Law Firm Lacks Standing To Sue Client’s Insurer For Fees

The moral of the story here is: get it in writing if you wish to collect your legal fees.

The opinion in Mintz Fraade Law Firm, P.C. v. Federal Insurance Co., 2021 2021 NY Slip Op 02607, Appellate Division, First Department is short and to the point. The key language:

“Plaintiff law firm lacks standing to recover its legal fees under the insurance policy, to which it is not a named party (Miller & Wrubel, P.C. v Todtman, Nachamie, Spizz & Johns, P.C., 106 AD3d 446 [1st Dept 2013]). Plaintiff was merely an “incidental beneficiary to its client’s malpractice insurance policy” (id.). Thus, the motion court properly found that plaintiff’s sole recourse was against the insured, its client, and not its client’s insurance provider.

Plaintiff’s argument that it had a direct contract with defendant on account of the various correspondence between itself and one of defendant’s employees also fails. Indeed, these letters merely confirm, consistent with the policy’s requirement that the insurer’s consent of the insured’s choice of counsel not be “unreasonably withheld,” that defendant consented to the insured’s continued retention of plaintiff.”

Comment: if you want to sue for fees, sue your former client. First, make sure you have an engagement letter. Second, make sure that you have detailed billing records that justify such an invoice. Third, make sure you review the file carefully so you do not draw a counterclaim to your lawsuit.

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