Insurance company cannot sue their retained defense counsel for legal malpractice.

When an insurance company retains a law firm to represent an insured to defend a lawsuit, can the insurance company sue the law firm for legal malpractice if it is not satisfied with the law firm’s defense of its insured? The Fourth District says no. In Arch, the insurance company retained a well-known Florida defense firm, Kubicki Draper, LLP to represent its insured in the defense of a lawsuit. Once the lawsuit settled, the insurer sued the law firm for legal malpractice, alleging the law firm should have asserted a statute of limitations defense sooner in the litigation and its delayed assertion of that defense subjected the insurer to a larger settlement. The law firm moved for summary judgment, contending the insurer lacked standing to sue the law firm for legal malpractice because there was no privity between them. The trial court granted summary judgment in favor of the insurer.

On appeal, the Fourth District agreed with the trial court’s reasoning that the insurer was not in privity with the law firm and, thus, the insurer lacked standing to sue the law firm. The court also concluded that the insurer’s suit did not qualify under the privity rules’ two exceptions where a third party can pursue a legal malpractice against counsel: (1) will drafting; and (2) private placement. The court rejected the insurer’s public policy and common sense argument and affirmed the decision below.

Thereafter, Arch moved for certification to the Florida Supreme Court, which the Fourth District granted. See Arch Insurance Company v. Kubicki Draper, LLP, No. 4D17-2889 (Fla. 4th DCA March 20, 2019). The Fourth District certified the following question of great public importance: “Whether an insurer has standing to maintain a malpractice action against counsel hired to represent the insured where the insurer has a duty to defend.”

Stay tuned to see if the Florida Supreme Court agrees with the Fourth District or if it allows an insurer to maintain a malpractice against counsel hired to represent the insured where the insurer has a duty to defend.

_{Case Law Alerts, 2nd Quarter, April 2019}

_{Case Law Alerts is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2019 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.}