Insurance Company Required to Defend Estate Attorney Against Legal Malpractice Claims

An Illinois appeals court holds that an attorney’s legal malpractice insurance company is required to defend him in two actions involving the attorney’s representation of an estate because the actions alleged damages and were not simply seeking attorney’s fees. Illinois State Bar Association Mutual Insurance Company v. Sohn (Ill. Ct. App., 1st Dist., No. 19 CH 10433, Dec. 13, 2021).

Randy Sly was appointed executor of Lisa Loessy’s estate and hired attorney Alan Sohn to represent him. Mr. Sly paid Mr. Sohn fees without court approval. The probate court appointed a guardian ad litem (GAL) for Ms. Loessy’s minor children and held a hearing on the issue of the fees. The court found that most of Mr. Sohn’s billings were unnecessary and unreasonable and ordered him to repay some of his fees. The GAL filed a motion against Mr. Sly, arguing that he should be personally liable for the fees, and the court granted the motion.

Mr. Sly sued Mr. Sohn for breach of contract, breach of fiduciary duty, and misrepresentation, arguing that Mr. Sohn told him he could pay the fees without court approval and mispresented him to the court. The GAL sued Mr. Sohn for legal malpractice, arguing that Mr. Sohn failed to advise Mr. Sly of his duties. Mr. Sohn tendered his defense of the claims to his legal malpractice insurance company. The insurance company brought a declaratory judgment action against Mr. Sohn, claiming that it did not have a duty to defend Mr. Sohn because the GAL and Mr. Sly sought attorney’s fees, which were excluded as damages under the insurance policy. The trial court granted judgment to Mr. Sohn, and the insurance company appealed.

The Illinois Appellate Court, First Judicial District, affirms holding that the insurance company has a duty to defend Mr. Sohn. According to the court, Mr. Sly is not seeking restitution for legal fees, instead he “seeks relief based on the judgment against him, which constitutes classic money damages.” In addition, the court finds the GAL is seeking “damages [that] are based on [Mr.] Sohn’s negligent advice regarding estate administration, not the payment of legal fees.”

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