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Ethics Traps for the Unwary #4: Don't Be Exposed - Keep the Right Insurance

By: Craig S. Brodsky | 1.22.20 | Media Featured

We defend various professionals in Maryland, the District of Columbia and Virginia, including lawyers and law firms. Many of these cases are ethics matters involving Bar Counsel. From our experience litigating and trying cases against Bar Counsel, we often hear concerns from clients about the cost of defense and the length of time that a disciplinary case takes. If you are an attorney concerned about the costs associated with defending yourself in a disciplinary matter, this brief article provides some insights on steps you can take to protect yourself.

Quick Takeaways: Responding to Inquiries from Bar Counsel
  • Most Professional Liability insurance policies contain a rider for payment of legal fees in disciplinary actions that defray the costs of defense.
  • Failing to notify your carrier timely can result in a denial of coverage.

Attorneys under investigation by Bar Counsel and attorneys responding to Attorney Grievance Commission complaints are often unaware of the traps they may face. One way to avoid the traps associated with an ethical complaint is to have insurance that provides funding for the defense of a licensing proceeding. Keeping the right insurance policy is critical as it might provide you with the best opportunity to defend yourself. This is especially so in disciplinary cases which, upon the filing of public charges, have mandatory appeals to the Court of Appeals in Maryland and the District of Columbia.

Legal Malpractice Insurance Can Pay Your Defense Costs

Most lawyers have a professional liability coverage, to provide defense and indemnity in the event of a claim for legal malpractice. Many policies also contain a rider or extension to the coverage, which pays for legal fees in the event of a regulatory or disciplinary proceeding. A typical policy may have a provision like this:

We shall pay reasonable and necessary fees, costs and expenses (but not damages or sanctions) incurred by an insured resulting from the defense of a proceeding by a regulatory or disciplinary official or agency first initiated and reported to us during the policy period to investigate a charge of professional misconduct in the rendering of or failure to render professional legal services subject to a limit of $50,000 for each insured and subject to a maximum limit of $100,000 per policy period. ... This coverage is also subject to any exclusions of the policy and coverage defenses which might apply with respect to claims. In order to receive coverage under this provision, you must give us written notice prior to the end of the policy period and no later than thirty (30) days of receipt of any disciplinary allegation made against any insured.
In order for an insured to receive coverage for a disciplinary proceeding pursuant to the foregoing, an insured must give us written notice no later than thirty (30) days after receipt of any disciplinary allegation made against any insured.

In our experience, the various insurance carriers provide different levels of coverage. Indeed, we have seen policies that provide as little as $2,500 and as much as $50,000. Obviously, those policies with higher levels of coverage provide a greater level of protection for attorneys. We recommend a cost/benefit analysis and consultation with your insurance agent when selecting a policy.

Traps to Avoid

As with all insurance, a lawyer’s ability to tap into the coverage extension is governed by the language of the insurance policy. We note that insurance policies often have exclusions such as:

This insurance does not apply to any claims arising out of any alleged conversion, misappropriation, commingling, or improper use of money or funds held for others.


Similarly, it is important to notify your carrier as soon as possible, before even responding to the initial letter from Bar Counsel. Policies often have provisions that preclude insureds from assuming or admitting liability before notifying the carrier, yet in Bar Counsel cases, lawyers often must acknowledge fault early on. Policies also often require notice within 30 days of circumstances that may give rise to a claim, so notice to the carrier upon receipt of a letter from Bar Counsel is often required.

Another potential trap is the insurance application which almost always asks the lawyer to state whether the attorney has been the subject of a disciplinary complaint or grievance. Carriers can construe even the initial letter from Bar Counsel as a disciplinary complaint or grievance, even before the complaint is docketed.

What to do if You Receive a Letter from Bar Counsel

While each case is unique, failing to procure sufficient insurance and failing to notify your insurance carrier can create problems that are easily avoided. You can avoid the unnecessary stress associated with the expense of a disciplinary action by being proactive and purchasing an insurance policy and providing timely notice to your carrier.

If you have received a letter from Bar Counsel or a client has filed a complaint with the Attorney Grievance Commission, or you are currently defending a Petition for Disciplinary Charges, we can help. Craig Brodsky has extensive experience handing these cases and is available to address your concerns. If your organization is interested in a presentation from a legal malpractice or professional malpractice expert at your next event, contact us today.