Most states view the duty to defend more broadly than the duty
to indemnify. Some people call the duty to defend “litigation
insurance” because it often applies even where the
allegations are slim, conclusory and ultimately untrue. A recent
Fifth Circuit case reemphasizes how many courts address the duty to
defend.
In Allied World
Specialty Insurance Co. v. McCathern, P.L.L.C., No.
17-10615 (5th Cir. Feb. 26, 2020) (Not Precedent), a lawyers’
professional liability insurer brought a declaratory judgment
action against a law firm seeking to avoid both the duty to defend
and indemnify the law firm from an underlying legal malpractice
case. The malpractice case arose after the lawyer allegedly was
late in accepting a Stowers demand for the remaining
policy limits of the underlying insured’s policy. In the
underlying case, the court rejected the law firm’s arguments
that the demand had been accepted, dismissed the affirmative
defense of settlement, and a jury found
