Allegations Against Property Developer Impact Law Firm

Zack Davidson, a Florida property developer, was sued for allegedly stealing over $3M from Marin Metropolitan District.  The funds were supposed to have gone towards the development of a community but the monies are claimed to have been misdirected to Davidson’s personal use.  The law firm, accounting firm and listing broker Davidson used have also been named in the suit – with the District explaining that Davidson relied on these parties to hide the fraud.

For the law firm sued,  the allegations are new and the case promises to be expensive.  A properly structured insurance program will provide defense costs for such a scenario.  Court costs can easily enter the six figures and it is important to know that your insurance is well-suited for this event.  Contact us to discuss ways to further protect your firm in the event of a lawsuit.






Ohio Lawyer Disbarred in Kentucky for Excessive Fee

Ohio mass tort lawyer Stan Chesley has been disbarred in Kentucky for a fee he took in a case where he had minimal involvement.

Litigation surrounding Fen-Phen resulted in a $200M settlement, with only $46M going to the plaintiffs.  Chelsey’s fee was $20M. Two other lawyers, Shirley Cunningham Jr. and William Gallion, were sentenced in 2009 to up to 25 years in prison in 2009 for illegally taking $94 million in settlement funds.

With increasing regulatory oversight is working with firms to ensure the increasing costs of malpractice allegations and regulatory investigations are reimbursed.

Cyber Liability Hits the Main Stream

Two major main-stream news sources published articles this week on the topic of cyber liability insurance. published an article on the 6 reasons a company needs cyber liability.  The Wall Street Journal released its article claiming that a majority of small businesses that suffer a cyber attack will not survive financially just 6 months later.  Cyber liability insurance has been around for 10 years, but it is increasingly gaining momentum by businesses who realize the depth of confidential client information they are storing electronically and the large expenses created by a cyber attack.

As a law firm considers cyber liability insurance, it is important to know that not every policy is written with the same level of coverage.  It is important to know what a firm needs and what is available in the market to meet those risks.  Here is a list of a few items to consider when looking for cyber and network insurance:

  • • Consider whether you need first party coverage and/or third party coverage
  • • Some policies a firm already purchases may have limited cyber liability included – what is missing that may need to be purchased separately?
  • • When obtaining multiple quotes, how do the exclusions and policy wording differ?
  • • What level of risk management assistance does each carrier offer?
  • • What limit of liability does the carrier offer for credit monitoring and notification costs?
  • • Does the policy provide forensic investigation costs to determine the cause of the breach?
  • • Does the policy being considered provide non-physical business interruption coverage?

Contact us today to discuss this insurance more in-depth and determine how your firm can benefit from its coverage.

DC Appellate Court Hears Attorney Relationship Malpractice Case

As all attorneys have learned, the first step in analyzing a malpractice case is determining a duty of care to the injured. A DC court is hearing an appeal by Boston-Maine Airways arguing that Sheppard, Mullin, Richter & Hampton should not have taken actions that harmed them because they represented another company with common ownership.

Sheppard represented  Pan American Airways and Pan American Railways, who shared ownership and a general counsel with Boston-Maine. That general counsel had approached Sheppard for advice after forged the signature on a surety bond for Boston-Maine. After the Transportation Department revoked the license of Boston Maine the company sued Sheppard for not disclosing this discovery. Sheppard had won a summary judgement in their favor based on the fact that no attorney-client relationship existed with the company.

Contact to discuss how emerging risk and how to better protect your firm.

Verdict in Wisconsin Online Advertising Case Affirmed

A Wisconsin appeals court has affirmed a lower court’s defense ruling in a spat between two competing Milwaukee area plaintiff firms. Cannon & Dunphy was alleged to have purchasing search engine advertising based on a competing firm’s name. The firm, Habush Habush & Rottier, allegedthe ads violated a Wisconsin law, 995.50(2)(b), prohibiting advertisers from using “the name, portrait or picture of any living person” without their consent.

The appellate court upheld the lower courts ruling that the law did not apply to online keyword advertising, which they compared to opening up a physical location near a competitor.  “Locating an advertisement or business near an established competitor to take advantage of the flow of potential customers or clients to the established business is not a practice the legislature intended to prohibit” the ruling stated.

Contact today to discuss how your current insurance program responds to advertising injury and other emerging risks.

