Federal Court In Mississippi Finds No Duty To Defend Or Indemnify Law Firm Under Errors And Omissions Policy For Deficient Legal Services Provided To Firm Lawyer

A federal court in Mississippi has held that no duty to defend or indemnify existed under a law firm’s errors and omissions policy because the policy did not provide coverage for services rendered to firm employees. Blackburn Law Firm, PLLC v. Allied World Ins. Co., Case No. 3:30-CV-38-DMB-JMV (N.D. Miss. Mar. 3, 2021).

A law firm pursued a declaratory judgment action against its errors and omissions insurer following litigation surrounding an ambiguous trust agreement, which the law firm allegedly negligently drafted and failed clearly to convey the trustor’s intent. The trustor was one of the firm’s attorneys. The insurer denied coverage, arguing that its policy covered only legal services rendered for those other than a named insured. The named insured here included the firm and its employees. Because the subject trust agreement was drafted by the firm for one of its attorneys’ personal use, the insurer argued that it owed no duty to defend or indemnify under its policy. 

The court relied primarily on the policy’s definitions to conclude that no coverage existed. The court first noted that the policy covered legal services rendered by the firm and its employees on behalf of “others,” a term left undefined in the policy. The court turned to the ordinary definition of “others,” concluding the definition did not include the firm’s own employees. As the underlying trust agreement was drafted by the firm for one of its employee’s personal distribution of assets, the court reasoned that the legal services rendered were not performed for “others,” thus barring coverage.