An essential aspect of legal malpractice insurance is the duty to defend and the selection of counsel in the event of a claim. Depending on the size of the law firm and the type of policy in place, the insurer may either take full responsibility for appointing defense counsel or allow the insured to have more control over the process. Understanding the distinctions in your policy, such as whether the insured has the right to select their own counsel, is key to navigating the complexities of legal malpractice insurance.
Duty to Defend
A duty to defend policy means your insurance carrier is obligated to defend your business against liability claims.1 You always need to read the fine print in your insurance policy to see your insurance carrier’s role in defense and selection of counsel.
Selection of Counsel
Larger law firms with substantial insurance policies usually have the option to choose their own lawyer for defense, within certain limits. However, for smaller and midsized firms, legal malpractice policies typically give the insurer the right to select the defense for the insured lawyer in the event of a claim, and some policies for these firms allow for mutual choice of counsel. Since lawsuits can drain time and money, it can be advantageous for small and midsized firms to have the insurance carrier take on this task.1
Policy Examples
The following are examples of the ways legal malpractice insurance policies are written in regard to selection of counsel.
1. CNA/Pearl Legal Malpractice Insurance Program
The insurer has the duty to appoint counsel.
| The Company shall have the right to appoint counsel and to make such investigation and defense of a claim as is deemed necessary by the Company. If a claim shall be subject to arbitration or mediation, the Company shall be entitled to exercise all of the Insured’s rights in the choice of arbitrators or mediators and in the conduct of an arbitration or mediation proceeding. |
In these situations, the insurer typically chooses a defense attorney from a pre-selected “panel” of firms and attorneys that regularly do work assigned by the insurance carrier.2
The insured can select their own counsel.
| The Insureds and not the Company have the duty to defend claims. The Company shall be entitled to effectively associate in the defense and the negotiation of any settlement of any claim that involves or appears reasonably likely to involve the Company. An Insured shall not be required to contest any claim by legal proceedings in the event such claim can, by agreement with the claimant, be contested by arbitration in accordance with the rules then obtaining of JAMS, or any other equivalent body or association in any non-USA jurisdiction in which the claim is brought. The Insureds shall give to the Company written notice of the intention to refer such claim to arbitration |
In this situation, the insured chooses the defense attorney and stays in communication with the insurance carrier. Policies with this language are typically written on a reimbursement basis, which means that the expenses are paid by the insured up until the deductible or retention is exhausted. Any additional expenses are then reimbursed by the insurer.
2. CNA Massachusetts Bar Association Program
The insurer and the insured can mutually agree to counsel.
| The Company and the Named Insured shall mutually agree on the appointment of counsel selected from the Company’s list of Lawyers Professional Liability preferred counsel to investigate and to defend any claim. If a claim shall be subject to arbitration or mediation, the Company and the Named Insured shall mutually agree on the choice of arbitrators or mediators and in the conduct of any arbitration or mediation proceeding involving a claim covered by the Policy. Either party’s agreement to defense counsel, mediators, or arbitrators shall not be unreasonably withheld. |
In this situation, the insurer typically chooses a defense attorney from a pre-selected “panel” of firms and attorneys that regularly do work assigned by the insurance carrier.2 The selection made by the insurer must be approved by the insured.
The duty to defend and the selection of counsel are vital considerations in legal malpractice insurance policies. Whether the insurer appoints counsel, the insured selects their own, or both parties collaborate in the decision, the specific terms of the policy can significantly affect how claims are handled. Clearly understanding these provisions can ensure that the legal malpractice coverage aligns with your needs, offering the best possible defense in the event of a claim.
When you’re assessing professional liability insurance policies, be sure to consult with insurance experts, like Pearl Insurance. Our tailored approach and expertise in the legal realm can help guide you in selecting the most suitable coverage for your unique practice.
Questions?
At the end of the day, Pearl Insurance is here for you. We work tirelessly to help you find a policy that fits your firm’s exact needs. Pearl takes our responsibility to protect your firm seriously and will always put people before profit.
Want to know more? Find out for yourself.
(800) 346-6680 | pearlinsurance.com/professional-liability-insurance/
These highlights are intended to present a general overview for illustrative purposes only. It is not intended to constitute a binding contract. Please remember that only the relevant insurance policy issued to a law firm can provide the actual terms, coverages, amounts, conditions, and exclusions for an insured.
1“Does your insurance company have a duty to defend you during a lawsuit?” TechInsurance, 2022.
2“Do You Have a Choice of Counsel in Insurance Litigation?” Warner Norcross + Judd, 2024.
