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Attorneys for Heller Seek Approval of $3.48M for Legal Malpractice Insurance
The National Law Journal
January 20, 2009
Attorneys for the insolvent Heller Ehrman are asking a U.S. bankruptcy judge to approve $3.48 million in premiums to pay for legal malpractice insurance covering claims filed after June 14, according to court papers.
"The Debtor believes that failing to purchase tail insurance will expose the estate to substantial claims, which could severely dilute the distributions to other unsecured creditors," wrote John D. Fiero, a partner in the San Francisco office of Pachulski Stang Ziehl & Jones, who represents the insolvent Heller Ehrman, in a motion filed last week. "Because malpractice claims are typically reported many months, or even years, after the alleged wrongful act took place, the Debtor's estate will be exposed to potentially substantial liabilities unless tail coverage is purchased."
Future malpractice claims at Heller Ehrman, which filed for Chapter 11 bankruptcy protection on Dec. 28, "could assert potentially substantial amounts in damages," Fiero said in the motion. The firm's current insurance policy will expire on April 15 and covers claims filed by June 14.
Additional insurance is needed because Heller Ehrman estimates that another $7.5 million in malpractice claims could be filed in the 36 months following that date, given an average of 15 claims per year.
The insurance, if purchased, would provide up to $20 million for 36 months. In order to obtain the requested policy, Heller Ehrman must pay the full premium by Jan. 30, the motion claims. As a result, lawyers for the insolvent firm have requested a Jan. 28 hearing on the motion.
