Category Archives: Lawyer costs charging client for litigation cost protection insurance

The Florida Bar’s Board of Governors votes to approve charge of “litigation cost protection insurance” premium to clients

Hello everyone and welcome to this Ethics Alert will discuss the recent decision of the Florida Bar’s Board of Governors to allow lawyers to pass-through the costs of “litigation cost protection” insurance to the client.

According to a recent article in the February 15, 2018 Florida Bar News, the Board of Governors (BOG) voted at its meeting on January 26, 2018 in Tallahassee to permit lawyers to charge the client with the cost of the “litigation cost protection” premium; however, the lawyer must obtain informed consent and make extensive disclosures.  The Bar News article is here:

The insurance product, called “litigation cost protection” insurance, reimburses up to the insured amount of costs advanced by the lawyer to the client only if the case goes to trial and there is no recovery.  Supporters of the insurance state that it provides sole practitioners and smaller firms with the ability to go after deep pocket defendants.  Under the terms of the insurance policy that was considered by the BOG, the premiums would be 7 percent of the dollar amount of coverage, or $17,500.00 if the lawyer obtains the maximum coverage of $250,000.

After an intense debate, the BOG voted 23-17 to permit the lawyer to require the client to reimburse the cost of the insurance premium.  The BOG’s decision reversed a Florida Bar Professional Ethics Committee (PEC) decision in 2017 which opined that a lawyer would be prohibited from charging the client for the cost of the policy.  The BOG directed Bar staff to issue an advisory opinion and the final proposed opinion states that the insurance premium pass through to the client is “a close question because the circumstances described create potential conflicts of interest between the lawyer and client throughout litigation.

The final BOG opinion listed eight conditions, including that the lawyer must: make “an objectively reasonable determination that the litigation cost protection insurance serves the client’s best interest”; inform the client that other attorneys may offer contingency fee arrangements without passing along the expense of the litigation cost insurance; fully explain the insurance and why it is in the client’s best interest; give the client a copy of the policy and advise him or her to have another lawyer to review it; and not allow the terms or availability of coverage to “adversely affect (the lawyer’s) independent, professional judgment, the client-lawyer relationship, or the client’s best interest.”

Bottom line:  Notwithstanding the BOG’s close vote, this decision will now permit lawyers to pass through the cost of the premium for litigation cost protection insurance to their clients without violating the Florida Bar Rules related to litigation expenses.

Be careful out there.

Disclaimer:  this Ethics Alert is not an advertisement and does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N., Suite 150,

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

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