Tuesday, October 16, 2018

US District Court holds professional liabilty insurer has duty to defend action relating to breakup of law firm

Massachusetts Lawyers Weekly quoted me in an article about a recent U.S. District Court case on coverage under a lawyer's professional liability policy for a claim arising from the breakup of a law firm.  The departing attorneys sued the firm, alleging in part that the firm refused to release client file materials and property to their new firm. 

In Governo v. Allied World Ins. Co., __ F. Supp. 3rd __, 2018 WL 4685566 (D. Mass.), the court held that the firm's professional liability insurance had a duty to defend.  The allegation of refusal to release client material came within coverage for Legal Services Wrongful Acts, which the court held implicates the specialized professional obligations and ethical standards of attorneys. 

More specifically, the policy provided coverage for claims “arising out of” a Legal Services Wrongful Act.  The court noted that  there might not have been coverage if the policy language had provided coverage for claims occurring “by reason of” such an act. And that, ladies and gentlemen, is why insurance coverage law is a specialty in the practice of law. 

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