Directors' and Officers' Liability: Insurance for Attorney's Fees in Derivative and Class Actions
In his column on Directors' and Officers' Liability published in the New York Law Journal, Joseph McLaughlin examines what happens when a shareholder recovers an award of the reasonable expenses of litigation, including attorney's fees, following a judgment or settlement in shareholder derivative or class action litigation. D&O insurance policies that treat plaintiffs' attorney's fees as an afterthought have generated coverage litigation concerning those fees—and the outcomes have surprised some. A review of standard D&O insurance policy terms and relevant case law suggests that insurers may wish to tighten the language of certain policy definitions and that, until they do, insureds have additional avenues to pursue coverage for payment of plaintiffs' attorney's fees.