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Coverage Question Series – Part 45

Post on March 8th, 2019
This is a continuing series in which we address policy coverage questions that we routinely discuss with you and your colleagues. The answers provided are based on the basic policy form, currently LPLP-1s (effective for all policies new or renewed as of May 1, 2018). Refer to your specific policy and any endorsements attached thereto that may change coverage or the answers provided here.

I waited a year after I finished with the client before I sued for my fees. She filed a counterclaim for malpractice even though it is after the statute of limitations, am I covered?

It depends. The work you performed for the client was unparalleled. You successfully concluded the client’s case with her receiving her absolute best-case scenario. You worked so efficiently on the file, not even an insurance claim adjuster could dispute your billings. And after it all, you have a large receivable owed by the client. You diligently wait a full year from the date of your closing letter before filing a complaint for collection. Even though you moved mountains for the client, she filed a counterclaim for malpractice.

 

If the counterclaim is definitively out of time, it can still be an affirmative defense and applied as an offset to any recovery. See Riley v. Montgomery, et al., 11 Ohio St.3d 75, 79, 463 N.E.2d 1246 (1984). If the counterclaim seeks to offset the amount of the money owed for fees, no coverage would be provided because you would not be legally obligated to pay money as damages. The LPL policy only will “pay on behalf of the Insured all sums which the Insured shall be legally obligated to pay as money damages because of any “Claim” . . .” I.COVERAGE, pg. 2, LPLP-1s (05-2018).

If the counterclaim alleges damages arising from the legal malpractice in excess of the amount sought, defense may be provided, at least until the counterclaim is relegated to an affirmative defense because it is untimely.

As you should expect, these Q&A scenarios are based on simple hypotheticals. Coverage determinations for an actual claim are ultimately based on the unique facts, applicable law, and the Terms, Conditions, Limitations, Exclusions, and Endorsements of your policy.
Please contact me at cmarsh@oblic.com if you have any questions!
Carl Marsh, Esq.
Claims Counsel