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Fee Disputes with an Insured’s Preferred Defense Attorney

August 4, 2020

When an insured is sued for both covered and non-covered claims many carriers provide their insureds with the option of accepting assignment of panel counsel or retaining their own attorney to defend them.  When an insured selects their own attorney those carriers often limit the rates that private counsel can charge.  The carrier should secure agreement to the rate to be charged by private counsel in writing.

In Feld v. Fireman’s Fund, the U.S. Court of Appeals for the District of Columbia Circuit wrestled with what happens when a fee agreement was not reduced to writing.  The carrier claimed that the insured’s preferred attorney agreed to defend the insured for $225 per hour during a telephone call.  The attorney disputed that an agreement was reached and insisted that the firm’s rate was $500 per hour.  The District Court granted summary judgment to the carrier, but the Court of Appeals found that the facts were disputed and returned the case to the District Court for discovery and trial.

It was unclear from the opinion whether an oral agreement to a fee was reached, which is exactly why such fee agreements should be confirmed in writing.