They say the definition of “chutzpah” is a man who kills his own parents and then throws himself on the mercy of the court because he is an orphan. Well, here’s what happens when that man is a personal injury lawyer.
Adam Clermont, said lawyer, left his firm, Freedman, DeRosa & Rondeau, LLP (“FDR”), in 2009. He took some personal injury cases with him, and as is common under such circumstances, entered into an agreement with his former firm to pay them a percentage of any fees he collected in those cases.
Then Clermont hit the big time. One of his cases resulted in a settlement in excess of $ 2 million. Clermont collected a fee of more than $ 800,000. He didn’t tell his old firm. They found out. They sued.
So what does Clermont do? Well, he lawyers up, but not just to defend FDR’s claim. He also retains counsel to pursue his professional liability insurer, CNA. CNA had previously refused to defend or indemnify him with respect to FDR because Clermont’s refusal to honor the agreement with FDR was not a “professional service” covered by the policy.
CNA looks at the case and reconsiders. It agrees to defend Clermont under a reservation of rights and retains an attorney to defend him. Clermont isn’t happy with this attorney. He asks CNA to pay for the services of an attorney that he chooses. CNA agrees again.
CNA tells the newly retained attorney that it will only pay for services rendered in connection with one facet of the FDR litigation, the facet which, at least arguably, gives rise to a duty to defend. Retained Attorney says, no, that’s not possible because the matters are interrelated, and again CNA relents and agrees to pay fifty percent of Retained Attorney’s fees.
Eventually, Clermont and FDR agreed to arbitrate their fee dispute, and the arbitrator awarded FDR fifty percent of the contingency fee, or about $ 400,000.00.
Okay. Now, folks, Clermont has gotten half of his defense costs paid for a case which, to anyone who knows anything about E&O coverage, never had a chance in hell of being adjudicated in Clermont’s favor. Fee disputes between lawyers arise from contracts. There’s nothing special or unique about a lawyer’s agreement to share a fee to distinguish it from any other contract between two parties. There’s no “professional” in the service being delivered, just performance or non-performance of an agreement.
Realistically, Clermont caught himself a lucky break when his carrier agreed to defend him under an ROR.
So, naturally, Clermont sued CNA. Why? Because the E&O insurer should have paid FDR the $ 400,000+.
You heard that right. This guy argued that his insurer should have to pay his former firm the one-half attorney’s fee that he – Clermont – had contracted to pay. That way, FDR could get paid and Clermont could score himself a nice little windfall.
The United States District Court for the District of Massachusetts devoted a good thirty pages to why Clermont was out of luck. If it were me, I’d have issued a one pager: “You are an idiot. Go away.”
But I don’t imagine I’ll ever make the short list for the federal bench.