FHAM Wins Professional Liability Case...

FHAM Wins Professional Liability Case in Which the Georgia Court of Appeals Decides Issue of First Impression

In a case of first impression in Georgia, the Georgia Court of Appeals has decided that a professional liability policy does not cover an attorney’s alleged liability for breaching a fee-splitting contract. Garland v. American Safety Casualty Insurance Company, 2007 WL 2305475 (Aug. 14, 2007). FHAM attorneys, Terry Howell and Jonathan Kramer, represented American Safety against a suit by an Atlanta criminal defense attorney, demanding that American Safety reimburse him under its professional liability policy for over $100,000 in defense costs expended in winning a Florida case.

In the underlying lawsuit, a Florida attorney asserted that the Atlanta attorney owed compensation to the Florida attorney under an alleged oral fee referral contract. American Safety denied coverage because the underlying lawsuit did not involve performance of legal services as required by the policy and because the exclusion in the policy for damages arising from the restitution of fees applied. The Atlanta attorney sued American Safety, arguing that American Safety had wrongfully refused to defend him. FHAM convinced the trial court to dismiss the suit because there was no possibility of coverage under the professional liability policy and therefore no duty to provide a defense.

The Georgia Court of Appeals affirmed, holding:

Here, given the fact that the Florida attorney’s lawsuit against Garland and his firm
involved the alleged breach of a fee-splitting agreement incidental to the firm’s business as a law firm, the claim did not arise from Garland’s or his firm’s acts or omissions in rendering professional services as lawyers and was not covered by the policy issued by American Safety.

2007 WL 2305475, *3. The Court of Appeals relied heavily on the fact that many courts in the United States have held that contractual fee disputes do not constitute the rendering of professional services. Id. at *1.