Dear John: Attorney Not Required to Disclose Letter From Dissatisfied Client in Application for Malpractice Policy

Illinois State Bar Association Mut. Ins. Co. v. Gold
(Ill. Ct. App. Aug. 7, 2013)
An Illinois appellate court recently held that a letter from a dissatisfied client to his attorney did not amount to a potential claim requiring disclosure on the attorney’s application for malpractice coverage.

In 2004, the defendant attorney received a letter from his client expressing dissatisfaction with the attorney’s handling of his case. In the letter, the client outlined different options for moving forward, including that he “go to war” against the attorney for “full reimbursement of all fees.” The letter closed by advising the attorney that he wished to pursue a different option—settlement with the defendants. The attorney continued to represent his client in the action, which was ultimately dismissed in 2005.

Later in 2004, the attorney purchased professional liability insurance from the plaintiff insurer. In 2007, more than three years after the client sent the letter criticizing his attorney, he sued the attorney for malpractice. The insurer tendered his defense to his professional liability insurer, which denied coverage on the ground that the attorney failed to disclose the potential claim before the policy was issued.

In the ensuing declaratory judgment action, the court held that letter did not apprise the attorney of a potential claim for which he was obligated to notify the insurer. To this end, the court held that the letter did not exhibit a “clear and unmistakable future intention to press a legal claim against the attorney for damages and, as such, does not constitute a claim within the meaning of the policy.” The court also found that the “threat of a claim had apparently dissipated before [the attorney] applied for the policy[.]”

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