Hollywood producer turned convicted felon, Harvey Weinstein, has introduced a authorized malpractice swimsuit in opposition to his counsel, claiming they failed to tell him that the dismissal of a cost in his 2020 trial would consequence within the forfeiture of insurance coverage protection. The swimsuit alleges that Abelson Herron Halpern LLP (“AHH”) was contractually required to supply Weinstein “with authorized counsel concerning sure insurance coverage protection in reference to a felony continuing ….” Within the grievance, Mr. Weinstein alleges that AHH and its companion Michael Bruce Abelson, who have been conscious of an impending dismissal of a rely in an underlying felony swimsuit, did not “inform Weinstein that insurance coverage protection could also be terminated because of the aforementioned dismissal.”
Weinstein’s lawsuit prompts the query: Does counsel’s failure to tell purchasers of the potential for —or means to lose— insurance coverage protection represent authorized malpractice? Certainly, a number of courts have held that attorneys could have an obligation to tell purchasers about and pursue insurance coverage protection.
The New York Appellate Division, Second Division, thought-about an legal professional’s obligation to advise and pursue a shopper’s insurance coverage protection in Shaya B. Pacific, LLC v. Wilson, Elser, Moskowitz, Edelman & Dicker, LLP. The court docket was requested to find out whether or not counsel retained by a main provider to defend its insured in an underlying motion had any obligation to analyze whether or not the insured had extra protection out there and, if that’s the case, to file a well timed discover of declare with the provider on the insured’s behalf. In Shaya, Wilson, Elser tendered the underlying swimsuit to the surplus provider, Nationwide Union, after the underlying claimant had gained abstract judgment in opposition to the plaintiff however earlier than the trial on damages commenced. Upon tender, Nationwide Union disclaimed protection on the bottom that it had not acquired well timed discover and had no data to substantiate that the plaintiff was an insured below the surplus coverage. Plaintiff sued Wilson, Elser, claiming that the “defendant had been negligent in failing to advise Nationwide Union of the underlying motion or, alternatively, that its failure to take action constituted a breach of contract.” Defendant subsequently moved to dismiss the case. The Courtroom concluded dismissal can be applicable if the defendant might show both that the plaintiff’s engagement letter conclusively proved that the scope of illustration by no means encompassed any duty with respect to attainable extra protection or, alternatively, that Nationwide Union’s disclaimer letter conclusively established that the plaintiff was not an insured below the surplus coverage. Denying the defendant’s movement to dismiss, the Courtroom held that: (1) whether or not an legal professional is negligent for failing to analyze and pursue insurance coverage protection will depend on the scope of the agreed illustration, and if the legal professional fails to train the affordable ability and information generally possessed by members of the authorized occupation; and (2) the identical rule applies to an legal professional who’s retained by the insurer, as an alternative of the insured itself.
With engagement letters and retainer agreements being the premise of attorney-client relationships, the phrases of those contracts will usually govern an legal professional’s obligation to tell purchasers about insurance coverage protection. Attorneys who use broad, sweeping language of their retainer agreements needs to be aware of their presumed obligations to analyze and advise purchasers of their insurance coverage protection. For instance, the US District Courtroom for the Southern District of Florida has held that when an legal professional is retained to “defend [a client’s] pursuits” in litigation, there may be arguably an obligation to evaluation the shopper’s insurance coverage avenues, together with pursuing claims in opposition to the shopper’s insurer if the insurer fails to defend or indemnify the shopper.
Primarily based on broad interpretations of retainer agreements, attorneys like Weinstein’s are prone to open themselves as much as authorized malpractice claims in the event that they knowingly enable allegations that set off an insurer’s obligation to defend or indemnify to be dismissed. For instance, allegations of negligence in a grievance can set off an insurer’s obligation to defend a complete swimsuit, even when all different allegations within the grievance are excluded from protection. If an legal professional permits the negligence allegations to be dismissed, the shopper will forfeit a protection and indemnification below sure insurance coverage insurance policies. Furthermore, except the shopper was knowledgeable of the implications of the dismissal and consented beforehand, the shopper might search authorized recourse in opposition to their legal professional for the termination of protection.
How Ought to Attorneys Defend Themselves?
Attorneys can take a number of steps to guard themselves from authorized malpractice claims arising out of failures to advise on insurance coverage protection. First, attorneys needs to be aware of how they draft their retainer agreements. Attorneys can proactively add provisions of their retainers, requiring purchasers to reveal any insurance coverage insurance policies and/or affirm whether or not their insurance policies could also be implicated of their claims.
Second, if purchasers have any relevant insurance coverage protection, attorneys ought to fastidiously evaluation the insurance policies’ phrases to find out if any of the insurance policies set off an insurer’s obligation to defend or indemnify. Moreover, to be additional cautious, attorneys ought to tender all potential notices of claims or fits to pertinent insurers to keep away from an insurer elevating a late discover protection.
Lastly, if attorneys are not sure of or inexperienced with insurance coverage points, they need to advise their purchasers of the advantages of retaining counsel that follow insurance coverage protection regulation. Including insurance coverage protection counsel to a litigation group will make sure that purchasers receive the utmost restoration below their insurance policies and that authorized methods within the underlying litigation don’t jeopardize mentioned protection.