Lloyd's seeks to recover $6.3 million over Lakin legal malpractice settlement

Kelly Holleran Feb. 4, 2009, 11:35pm

Brad Lakin

Tom Lakin

Underwriters at Lloyd's of London has filed suit against Fields, Howell, Athans and McLaughlin law firm and Norton and Rain, Inc., alleging that because of miscommunication it did not defend the Lakin Law Firm in a legal malpractice law suit.

After preparing to defend the firm in a suit against it, Lloyd's was informed by an attorney at Fields that it would no longer have to represent the firm, according to the complaint filed Jan. 23 in St. Clair County Circuit Court.

However, Fields was wrong, the suit states.

In the three-count complaint, Lloyd's is seeking a judgment in excess of $6.3 million, plus costs.

It is represented by Bernard J. Ysursa of Cook, Ysursa, Bartholomew, Brauer and Shevlin in Belleville.

Lloyd's claims that on the day of trial in Oklahoma in 2007, no one showed up to defend the Lakin Law Firm.

The Record has previously reported that U.S. District Judge Claire Eagan of Oklahoma entered a $3,752,601.80 default judgment against Tom Lakin and the Lakin Law firm to plaintiff Stephen Williams of Chouteau, Okla.

Williams lost a leg in 1991, when a Union Pacific train rolled over him. His suit against the Lakins claimed his structured settlement was mishandled.

The case was settled on Dec. 2.

According to Lloyd's complaint, miscommunication occurred after Daniel Esrey, an attorney at Fields, sent a report to Lloyd's on Dec. 14, 2006, that said, "The Assured withdrew the claim for consideration under this policy prior to our issuing the coverage letter approved by Underwriters. Accordingly, we refrained from issuing the letter and we recommend closing the file in this matter."

Lloyd's claims it would have provided the Lakin Law Firm with defense had it not received the advice of the Fields' attorney. In addition, the law firm would probably have won the suit against it.

"Lakin had meritorious defenses to the claims asserted in the Williams complaint," the suit states. "In absence of the default judgment, Lakin would have prevailed on the merits and no judgment would have been entered against Lakin."

When Lakin learned of the suit against it, it informed Norton and Rain, Inc., its insurance broker of the complaint.

In turn, NRI was supposed to contact all of Lakin's current and past insurance carriers, Lloyd's claims.

However, it only informed Lloyd's of the complaint because it served as the Lakin Law Firm's professional liability insurance from May 5, 2006, until May 5, 2007, the suit states.

So, when the Lakin Law Firm lost the suit against it, the firm filed a complaint against Lloyd's because of its failure to defend.

A settlement was reached in the matter in which Lloyd's agreed to hold Lakin harmless on matters of the defense and agreed to pay attorney's costs and other fees in excess of $2.1 million.

"The Lloyd's Underwriters had no alternative to such settlement because of Fields Howell's failure to reserve their rights, all policy coverage defenses were lost," the suit states.

Fields was guilty of negligent acts that led to the default settlement because it mistakenly believed the Williams complaint was reported to a prior carrier and because it failed to investigate whether it was properly reported to Lloyd's under the policy, Lloyd's claims.

It also negligently failed to inform Lakin that Lloyd's was closing the file on the claim, failed to follow up with the prior carrier to insure that defense was being mounted on Lakin's behalf and made statements to Lakin that led the firm to believe Lloyd's was still mounting a defense for it, according to the complaint.

NRI breached its duties to Lakin by failing to provide all insurance carriers with notice of the claim, by failing to follow up with Lloyd's to make sure a defense was being mounted on Lakin's behalf, by failing to ensure that any insurer was defending Lakin and by failing to inform Lakin of the status of the defense claim against it, the suit states.

St. Clair County Circuit Court case number: 09-L-0033.

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