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June 10, 2014

Press Release
William L. Boesch

Summary judgment win for malpractice insurer in $215 million fee case

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A Delaware superior court has granted summary judgment for a lawyers’ professional liability insurer represented by Sugarman Rogers’s William Boesch, in a dispute with an insured law firm over a claim seeking return of some $215 million in fees awarded in a securities class action.

The law firm was co-lead counsel for the plaintiffs in the Tyco companies securities class action. The matter was settled in July 2007, and a New Hampshire federal judge approved the settlement, including over $460 million in contingent fees sought by the lead-counsel firms. In 2010, a member of the plaintiff class, Richard Gielata, sued the law firm, charging that the size of its fee violated a 2004 agreement in which the firm had agreed to cap the amount of its fees, and to oppose larger fees if sought by co-lead counsel. Gielata sought to have the firm return some $215 million in allegedly overcharged fees, plus punitive damages, interest and costs.

The law firm sought a defense and indemnity from its malpractice insurer. The insurer, represented by Sugarman Rogers’s William Boesch, brought a declaratory-judgment suit seeking a determination that the Gielata action was not covered, based on a policy provision excluding disputes over attorneys’ fees or costs. The law firm countered that the exclusion did not apply – at least with respect to the insurer’s duty to defend – because Gielata’s claims were much broader than in the ordinary fee dispute. In a decision issued June 9, 2014, the Delaware superior court agreed with Sugarman Rogers’s arguments for the insurer, and granted it summary judgment.

For a copy of the decision or more information, please contact William Boesch.