Can insurance companies sue for legal malpractice?

What happens when one person injures another? Whether a car accident, medical error, dog attack or other negligent action that led to an injury the injured person may be able to hold the responsible party accountable through a personal injury lawsuit. This form of civil liability can result in funds to help cover the cost of the injury.

Now, let’s say the victim wins the case or settles the matter and gets payment from the person or business responsible for the injuries. Will the injured party who got this payment have to pay back insurance if insurance covered the cost treatment? In most cases, yes.

But what happens if the victim does not win their personal injury case? What if the reason the victim, the insured, did not win was due to poor legal representation? Could the victim’s insurance company sue the lawyer for legal malpractice? In this situation, the insurance company could argue that they have the ability to sue their insured’s attorney under the theory of subrogation.

What is subrogation?

Subrogation is a legal term that refers to an insurance carrier’s legal right to hold a third party accountable when that third party was responsible for the loss incurred by the insured. In a recent case, an insurance company attempted to argue that they could sue their insured’s legal counsel for legal malpractice. The attorney argued that the insurance party was not allowed to do so because they did not have standing. Basically, the lawyer pointed to the attorney-client relationship and said it barred the insurance company from suing for malpractice.

The court did not agree. Instead, it held that the language of the contract between the insured and the insurance company expressly provided for subrogation. As a result, in this case the insurance company could essentially step into the shoes of the insured and bring forward a legal malpractice claim.  

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