New Orleans Law Firm Sued for Malpractice on Earlier Trial

Angela Parker and Vicki Daigrepont recently filed suit against the Law Office of Capasso and Associates in New Orleans.  The plaintiffs allege that the firm misrepresented them in an earlier case where they engaged the firm to act as their counsel in a another lawsuit.  The two women claim that lawyer’s malpractice was committed in the underlying trial, explaining that the law firm missed deadlines, failed to timely oppose a motion to dismiss, and failed to file a witness list – all of which led to their losing the case.

This type of allegation is not new and it is not the last time it will be seen.  Every law firm needs to be prepared for this situation – whether the allegations are true or not.  Carrying the proper type of insurance,  setting a deductible at the right amount and looking for ancillary coverage benefits can save firms from difficulties when responding to allegations of malpractice.  Contact a broker today to discuss how your firm can be prepared for any scenario.







Sedgwick LLP Sued by Lloyds of London for Malpractice

Sedgwick LLP has been sued by Lloyds of London over their handling of a fraud defense for Milberg LLP.

The issues at hand are over how a claim against Milberg for fraud was handled. Lloyds was notified as early as 2002 that grand jury indictments had been issued against Milberg but did not believe that was enough to trigger coverage under their policy. Using Sedgwick as their representative, Llloyds agreed to pay a portion of Milberg’s expenses in a interim funding agreement. However, Lloyds is alleging that Sedgwick committed malpractice when they did not include a tolling clause in the agreement.

When Lloyds attempted to resind their policy in 2008 the statute of limitations had passed and they were barred from doing so. Their case against Sedgwick is pending.

Contact to discuss your policy wording and how to better protect yourself against claim denials and policy rescissions.






EEOC Complaint Against Firm Who Fired Woman Fighting Breast Cancer

Winston-Salem based Womble Carlyle Sandridge & Rice LLP is facing a lawsuit from the U.S. Equal Employment Opportunity Commission over an ex-employee who is fighting breast cancer.

The firing of Charlesetta Jennings from her position as a support assistant  is alleged to be “intentional” and “done with malice or with reckless indifference” of Americans with Disabilities Act requirements. After a second emergence of cancer Jennings was unable to lift more than 20 pounds but was in a position that required her to left 75 pound boxes, when she could not meet this requirement her position was terminated.

Contact today to protect your firm against the rising costs of employment related lawsuits.







Law Firm Allowed to Bring Third-Party Lawsuit Against Three Firms

A New York appeals court granted the law firm of Reed Smith the ability to reinstate its claims against three law firms in connection with a legal malpractice lawsuit.  Reed Smith was previously sued by Millennium Import for failure to give proper advice in negotiations to license and subsequently protect the name “Belvedere” as a liquor.  Reed Smith alleges that these three other New York firms played a part in the negotiations and rendered professional advice that contributed to the loss Millennium Import experienced.

Even if a law firm plays a small role in a larger engagement, their roll may exposes them to the full liability of that engagement.  This is important to recognize when the firm is contemplating adequate insurance limits and risk management practices.  Although a firm may practice in primarily low-risk areas, insurance is meant to protect against catastrophic losses.  A firm must be able to recognize what their highest risk engagement is and contributory engagements should be considered. Contact a licensed broker to discuss whether your firm is carrying adequate limits and has the right coverage to protect your firm.




Court Rules that Malpractice Claim is Excluded Under Insurance Policy

An Eastern District Judge has ruled that any defense or indemnity that would have been provided by the defendant’s insurance policy is void.  The law firm of Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara & Einiger has had two suits lodged against it, but the judge explained that the firm’s professional liability insurance contains exclusions that prevent it from responding to these matters.  The exclusions deal with related entities and cross-ownership.

All firms have this same risk.  Unless negotiated otherwise, a lawyer’s malpractice insurance policy will contain exclusions that prevent coverage for claims brought by entities that are managed, controlled or operated by the firm or by any individual insureds.  Policies also exclude any entity that the firm has more than 5%-25% ownership in (exact percent depends on policy wording).  Additional exclusions apply on many policies.

Since no two professional liability policies are the same, it take an experienced broker to navigate the policy wording and to know how it applies to each firm’s individual circumstances.  When choosing which insurance to purchase, price is a factor – but adequate coverage needs to be in place.  Contact us today to learn how to best protect your firm from gaps in coverage.