D & O

March 03.2010

New Cases Find Coverage Under D&O Policies For A Company’s Special Investigation Committee Costs

In the recent spate of backdating lawsuits, and in the current wave of financial institution litigation, Directors & Officers (D&O) liability carriers have almost uniformly taken the position that the costs of a company’s Special Investigation (or Litigation) Committee (SC) are not covered “Loss.” Two cases in 2009 – the first to address this issue – concluded otherwise. A company faced with allegations of wrongdoing by its directors or officers may choose to form a Special Committee of independent directors to investigate the allegations and make a determination of their merits. Many cases involve an SC that is formed in...

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January 21.2009

Identical Financial Advice Can Constitute Separate Claims

These days, putting your money in the stock market isn’t for the faint of heart. Even before the recent economic downturn, many individuals were turning to financial advisors to give them the inside scoop on the best stocks, funds, and bonds. But what happens when those investments perform poorly? Or when it comes to light that a particular advisor has been giving the same bad advice to his clients for years? For insurance purposes, does giving the same advice to two different investors count as one act or two? One recent Ninth Circuit decision sheds light on the increasingly important...

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January 12.2009

All May Not Be Lost In The Financial Crisis: Bankrupt Defendants’ D&O Insurance

The current financial crisis has led to a number of corporate bankruptcies. Lehman’s filing in September 2008 – the largest bankruptcy case the U.S.has ever seen – is one obvious example. There are bound to be many more bankruptcies in 2009 as the financial crisis chew up more struggling businesses. As the Lehman bankruptcy shows, corporate bankruptcies can give rise to numerous claims for mismanagement, waste and inaccurate financial disclosures. Plaintiffs may assume that all, or nearly all, the money available to satisfy their claims has either evaporated or will be divided among thousands of creditors. But, plaintiffs might be...

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December 22.2008

Traps to Avoid when Settling Lawsuits with Claimant

The California District Court of Appeals has come out with a couple decisions in the last two years which present serious traps for an insured when settling a case with the underlying claimant or separately with one layer of coverage. Two such cases are Qualcomm and Aerojet. We will be discussing these cases, as well as thoughts regarding how to deal with them, in upcoming blogs. As part of that process, we hope to solicit the thoughts and experiences of readers as well. There are any number of ways to approach the difficulties presented by these cases, as well as...

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December 18.2008

Confidentiality of Communications with Carriers

I spoke recently on a Webinar sponsored by Strafford Publications, entitled "Attorney-Client Privilege in Jeopardy in Insurance Litigation." One issue addressed was whether communications between the policyholder counsel and the carrier are privileged when the insured has independent Cumis counsel. In the Cumis setting, the insured hires its own independent defense counsel, which represents only the insured and has no attorney-client relationship with the insurer. If Cumis counsel provides the insurer with information or an assessment of the merits and risks of the litigation, is that communication privileged, or may it be discovered by the opposing party in the litigation?...

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