Recent Developments in Legal Malpractice Litigation

By Elizabeth Starrs

Does a lawyer, hired by an insurance company to represent a professional in a malpractice case, have to advise the professional, his client, that he might need his own personal counsel to evaluate whether to demand that the insurance company settle on his behalf? According to the Colorado Court of Appeals in its July 10, 2008 decision in Morris v. COPIC, the answer is “yes.”

In Morris v. COPIC, Dr. Morris was sued for medical malpractice by a former patient. Dr. Morris was defended in this case by an experienced lawyer retained by COPIC Insurance Company, Dr. Morris’s medical malpractice insurance carrier. The jury returned a verdict for money damages in an amount which was greater than the insurance policy limits and Dr. Morris assigned his rights against COPIC for bad faith breach of his insurance contract to the former patient’s widow in exchange for the widow not pursuing Dr. Morris personally.

One of the issues before the Colorado Court of Appeals was the extent of information made available to Dr. Morris and upon which he could make an informed decision about whether to settle. In that regard, the Court commented that the lawyer should have sent his client copies of his letters to the insurance company about the potential size of the verdict.

The Colorado Court of Appeals also held that the insurance-company-retained lawyer had a duty to advise his client, the doctor, that he should get his own personal counsel to evaluate the impact of an adverse verdict in excess of the doctor’s policy limits and make a demand that the insurance company, COPIC, make every effort to settle the doctor’s case within the insurance policy limits.

Although this was a bad faith case against an insurance company, and although there is no evidence that the former client was critical of how the case was handled by his former attorney, the Colorado Court of Appeals made a point of indicating that the lawyer should have told Dr. Morris that he should have his own personal counsel before the trial to evaluate the potential of an excess verdict against him and should have copied Dr. Morris on his communications with the insurance company about the potential size of an adverse verdict. If this had occurred, it probably would have minimized the negative impact on Dr. Morris.