We have covered this in the past, but the question continues to come up. A case in Alaska, ALPS v Ingaldson Fitzgerald PC, is another example of the courts refusing to force an insurance carrier to cover attorney’s fees.
Awarded attorney’s fees normally are not covered under a Lawyers Professional Liability Insurance policy. Included under this category of damages are also civil or criminal fines, sanctions, or penalties ordered by a court or other administrative body. Depending on the insurance carrier’s Lawyers Professional Liability Policy, the language for this exclusion normally is found in 1 of 3 places; the insuring agreement, the definition section where damages or claims are defined or in the exclusion section of the policy.
In addition demands for attorney’s fees by a client to be returned to the client normally are not covered.
Fees can be a significant exposure to an attorney as attorney’s fees being awarded by the court to the other party can amount to millions of dollars.
The reasoning for not covering attorney fees and associated sanctions is that when awarded they are meant to punish for deliberate, excessive or egregious acts by an attorney. As a matter of public policy these will not be covered by the Lawyers Professional Liability Insurance Policy.
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Lee Norcross, MBA, CPCU
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