Cross-Office Team Secures Win for Insurer in Dispute over Legal Malpractice Coverage

Chicago, Ill./Boston, Mass. (May 8, 2025) - Chicago Partner Darcy Ibach and Boston Partner Patricia Gary recently secured a ruling that their surplus lines insurer client has no duty to defend or indemnify its insured attorney in a legal malpractice action.

The circumstances giving rise to the coverage dispute date back to 2016, when the insured attorney began providing employment-related legal advice to a company that offers services to individuals with autism. The attorney drafted a noncompete agreement for the company to use with its employees and provided guidance about the agreement’s implementation and enforceability.

One of the company’s former principals later left to launch a separate business offering similar services. In August 2021, the company sent a cease-and-desist order to the former principal, asserting that she was in violation of her noncompete agreement and her fiduciary duties. The following month, another of the company’s principals sued the former principal, her new business, and others. That lawsuit alleged the defendants misappropriated the company’s confidential information and goodwill to form and operate the new venture and steal the company’s clients.

The insured attorney agreed to represent the former principal, her new business, and the other co-defendants in the litigation. However, at the plaintiffs’ urging, the attorney was ultimately disqualified by the trial court based on his conflict of interest – namely, having drafted the noncompete agreement at the heart of the litigation. A panel of the Massachusetts appeals court affirmed that decision, deeming the appeal frivolous.

In May 2024, the attorney was sued for legal malpractice by his original client company and its principal. The lawsuit alleged that, by representing the former principal and her co-defendants in the employment action, the attorney disregarded his ethical duties to the company and used the company’s privileged and confidential information to its detriment.

The attorney tendered the legal malpractice action to Lewis Brisbois’ insurer client, which denied coverage under its claims-made policy. The insurer then filed a declaratory judgment action in Massachusetts Superior Court Business Litigation Section in August 2024.

The insurer took the position that the attorney is not entitled to coverage because he had knowledge of facts that could reasonably have caused him to foresee a claim well before the policy’s January 2024 inception date. In addition, the insurer argued that the legal malpractice action against the attorney is related to the 2021 employment litigation. Under the terms of the policy, therefore, the legal malpractice claim must be deemed to have been made back in 2021, prior to the policy period inception date.

In granting the insurer’s motion for judgment on the pleadings, Judge Peter B. Krupp agreed with both arguments. Regarding the “prior knowledge” condition, Judge Krupp found that the insured attorney could reasonably have foreseen a legal malpractice action on the horizon as early as 2022, when the plaintiffs in the employment action moved to disqualify him from representing the defendants. The judge pointed to the Massachusetts Appeals Court panel’s ruling that upheld the attorney’s disqualification, which found that the attorney not only possessed his former client company’s confidential information but had already used it to the company’s detriment in opposing the disqualification motion.

Judge Krupp also found that the 2021 employment action and the legal malpractice action constituted “related claims” under the policy’s broad definition of the term. Judge Krupp also denied the insured’s counterclaim for relief, including its claim for Chapter 93A damages.

This ruling was featured in both Law360 (subscription may be required) and Massachusetts Lawyers Weekly.