Risk Update

Risk News — Malpractice/Insurer Claims Decision, Telecom Calls for DQ

Florida Supreme Court holds that an insurer may pursue malpractice claims against lawyer retained to defend the insured” —

  • “Under the terms of the professional liability insurance policy, Arch Insurance Company (Arch) had a duty to defend Spear Safer in the accounting malpractice lawsuit and the insured had the right to retain legal counsel with Arch’s approval. The policy also included a subrogation provision, which stated that Arch was subrogated to all of Spear Safer rights of recovery against any person, organization, or entity, and that Spear Safer was required do whatever necessary to secure such rights.”
  • “Arch retained the Kubicki Draper law firm to defend Spear Safer in the accounting malpractice action. That litigation was settled within Spear Safer’s policy limits for $3.5 million before trial. Arch then filed a legal malpractice lawsuit against Kubicki Draper, alleging that the law firm breached its duty of care by failing to timely raise a statute of limitations defense in the underlying litigation.”
  • “The Florida Supreme Court agreed with the trial court and 4th DCA that defendant was in privity with Spear Safer and not Arch; however, Arch had standing to maintain a legal malpractice action against the defense counsel retained to defend its insured where Arch was contractually subrogated to the insured’s rights under the insurance policy.”
  • “The opinion found that Arch’s right to contractual subrogation was expressly provided for in the insurance policy, which included claims for legal malpractice against counsel retained to defend the insured. The opinion found that where an insurer has a duty to defend and counsel breaches the duty owed to the insured, contractual subrogation permits the insurer to pursue the same claim the insured could have pursued and, since the insured was in privity with defendant, Arch could step into the insured’s shoes and pursue the malpractice claim.”
  • “Bottom line: In this case, the Florida Supreme Court adopted the reasoning that a malpractice lawsuit alleging breach of care can be brought against a lawyer not only by the former client, but also by the former client’s insurer, if a duty to defend and subrogation rights are included in the policy.”

AT&T Wants Ex-BigLaw Attys DQ’d From $450M Patent Case” —

  • “AT&T on Tuesday asked a New York federal court to disqualify a former Baker Botts attorney and two former Akin Gump attorneys from representing a company that hit the telecom giant with a $450 million patent infringement suit, arguing that the lawyers previously provided extensive legal services for AT&T.”
  • “According to the motion to disqualify opposing counsel, attorneys Kevin Cadwell, David Clonts and Michael Reeder worked with AT&T for more than a decade, billing nearly 25,000 hours. Cadwell alone billed nearly 13,000 hours, ‘the equivalent of working full-time for six and a half years,” AT&T said in the filing, which was heavily redacted.'”
  • “‘In addition, beyond the overwhelming volume of counsel’s work for AT&T, there is substantial direct factual overlap between this case and prior cases with respect to the AT&T network systems, technology and witnesses,’ the company said.”
  • “The lawyers represented AT&T in more than 100 patent infringement cases over the years, the telecom said. Reeder provided legal services for AT&T as recently as late 2019, per the motion. And Cadwell defended AT&T in patent cases as recently as 2017, it said.”
  • “And the attorneys had access to AT&T’s employees, files and confidential information that makes them conflicted in the case, it added. They were also actively representing AT&T when Network Apps brought an earlier, “strikingly similar” case against AT&T in 2016, according to the motion.”
  • “Cadwell, Clonts and Reeder and counsel for AT&T didn’t immediately return requests for comment Wednesday.”