SPRINGFIELD – News of a multi-million dollar malpractice judgment against the Lakin Law Firm surprised the insurer that may have to pay it.
No one at Illinois State Bar Association Mutual Insurance even knew the suit was filed until they read about the judgment in a newspaper on May 30, according to attorney Robert Chemers of Chicago.
After reading the news Chemers amended ISBA Mutual's complaint in a five-year-old Sangamon County suit against the Lakins.
"Lakin and Lakin Law Firm at no prior time ever notified ISBA Mutual of the pendency of the action in Tulsa, Oklahoma, nor did either or both ever request a defense for that action," Chemers wrote.
"Lakin and Lakin Law Firm breached the notice condition of the ISBA Mutual policy…"
The suit seeks to rescind the policy. The insurer claims the Lakins obtained it through misrepresentations.
If the policy should stand, ISBA Mutual would face potential liability for millions that Lakin clients lost.
When the Lakins settled cases they structured some lump sum settlements over time through investor James Gibson.
He left the country. The money disappeared. He went to prison.
The biggest structured settlement belonged to personal injury client Stephen Williams, of Oklahoma.
On Feb. 8, U.S. District Judge Claire Eagan of Tulsa granted default judgment to Williams. On April 18, Eagan set it at $3,752,601.80.
Williams's attorney, David Herrold of Tulsa, moved for foreign judgment at federal court in East St. Louis on May 24.
In June the Lakins filed a motion in Tulsa to set aside Eagan's judgment and a motion in East St. Louis to stay foreign judgment.
Brad Lakin swore in an affidavit that he didn't know about the Oklahoma suit until he read about it in a newspaper on May 30.
On June 26 in Tulsa, U.S. Magistrate Judge Paul Cleary ordered the Lakins not to alienate, conceal, encumber, secret, hide, distribute, pledge, sell, mortgage, pay out, dispense, gift or dispose any assets or property.
Cleary allowed exceptions for operations of the firm and Tom Lakin's food, shelter and health.
Also on June 26, ISBA Mutual amended its complaint and submitted a reply brief on its motion for summary judgment.
Chemers wrote, "…lying about one's latent risks is not the only way to unmake one's insurance policy. Equally effective is hiding key facts."
Back in Tulsa, on July 9 Cleary ordered the Lakins to post bond in the amount of the judgment plus three months interest.
He wrote that a court should require security of some kind to protect a judgment creditor while the court considers post trial motions.
"This is especially true where, as here, defendants are facing significant litigation and claims by multiple parties," Cleary wrote.
He wrote that Williams had detailed the civil and criminal cases.
He wrote that they were "certainly not the average run of the mill litigation a law firm might be called upon to defend."
Back in Springfield, Circuit Judge Patrick Kelley plans a hearing on summary judgment Aug. 7.