A quirky reality of litigation is that the amount of recoverable dollars often dictates the strategy and approach. Maybe no one said it better than Biggie: “mo money, mo problems.” Especially in the context of an insured defendant, the applicable policy limits and coverage terms play a large role in shaping the litigation.
In a recent legal malpractice dispute, a plaintiff alleges that his former counsel misguided him during litigation — an underlying legal malpractice claim — by failing to appreciate the impact of a “wasting policy.” Rather than potentially engaging in early settlement discussions, as alleged, the plaintiff incurred significant legal fees before ultimately settling for what was then left on the eroding policy.
In his recent complaint filed in Washington state court in Seattle, a business owner alleges that his attorneys failed to advise him regarding the particulars of his underlying legal malpractice complaint. Although the applicable legal malpractice insurance policy had eroding limits, meaning that the cost of defense reduced the available policy limits, the plaintiff’s attorneys implemented an aggressive and expensive litigation plan. According to the complaint, the plaintiff made “litigation and spending decisions specifically in reliance on defendants’ assurances that [the underlying defendants’] policy was not a wasting policy.”
It was not until an eventual mediation when the underlying defendants accepted a policy-limits demand, although the remaining limits had dwindled after more than a year of litigation. The plaintiff also seeks to recover his fees paid to his attorneys as well as considerable expert costs.
This case is another example of the importance of understanding the applicable insurance policy. Policy limits, coverage terms, and the impact of defense fees on those limits can dramatically impact strategy on both sides of the aisle. Why litigate for years to recover a dwindling return? Why take a strategic position that could impact coverage for the insured? These questions and others must always be top-of-mind for practitioners when navigating litigation involving covered claims.
(EDITOR’S NOTE — The case is Trobough v. Karr Tuttle Campbell et al., King County Superior Court, Washington.)