It is common for personal injury attorneys to represent more than one person who has been hurt in an accident in a case against the tortfeasor. In that circumstance, if the attorney makes an error that derails the case, will the attorney face a single malpractice claim or more than one claim?
The answer makes a big difference because malpractice insurance policies often contain a per-claim limit and an aggregate limit (i.e., the limit the carrier will pay for all occurrences or claims arising during the policy period). Once the malpractice carrier pays the limit, the aggrieved former client can then try to collect directly from the attorney. Financially that can ruin the attorney.
Recently, the Missouri Court of Appeals addressed the issue and concluded that when a couple retained a law firm to represent them in an auto accident case, they have one malpractice claim against the firm, not two.
The couple, a husband and wife, signed separate retainer agreements with a law firm to pursue personal injury claims against the other car’s driver. The “attorney” assigned to represent them had been disbarred after convictions for forgery and stealing. The opinion doesn’t go into what went wrong, but apparently, there were multiple acts of malpractice.
The law firm’s professional liability policy covers $500,000 per claim and $1,500,000 in the aggregate. The couple initially offered to settle their claims for $500,000 each, which was rejected by the carrier. The carrier argued that the most it had to pay was $500,000 because there was a single claim.
After a bench trial, the judge entered judgment in favor of the couple and awarded the wife $400,000 in actual damages and $444,445 in punitive damages; and the husband $50,000 in actual damages and $55,555 in punitive damages. The judge disagreed with the carrier’s position that there was a single claim of malpractice and found coverage for two separate claims.
The Court of Appeals reversed the decision and concluded that under the terms of the malpractice policy when two or more claims were arising out of related acts or omissions, it should have been treated as a single claim. Therefore, unfortunately for the couple, the most they could recover from the carrier was $500,000, instead of the total amount of $950,000 awarded at trial.
The decision can be viewed or downloaded here: MISSOURI CT OF APPEALS CASE
The decision, in this case, turned on the language of the law firm’s malpractice policy, and each policy’s terms differ. However, one way for a law firm to generally avoid an issue about per-claim limits and aggregate limits is to ensure that its malpractice policy has adequate limits based on the type and scale of the cases the firm handles while taking into consideration the possibility of representing one or more people in a case.