The federal district court undertook a matter of first impression and determined that the Missouri Supreme Court would find that an excess insurer cannot bring a legal malpractice claim under a theory of equitable subrogation against a law firm hired by the primary insurer or the insured because of the extreme nature of the remedy of equitable subrogation in Missouri and because there is a potential conflict of loyalty for the attorney to his direct client.
St Paul Surplus Lines Ins. Co. v. Remley, 2009 U.S.Dist. Lexis 59434 (2009)
Filed: July 13, 2009
Appellate court found that claimant counsel’s failure to obtain consent to represent worker’s compensation carrier precluded claimant attorney’s right to recover attorney’s fee from carrier’s lien recovery.
The court reiterated the rule that a worker’s compensation carrier is entitled to have its lien paid first from any tort recovery. Claimant attorney cannot collect attorney’s fee until gross recovery is first reduced by worker’s compensation carrier’s statutory lien.
Failure to comply with “first money rule” is possible violation of Texas ethics rules.
Gray Law, LLP v. Transcontinental Insurance Co., 560 F3d 361 (2009).
Filed: February 18, 2009