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Denied ClaimAttorney Malpractice Insurance Policies do not have standard wording but a common exclusion is for excluding awarded attorney’s fees.  As attorney’s fees can run in the hundreds of thousands of dollars or more this can be a significant surprise if the firm is not aware of this exclusion.  More than one firm has become very angry when coverage is declined for this.  Normally attorney’s fees are carved out of the policy wording.

Even though it is ‘excluded’ the exclusion wording for the attorney’s fees is not normally found in the exclusion section of the policy.   Frequently you will find this in the definition of ‘damages’ or what is a ‘claim expense’.  The Medmarc Lawyers Professional Liability Policy is typical of how the ‘exclusion’ is crafted and found in the definitions section of the policy:

“Damages means monetary judgments, awards, or settlements, but does not include (a) the return or restitution of legal fees, costs, and expenses charged by the Insured; (b) any client funds allegedly misappropriated, whether by an Insured or any other person, and whether intentionally or not, or interest thereon; or (c) fines, sanctions, penalties, punitive damages, exemplary damages, or any award resulting from the multiplication of compensatory damages, imposed against any Insured, any client of an Insured, or any other person or entity.”

 

 

Even though attorney’s fees are normally not covered, it is important to put your insurer on notice as the allegations might expand beyond just attorney’s fees.  You do not want your legal malpractice insurer stating that you had ‘prior knowledge’ of circumstances leading up to a claim and using this for a basis for denying a malpractice claim at a later date.

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