Fee disputes are uncomfortable, and many attorneys assume that once a dispute is resolved, it’s behind them. But when it comes to malpractice insurance applications and renewals, past fee lawsuits can still matter — even if no malpractice claim was ever filed.
Understanding what must be disclosed, and why, is critical to protecting your firm’s coverage.
Why Insurance Carriers Ask About Fee Disputes
Professional liability insurers don’t just evaluate past malpractice claims. They assess patterns of behavior that indicate future risk.
Fee disputes signal breakdowns in the attorney-client relationship. Carriers know that when disputes escalate, the likelihood of grievances and malpractice allegations increases. That’s why applications often include questions about disputes, circumstances, or matters that could reasonably give rise to a claim.
From an underwriting perspective, fee lawsuits fall squarely within that scope.
When Disclosure Is Required
Most applications require disclosure of:
- Past or pending disputes with clients
- Fee litigation or collection actions
- Any circumstances that could reasonably lead to a claim
Even if a fee dispute didn’t involve allegations of negligence, it may still need to be disclosed. The key factor isn’t whether a malpractice claim occurred — it’s whether a dispute existed that reflects potential risk.
The Risk of Failing to Disclose
Failing to disclose a past fee suit can create significant insurance problems.
If a future claim connects back to an undisclosed dispute, the carrier may argue that material information was withheld. This can lead to coverage complications, rescission issues, or denial of defense.
In many cases, nondisclosure is more damaging than the dispute itself.
Does Resolution Change the Obligation?
Attorneys often assume that resolved or dismissed fee suits don’t need to be mentioned. While resolution is relevant, it doesn’t automatically eliminate the duty to disclose.
What matters is context. A resolved matter that’s clearly explained is generally far less concerning to insurers than an undisclosed one that surfaces later.
How to Disclose Strategically
Disclosure doesn’t mean providing unnecessary detail. It means offering clear, factual context:
- The nature of the dispute
- How it was resolved
- Any steps taken to prevent recurrence
Underwriters are far more comfortable with transparency than surprises.
What Insurers Want to See
Carriers look for firms that demonstrate control over risk. Clear engagement letters, defined withdrawal procedures, and consistent dispute-resolution practices all help position a firm favorably.
Disclosure is part of that story.
Protecting Your Firm Long-Term
Fee disputes may be unavoidable, but insurance fallout doesn’t have to be.
At The Bunker, we help law firms understand how past disputes affect malpractice coverage and how to navigate applications and renewals strategically. Our role is to help move your firm from danger to a safe place — before a claim or renewal creates unnecessary exposure.
Click here to schedule time to chat with us regarding your firms insurance program!