Squire's Setback in Hartford Case Shows Cumis Counsel Trap

Law360
August 10, 2015
"Squire's Setback in Hartford Case Shows Cumis Counsel Trap"

Insurance Recovery Partner Dennis Cusack commented on the impact of the California Supreme Court's finding that Hartford Casualty Insurance Co. can sue Squire Patton Boggs LLP to try to recover fees the firm charged while serving as Cumis counsel for a policyholder.  According to Cusack, insureds that select independent counsel will need to work out with those attorneys in engagement letters how to handle the potential costs of fee disputes in which the law firm is dragged in as a party. 

"In the more ordinary case where insureds are presented with the choice of independent counsel, this ruling will create difficulties for clients in sorting out with counsel how to deal with carrier challenges to reasonableness of fees," Cusack said. "Who's going to pay for the firm to defend itself and the client in that arbitration or lawsuit? How are we going to resolve between us the results of any of those actions?"

Additionally, Cusack noted, "I think the court has opened the door to insurance companies contesting the reasonableness of fees and doing so by going directly after independent counsel. This is going to drag law firms into the middle of these fee disputes. I think the California Supreme Court underestimates the mischief that this will cause."

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