but many of our clients don’t: coverage is tricky. There are aspects of an insurance contract which may cut against instincts and societal expectations. For example, there are coverage implications when an insured apologizes for a perceived mistake. Anything that potentially jeopardizes the defense, including anything that can be perceived as an admission of liability, may result in a coverage denial. Along those lines, a recent decision highlights the coverage implications of a guilty plea in criminal proceedings.

In Nat’l Fire &

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Crime Policy Coverage: Direct Means Direct

In a recent decision, a Federal District Court grappled with the definition of “direct loss” under a commercial crime policy. The court in CP Food & Beverage, Inc. v. U.S. Fire Ins. Co., concluded that “direct means direct” and an insured’s losses from payment card charge-backs when certain employees made fraudulent charges on customers’ payment cards were only the “indirect” result of employee theft, and therefore not covered under the insured’s policy.

The facts are interesting. The insured operated a club (the “Club”) where …

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Gavel on sounding block

Secrets Are No Fun, Especially When It Comes To Malpractice Coverage

The risk of a malpractice claim is real. That’s the bad news. But, now that we have your attention, the good news is that insurance is available to defend and indemnify professionals who face malpractice claims. In order to receive coverage, however, professionals generally must disclose whether they are the subject of any potential claims when completing their applications.  If an insurer discovers that a professional had knowledge of a potential claim, but failed to disclose it, it could rely upon the nondisclosure as a …

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Alleged Crimes Are Not Covered, Right?

For most professionals, renewing your policy is a matter of fact that includes little thought beyond answering a questionnaire. However, it is incumbent upon both insurers and policyholders to regularly review policy language to determine what is, is not, or only may be covered. For example, there is often an assumption that most policies will not cover certain criminal or intentional acts, but that is not always the case. For example, in a recent New Jersey District Court decision, the court found that an insurer …

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Attorney + CEO = Coverage Denied

Attorney? Check. CEO? Check. Coverage? Unlikely. Some attorneys wear multiple hats. We have other interests, other business ventures, other opportunities to make a buck. Attorneys are often exposed to other areas of business depending on the nature of their practice. Through their role as counsel, or through other opportunities, some attorneys become more directly involved in non-legal businesses.  The more traditional route is to switch to in-house counsel, but sometimes attorneys will go so far as to start a new company.  While both are commonplace …

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Malpractice for a Client’s Failure to Report

Although some law schools are notorious for offering elective courses like “space law” that are of limited practical use to most attorneys, there is still a set of core classes that are invariably recommended.  Courses such as tax law and corporate law often fall into this group, as most lawyers will have to consider tax repercussions or the structure of a company at some point in their careers, regardless of their practice area.  One big firm is now learning that despite the dearth of classes …

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What to Report and When?

Applying for malpractice insurance is a critically important process and a necessary risk management tool. Professionals must be sure to complete the applications completely and must take steps to include all pertinent information. In a recent decision, the Northern District of Illinois concluded that an attorney omitted material information in his application and denied coverage. The result could be devastating for the attorney.

Defendant Attorney filed two patent applications for his client over a one year period beginning in 2005. About one month after the …

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What are Professional Services and Why it Matters

Clearly, it is the specific terms of an insurance contract that dictate whether certain claims are covered or denied. In an interesting decision out of Illinois, the court faced the question: when is an attorney practicing law “in the service of another” and how does that impact coverage. This distinction was critical to whether a claim against an attorney would be covered by a commercial general liability (“CGL”) policy.

Sentinel Insurance Co. v. Cogan, et al., No. 15 C 8612 (N.D. Ill. 2014) arose …

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