Reporting claims: Avoid the risk of losing insurance coverage

December 11, 2012
Fulton County Daily Report

Imagine the law firm's surprise when its legal malpractice insurance carrier not only denied coverage for a claim, but also sued it in a declaratory judgment action seeking a judicial determination of "no coverage." This is the kind of thing that an attorney or law firm might expect if the claim involved intentional misconduct or activities outside the rendition of professional services. Yet this is what happened with a recent garden-variety legal malpractice claim.

In Fleming, Ingram & Floyd, P.C. v. Clarendon National Underwriters Co., one of the firm's partners conducted a review of the firm's pending cases and discovered some that might involve potential malpractice. One in particular involved a personal injury lawsuit against a hotel. From the review, it appeared that the associate handling the matter failed to sue the proper defendant.

As a general practice, undertaking internal audits like this one is an effective risk management technique—especially if the law practice permits associates to directly handle and/or supervise cases.

One important word of caution is appropriate. Currently, the Georgia Supreme Court is considering the degree to which internal reviews and/or communications about matters that may involve a potential claim are protected by an attorney-client privilege, if at all. Until the court rules, it is particularly important that law firms follow the protocols outlined in Judge Stephen Dillard's opinion in Hunter, Maclean, Exley, & Dunn v. St. Simons Waterfront, LLC., Case No. A12A0716, (Ga. Ct. App. 2012).

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