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Understanding the Fee Suit Exclusion

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by Mike Mooney

Suing a client for fees is always a hotly debated topic. Attorneys work hard for their fees and shouldn’t have to walk away because a client decides to stiff them. 

However, there are some things that you need to think about and be aware if and when you decide to sue for fees.   Fee disputes are the reason behind many malpractice claims. A good portion of the time if you sue a client for a fee there will be a counterclaim for malpractice. I’ve seen this figure as high as 70% of the time. Why is that important? It is important is because some Professional Liability Policies have an exclusion in their policy that will deny coverage if you have a counter claim for malpractice stemming from a fee suit. It typically reads like:

"No coverage will be available under this policy for damages or claims expenses from any claim or costs in connection with any disciplinary proceeding, brought by or on behalf of any client or former client, or any individual or entity who received or was the intended recipient of the benefit of professional legal services performed by you, if that claim is made against you following the commencement of legal action by you for the purpose of recovering outstanding, overdue or otherwise unpaid legal fees, costs or expenses in connection with those professional legal services."

Before suing for a fee, make sure you are not exposing yourself to uninsured liability. Review your Professional Liability Policy and make sure counterclaims for malpractice are not excluded. 

Mike Mooney is vice president of bar association programs at USI Affinity.

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