Lawyers throughout the state should be following a lawsuit that is unfolding in Richland County and centers on a professional liability carrier’s duty to defend the attorneys they insure against legal malpractice claims.
The dispute between West Columbia attorney Desa Ballard and Admiral Insurance Co. hinges on whether an insurer can settle a malpractice claim over the insured attorney’s objections and in apparent violation of a policy provision that gives the lawyer the right to approve or reject any decision to settle a claim.
“We paid for the increased premium to be able to decide if we’re going to settle a case. The carrier can’t do it without our consent. And that consent is extremely important. It’s personal. It goes to our reputation,” said Eric Bland of Bland Richter in Columbia. He and his law partner, Ronnie Richter of Charleston, represent Ballard. Bland said his firm pays for a professional liability policy that is similar to the policy that Ballard had with Admiral. Such policies, which contain language that purports to give the insured lawyers control over the resolution of their cases, typically cost 20 to 25 percent more than policies without settlement-control provisions, according to Bland.
“At Bland Richter we have the same policy to give consent to a settlement. We thought that’s what we were buying, but now it doesn’t appear so,” Bland said. He added that Admiral bases its position on language in the policy that required Ballard to cooperate “in good faith and not take an unreasonable position.”
“They say that the right to consent is there, but it’s not absolute,” he said. “We think when you draft a policy that says you have the absolute right to consent that’s what it is.”
Admiral’s attorney, Wesley Sawyer of Murphy & Grantland in Columbia, declined to discuss the suit, which was filed Sept. 14. Admiral has not yet answered the complaint.
Ballard, who specializes in defending lawyers against alleged professional violations, balked when Admiral, which had been her insurer since 2010, pushed for her to settle a claim with Adele Pope, special administrator of the estate of Ballard’s former client Gloria Corley.
Ballard defended Corley after Pope sued her to collect attorney’s fees for her work on a trust that belonged to Corley’s former husband. Ballard also represented Corley in negotiating a buyout of her interests in the same trust.
Corley’s malpractice claim alleges that the trust settlement was not in Corley’s best interests, while Ballard adamantly disagrees and has denied any wrongdoing. And so when Admiral told her that it wanted to mediate the case and was prepared to offer Pope more than $100,000 to settle, Ballard objected.
“Such a settlement carries an inference that there was merit to the claims asserted and, as such, would affect [Ballard’s] reputation and future insurability with other professional malpractice carriers,” Ballard states in her suit against Admiral.
Admiral had responded to Ballard’s push-back against settlement negotiations by threatening to withdraw her defense coverage under the policy. In May, Admiral notified Ballard that her policy was not going to be renewed based on her “refusal to consent to settle.”
Ballard asserts in her suit that the policy in question contains no language requiring her consent to settle. She is seeking a declaration from the court that Admiral has a duty, under its policy, to defend her against Pope’s claim.
She’s also accused Admiral of bad faith for violating her rights under the policy by failing to provide her with insurance coverage and “placing their own financial interests against the interests of their insured.”
“The carrier isn’t as concerned with the reputation of the attorney as they are with minimizing risk. The attorney, on the other hand, pays these increased premiums to control that defense,” Bland said. “We think every attorney who has this type of policy would want us to continue to fight this fight.”
Follow Phillip Bantz on Twitter @SCLWBantz