Legal Malpractice Carrier Excused from Covering Malpractice Allegations

A New York attorney advised his client not to answer a lawsuit, which resulted in default judgment against the client. He later procured a claims-based policy protecting against legal malpractice and affirmed that he had no knowledge of facts that could provide the basis for such a claim. The Second Circuit Court of Appeals held that the applicable test is not subjective but objective, and that any reasonable attorney would have known that facts existed to provide the basis for a malpractice suit. Therefore, the policy provided no coverage and the insurer was not obligated to provide a defense.
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