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Official Magazine of the Denver Bar Association

Check Your Policy: Disciplinary Defense Insurance “Coverage” ~ By Alec Rothrock

Many lawyers do not know that legal malpractice insurance policies usually provide money for hiring a lawyer to defend them against a disciplinary complaint. When lawyers receive the dreaded letter from the Office of Attorney Regulation Counsel informing them of a request for investigation and asking them to respond in writing within 21 days, their discovery of this insurance benefit usually comes as a great relief. Even the best lawyers lack the emotional detachment and expertise required to defend themselves in a disciplinary matter.

Typically, these disciplinary defense provisions provide $10,000 to $50,000 in defense dollars per policy period, no matter how many complaints the lawyer has received during that time. There is no deductible. Some insurance companies require their insured lawyers to choose a lawyer from among the law firms that defend liability claims against their insureds. Other insurance companies permit the insured to choose their own lawyer, provided that that lawyer agrees to charge a reduced hourly rate, often $200 per hour. A few insurers impose no such restrictions, apparently assuming that since the sum of money is limited, it is up to the insured how to spend it.

In addition, some disciplinary defense provisions are written in such a way that the insurance company pays retained defense counsel directly. Other provisions require the insured lawyer to pay retained defense counsel, subject to reimbursement by the insurance company.

Lawyers should take these provisions into account when applying for coverage. Obviously the existence of such a provision and the amount are important. Ten thousand dollars may get a lawyer through the investigation stage of a disciplinary proceeding, but if the matter develops into a formal complaint filed in the Office of the Presiding Disciplinary Judge, it will not be nearly enough, even at discounted rates.

Lawyers should consider three other issues when reviewing the terms of a policy:

First, lawyers should know whether they are entitled to choose the attorney who will represent them. If so, lawyers should find out whether there is a limit to the hourly rates the insurance company will pay that attorney and, if so, the maximum hourly rate. If they are not entitled to choose counsel, lawyers should find out what law firms handle their disciplinary defense matters. If and when they call on this insurance money and must decide whom to retain, lawyers would do well to investigate the expertise of the available attorneys in handling disciplinary defense matters.

Second, a few insurance policies provide disciplinary defense dollars only when the matter has reached the stage of a formal complaint filed in the Office of the Presiding Disciplinary Judge. This means the lawyer is entitled to no defense dollars for the initial “intake” and “investigation” phases of a disciplinary matter. This is a serious drawback. The lawyer needs the money most at the very outset in order to have the best chance of stopping the disciplinary matter before it ripens into a formal complaint. By that time, it may be too late to reach a nonpublic resolution of the matter.

Third, some insurance defense provisions qualify the availability of disciplinary defense funds on whether the disciplinary complaint arises from the provision of “legal services” or “professional services.” Other provisions do not. Lawyers face plenty of disciplinary hazards from their non-professional conduct. C.R.C.P. 251.20 requires lawyers to self-report criminal convictions. Virtually all criminal conduct by lawyers has attorney regulation consequences of some kind, even if they are minor and non-public. Lawyers with alcohol-related traffic offenses, for example, must navigate not only the criminal justice system and the Department of Motor Vehicles but also the Office of Attorney Regulation Counsel.

Additionally, the definition of terms such as “legal services” or “professional services” may not include law-related services that many lawyers routinely provide. Typically, these phrases are defined to include services as a title insurance agent, arbitrator or mediator. Many include services as the fiduciary of an estate or a person. Only some include services rendered as an expert witness. If the policy does not afford disciplinary defense dollars in that context, it is equally likely that it provides no civil liability coverage for the conduct of a lawyer as an expert witness. See D. Richmond, “Lawyers as Witnesses,” 36 N.M. L. Rev. 47, 60-72 (Winter 2006) (discussing liability and disciplinary exposure of lawyers serving as expert witnesses). D

Alec Rothrock is a shareholder with the Greenwood Village law firm of Burns Figa & Will, P.C. and an adjunct professor of legal ethics at the University of Denver Sturm College of Law. He practices in the area of legal ethics and the law of practicing law. He is a former chair of the Colorado Bar Association Ethics Committee. He can be reached at arothrock@bfwlaw.com.

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