The Expert Podcast

 Understanding Liability for Attorney's Fees:
  • As a business owner or an insurance company, it's crucial to consider liability for attorney's fees, especially in cases involving damages or liability where legal action is taken against another party.
  • If your insurance policy covers potential losses, it will likely cover attorney's fees. However, there are important factors to note.
Settlement Offers and Legal Fees:
  • When the opposing party offers a settlement and it's declined, any attorney's fees incurred beyond that settlement amount may need court adjudication.
  • If the insured party prevails in court, the insurance company may be entitled to attorney's fees. However, certain conditions must be met.
Reasonable Attorney's Fees:
  • Attorney's fees must be reasonable and not arbitrary. They are typically associated with lawsuits, where both sides may incur substantial legal costs.
Impact of Settlement Negotiations:
  • In settlement negotiations, rejecting an offer may lead to potential liability for attorney's fees. It's crucial to understand the implications before making decisions.
Importance of Legal Advice and Insurance Coverage:
  • Seek legal advice to navigate liability scenarios effectively.
  • Review your commercial insurance policy to ensure it provides adequate defense coverage and liability limits.
Mitigating financial risks:
  • Avoid limitations in your insurance coverage that could jeopardize your business financially.
  • Consider extra coverage if necessary to safeguard against potential liabilities.
Strategic Settlement Approaches:
  • Understand the implications of rejecting settlement offers, as it may involve waiving rights to future attorney's fees.
These considerations are essential for businesses and insurance companies alike to manage risks effectively and protect their interests in legal proceedings. If you have questions or want to delve deeper into today's topics, visit at RiskCoverage.com for additional resources. Until next time, stay insured and stay informed!

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If you're a business owner or an insurance company, this is a very important factor to keep in mind when being liable for attorney's fees. If you have a case where there's damages or liability and you sue another party, if you have insurance that would cover that potential loss, that insurance will kick in for attorney's fees. However, if the other party makes an offer to you to settle and you don't accept that offer, any attorney's fees that are needed over and above that settlement amount may be something that has to be adjudicated by the court. If the insured prevails in that trial, the insurance company can get attorney's fees, but only after they prove first of all that they did not accept that settlement, and the attorney's fees have to be reasonable. They can't just be some arbitrary, made-up number. This kicks in a lot with lawsuits.

So let's say you sue somebody for fifty thousand dollars and they make an offer to you of thirty thousand, and you deny the offer, and you go to trial, and you spend attorney's fees, and the other side spends attorney's fees, and maybe there's a judgment issued for forty thousand dollars. Well, the other side and also your insurance company can say, "Look, if you accepted that thirty thousand dollars, you wouldn't have had all these attorney's fees." So the other side can request those attorney's fees; your insurance company, if they provided you with defense coverage, can also make a claim for you for those attorney's fees, and vice versa. The insurance company might be required to pay them on the other side.

Be aware that you want to get good legal advice from an attorney—yyou know, we're not attorneys—aabout this type of scenario and liability, but also make sure that your insurance coverage in your policy for your commercial policy has the right language for defense coverage and what the liability limits are. You want to make sure that you have no limitations that's going to put you out of business if you have to pay a certain amount; that you can afford that might be something you want to have extra coverage for. And if you're entering into settlement negotiations, you want to make sure that you know what you're rejecting. That is not just that initial offering; you're maybe also waiving some rights to attorney's fees that you have to pay later.