An Illinois appeals court has required a legal malpractice insurer to defend an attorney who admitted to the heirs of a client that he’d made a mistake in drafting a will.
In a case of first impression, the Appellate Court of Illinois, First District, on November 9 deemed unenforceable a clause in attorney Frank Greenfield’s policy with the Illinois State Bar Association Mutual Insurance Co. that required him to get the insurer’s consent before admitting any liability to a client.
In affirming summary judgment for Greenfield, the appeals court held that the clause violated public policy because it threatened to limit a lawyer’s duty to disclose information to clients.
“We are uncomfortable with the idea of an insurance company advising an attorney of his ethical obligation to his clients, especially since, as in the case at bar, the insurance company may advise the attorney to disclose less information than the attorney would otherwise choose to disclose,” Justice Robert Gordon wrote for the court.
The decision stemmed from an amendment to a will that Greenfield, a principal in Frank M. Greenfield & Associates in Chicago, drafted for client Muriel Perry. His omission of key language caused the beneficiaries to receive less than Perry had intended.
When Greenfield discovered the error in 2008, he sent a letter, without notifying the insurer, to his client’s beneficiaries, saying that he “inadvertently omitted a provision” affecting the amount the beneficiaries were supposed to receive. His letter encouraged the beneficiaries to secure legal advice from their own attorneys and added that he was “distressed about the situation.”
After the beneficiaries sued Greenfield and his insurer for losses resulting from the mistake, the company sought a declaration from the court that it had no duty to defend him. The language at issue, called a “voluntary payment” provision, stated: “The insured, except at its own cost, will not admit any liability, assume any obligation, incur any expense, make any payment, or settle any claim, without the company’s prior written consent.”
In 2010, a trial judge found that Greenfield’s letter did not admit liability, only that he had made a mistake, which did not violate the voluntary payment provision. On appeal, the insurer argued that Greenfield had violated the clause.
The appeals court ruled that it did not need to decide that issue.
“The insurance policy’s voluntary payment clause did not relieve ISBA Mutual from its duty to defend Greenfield since the clause was unenforceable as against public policy,” Gordon wrote.
Greenfield declined to comment on the decision, citing the pending malpractice case. Representing the Illinois State Bar Association Mutual Insurance Co. was Robert Chemers, a partner at Pretzel & Stouffer in Chicago. Declining to comment on the decision, he said his client had not determined its next step.
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