An insurance dispute involving Somalian money laundering allegations met its resolution recently, with its fallout pervading even the legal community’s biggest corporations.
In a development likely to draw interest from corporate lawyers and law firms alike, AXIS Capital Holdings Ltd. and Sompo International Holdings Ltd. insurance units emerged victorious in a litigation brought forth by a former attorney from a Maryland law firm. As concluded by a federal appeals court, a criminal indictment — the crux of the court case — does not qualify for coverage under a $20 million liability insurance policy.
The attorney in question, Jeremy Schulman, formerly of Shulman, Rogers, Gandal, Pordy & Ecker, sought unsuccessfully to compel AXIS Surplus Insurance Co. and Endurance American Specialty Co. to shoulder his defense costs linked to federal charges of money laundering. However, the US Court of Appeals for the Fourth Circuit maintained that the indictment was not covered by the policy, thereby sealing the failure of Schulman’s appeal.
Prior to this judgment, the insurers had already delivered $700,000 in aid of Schulman’s defense following a subpoena by the Department of Justice — a detail that raises implications about the parameters of coverage under these types of policies.
The implications of this case extend to more than Schulman’s individual circumstances. The nature of the court’s ruling may induce recalibrations in how legal corporations regard their insurance provisions, particularly regarding what cases qualify for coverage. Ultimately, this ruling sends a clear message to the legal community about the non-coverage of criminal indictments within insurance policies.
For legal professionals navigating the complex landscapes of corporate law and insurance litigation, a comprehensive understanding of this case is imperative. A detailed report on the case can be found here.