LegalFeeGuard is the only insurance of its kind and only offered in Florida. LegalFeeGuard was created with the intention of combating Florida’s proposal for settlement statute. Section 768.79, Florida Statutes, shifts the burden of paying for opposing party attorney’s fees when a party rejects a valid proposal for settlement and does not achieve a particular judgment amount in relation to the offer amount. The policy states it will not cover any other costs, fees, or expenses awardable to the opposing party pursuant to any other statute, rule, regulation, or any other basis.
The insurance provides the funds to satisfy claims made pursuant to the proposal for settlement statute after trial. Insurers may provide coverage for adverse results under the PFS statute in Florida, but insureds may be liable for amounts after policy limits have been exhausted. LegalFeeGuard claims that the insurance policy enhances the client’s likelihood of negotiating a more advantageous settlement on the merits” by allowing clients to make decisions based on circumstances of the case rather than out of fear of being forced to pay the opposing party’s fees if the client in unable to obtain a verdict specified by the statute.
The Florida Bar ethics committee revised staff opinion 28705 permits an attorney to advance the cost of the premium of the LegalFeeGuard policy on behalf of the client. The opinion reasons that such a premium is a “cost of litigation” and permitted by Ethical Rule 4-1.8(e). Repayment can also be made contingent on the lawyer making a recovery on behalf of the client. While the ethics committee ultimately found that an attorney’s payment of the premium was allowable, it could not comment on the legality of the insurance product itself.
Policies are available to plaintiffs and defendants at limits of $10,000 ($500 premium for general negligence); $25,000 ($1,100 premium for general negligence); $35,000 ($1,650 premium for general negligence) $50,000 ($2,200 premium for general negligence); and $100,000 ($3,850 premium for general negligence). Premiums for professional malpractice cases run higher because, according to LegalFeeGuard, statistics show that professional malpractice cases are resolved through trial more often than other types of liability cases.
The policy specifies that it does not provide a duty by LegalFeeGuard to defend the insured or litigate on behalf of the insured. The insuring agreement provides:
The Company shall pay, on behalf of the Insured, all sums up to the limit of liability, which the Insured shall become legally obligated to pay as a Fee Award as a result of a Final Judgment that is set forth in a Claim that is first made against the Insured during the Policy Period.
The policy imposes a policy purchase cutoff date of 40 days before the trial start date. It also excludes coverage in the event that a policy is purchased more than 150 days after the date that the insured received the first PFS, if a final judgment is not entered, a settlement is entered, frivolous litigation by the insured, any deliberately fraudulent or criminal act by the insured in connection with the litigation, any agreement entered into by the insured and opposing party to cause the fee award to be payable under the policy, and removal to federal court.
The policy applies only as excess over any other valid and collectible insurance. The policy is limited to one fee award. Only one policy may be purchased for each opposing party, except in cases of vicarious liability.
LegalFeeGuard reserves the right to request updates as the litigation develops, including receiving copies of documents relating to the claim, additional proposals for settlement, pleadings and other court filings. The policy also authorizes LegalFeeGuard to deal directly with the insured’s counsel. Additionally, “[t]he Insured expressly agrees that the Insured’s Counsel shall have the right to make any and all decisions on behalf of the Insured with respect to this Policy and any payments made by the Company hereunder.”