An insurance company can't sue Florida law firm Kubicki Draper for legal malpractice as it was never really a client, The Fourth District Court of Appeal ruled Wednesday.

Arch Insurance Co. hired the law firm in 2006 to defend its customer, South Florida accounting company Spear Safer CPAs and Advisors, against a multimillion-dollar accounting malpractice lawsuit.

The case settled for $3.5 million — within the insurer's $5 million policy limit. But according to Arch Insurance, that number could have been lower if Kubicki Draper had raised a statute of limitation defense earlier in the case.

The insurer sued the firm in May 2008 for legal malpractice and professional negligence, asking for at least $4 million in damages, plus interest, fees and costs.

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Click here to read the full complaint

According to the complaint, attorney Peter Knight represented the accounting firm for the first year of litigation but left Kubicki Draper in 2007, when Rolando Diaz took over with a third attorney, Peter Murphy. Arch Insurance claimed a delay in assigning new lawyers to the case contributed to the firm's alleged negligence.

But Arch Insurance had no standing to sue, according to the Fourth DCA, which agreed with the trial court's decision to grant summary judgment against the insurer in October 2017.

The opinion quoted the insurer's argument that, “Logic dictates that an insurer can pursue a legal malpractice claim against the law firm it hired for its insured,” and said it understood the plaintiff's fears that there could be ”dire consequences” if insurance companies couldn't hold law firms liable in certain instances.

“However,” the opinion said, “We are bound to follow the law as it exists, not as the insurer argues it ought to be.”

Fourth DCA Chief Judge Jonathan D. Gerber wrote the opinion, backed by Judges Alan O. Forst and Mark W. Klingensmith.

Benjamin J. Baird of Winget Spadafora Schwartzberg in Miami, who represented the insurer, did not respond to requests for comment before deadline.

Steven Hunter of Hunter & Lynch in Coral Gables. Courtesy photo.

The ruling drew praise from Steven Hunter of Hunter & Lynch in Coral Gables, who represents Kubicki Draper.

“A lawyer's fundamental duty is to their clients,” Hunter said. “And that attorney-client loyalty rises above the desires of the insurance company to save money.”

The way Hunter sees it, there was no legal malpractice in the underlying case, in which he said the verdict could have been more than $500 million.

The opinion cited cases in which the Florida Supreme Court has ruled lawyers could only be negligent with clients — meaning third parties don't count, unless lawyers have a direct obligation or attorney-client relationship with them.

The high court has recognized just two exceptions, according to the opinion. One involved drafting a will, where the client clearly wanted to benefit a third party, and another concerned lawyers preparing documents on which independent auditors relied.

The court did note that the Fifth DCA has recently issued a different ruling on a similar case but said the plaintiffs in that case proved they were third-party beneficiaries of the law firm's service.

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