All Florida litigators are (or should be) aware of a unique statute in their state that shifts the burden of paying their own attorney’s fee to the other party under certain circumstances.
Specifically, if one party makes a formal "Proposal for Settlement" (PFS) in accordance with Florida Statute 768.79 and Rule 1.442 of the Fla.R.C.P and the other party rejects it, then the party making the Proposal for Settlement (PFS) may have their attorney's fees from the date their PFS is rejected be compensated by the other party if that other party does not achieve a judgment which is at least 75% of a defendant’s offer or less than 125% of a plaintiff's demand.
The liability that attaches under this statute is personal in nature, and therefore, the consequences of rejecting a PFS can be quite serious. Insurance has been available in Florida since 2012 that will cover the risk of rejecting a PFS in Florida, and hundreds of plaintiff attorneys have purchased this insurance on behalf of their clients. Interestingly enough though, only a handful of defendants have made similar purchases, even though it is equally available to defendants through the website www.legalfeeguard.com.
There are many reasons for defendants to consider purchasing Proposal for Settlement Insurance. First and most obvious, defendants that are self-insured stand to bear the costs of the plaintiff’s attorneys fees and costs that are shifted pursuant to the PFS statute entirely themselves. Second, and perhaps a more common scenario, many defendants have a large Self Insured Retention or a wasting policy that may not provide coverage if attorney’s fees are shifted as the result of an adverse PFS, depending on the facts of the case. Third, some insurers have taken the position that they will not pay adverse fees and costs that are shifted under the PFS statute under their Supplementary Payments clause in their policy, potentially leaving their insureds to fend for themselves if attorney’s fees are shifted against them.
At the very least, it is recommended that defense attorneys include a paragraph in their firm’s form letter explaining what a PFS is, its consequences if rejected, etc., that informs the client of the availability of Proposal for Settlement Insurance. If this language is included, then the law firm will have taken a powerful step towards insulating the firm against any malpractice liability in the event their client is hit with adverse fees and costs.
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