Plaintiffs Can Now Mitigate Sanctions from a Proposal for Settlement by Utilizing the New Insurance Program Providing Coverage for Attorney’s Fees and Costs Incurred under Florida’s Proposal for Settlement Statute

With the advent of the mediation process (which is mandatory in any civil action in Florida), over 95% of all lawsuits now settle before trial. From the moment a complaint is served, each party seeks to identify, establish and exploit any potential advantage. In the chess match that is civil litigation, leverage is king. The key to the creation of leverage against an adversary is to convince them to settle their case rather than risk the unpredictable results of trial.


One of the more widely used methods for establishing such leverage is a Proposal for Settlement or Offer of Judgment. Florida’s Proposal for Settlement statute, section 768.79, Florida Statutes, was intended to encourage settlements by imposing court costs and attorney’s fees as sanctions upon a party who unreasonably rejects a Proposal for Settlement.1 Defense counsel frequently employs the use of Proposals for Settlement as a fee shifting mechanism, with the logic being that a plaintiff will become more reasonable in settlement negotiations if there is the potential that they will be responsible for paying the defendant’s attorney’s fees and costs if an unfavorable result is obtained at trial.2


The threat of potential sanctions for a plaintiff’s failure to accept a reasonable settlement offer before trial can now be essentially eliminated due to the creation of fee-shifting insurance. On October 9, 2012, Willis Programs, a subsidiary of Global Insurance broker Willis Group Holdings (NYSE:WSH), announced an insurance program that covers liability for attorney’s fees and costs under Florida’s Proposal for Settlement Statute. This dynamic new insurance, termed LegalFeeGuard, affords Florida state court litigants indemnification for sanctions under the Proposal for Settlement Statute. 3

LegalFeeGuard offers policies for general negligence matters, which are defined to include automobile, motorcycle, slip and fall, and products liability matters. The program, as advertised, does not specifically identify coverage for premises liability actions, negligent security, or other types of negligence matters, but coverage for such actions may be available as long as the underwriter’s criteria is satisfied. LegalFeeGuard also offers policies for professional negligence matters at a slightly higher premium due to the fact that court statistics indicate that professional malpractice cases are resolved through actual trial more than other types of liability cases. LegalFeeGuard does not advertise which types of professional negligence matters are covered, but we assume that policies will be available for actions which have triggered a party’s error and omissions policy.


LegalFeeGuard’s coverage limits and costs are as follows:


Therefore, as an example, a plaintiff can protect against fee sanctions in a general negligence action up to $100,000.00 for a relatively small premium payment of $3,500.00. The above policy premiums are non-refundable and carry no deductible. It is important to note that Florida Bar Staff opinion 78705 (revised) of the Professional Ethics Committee of the Florida Bar indicates that an attorney in Florida may advance the cost of the premium of the LegalFeeGuard policy and make the repayment of that premium contingent on the lawyer making a recovery on behalf of the client. This allows for easier access to LegalFeeGuard for plaintiffs, and we expect to begin to see plaintiffs’ attorneys shielding themselves and their clients from exposure to fees and costs from failing to accept a valid Proposal for Settlement by purchasing LegalFeeGuard. From a defense

attorney and claims professional perspective, you should expect plaintiffs’ attorneys and their clients to be less affected by the threat of payment of the defense attorneys’ fees and costs during settlement discussions before trial due to the availability of this insurance.


It should also be noted that LegalFeeGuard is available to either plaintiffs or defendants, so insurance carriers and their insureds can also benefit from this insurance in the appropriate cases.


1 Florida Rule of Civil Procedure 1.442, which implements section 768.79, adds additional requirements concerning the content of the Proposal for Settlement.


2 In any civil action for damages filed in the courts of Florida, if a defendant serves an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney’s fees incurred by her or him, or on a defendant’s behalf pursuant to a policy of liability insurance or other contract from the date of filing of the offer if the judgment is one of no liability or the judgment obtained by the plaintiff is at least 25% less than such offer, and the court shall set off such costs and attorney’s fees against the award. Fla. Stat. § 768.79 (1).


3 However, this insurance is not available in federal court actions.

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