(Illustration: Richard Mia/ALM)

It's a recurring dilemma for litigators: The case has been landed, and a certified demand for settlement has been sent to the opposing party, who responds with a less-than-satisfactory counter-offer.  

Take the offer? Or refuse and risk going to trial, knowing that a loss or award that's not much higher than the spurned offer leaves the client at risk of having to pay attorney fees under Georgia's offer of judgment statute?

A recent arrival in Georgia's insurance market can—for a price—help alleviate some or all of that concern by covering any such fee awards ranging from $10,000 to as much as $250,000.

Lawyers whose clients have purchased the policies—which are unregulated by the Georgia insurance commissioner but are marketed as enforceable private contracts—say it has worked well for them. But the policies are apparently little known in Georgia, one of several states that have some form of offer of settlement statute on their books.

The price varies depending upon the amount of coverage and when it is obtained. The $10,000 policy, for instance, costs $500 if purchased within 30 days of the offer of settlement and tops out at $1,500 if purchased between 90 and 40 days before trial.

The $250,000 coverage starts at $12,500 and tops out at $37,500 within the 90- to 40-day window; the insurance is unavailable if the case is less than 40 days from trial. The coverage is only payable if the case goes to trial and does not apply to litigation that settles or is otherwise dismissed.

Under Georgia's offer of settlement statute, a plaintiff who declines an offer to settle a tort claim and then is awarded no more than 75 percent of that offer may be held liable for the opposing party's attorney fees and expenses dating from the date of the rejected offer.

Similarly, a defendant who rejects an offer and then is hit with a judgment of 125 percent or more than the offer also may face claims for the plaintiff's attorney fees.

Marketed as LegalFeeGuard, the coverage has been available in Florida since 2012, said Stephen van Wert of Founders Specialty Insurance in Tampa, the managing general agent for the program.

Marketing materials tout the coverage as a way to both protect clients from costly judgments and for lawyers to safeguard their contingency fees.

Van Wert said that about 1,300 policies have been sold in Florida since the insurance began being marketed; he estimates that 98 percent of the coverage was sold to plaintiffs, although it is available to defendants as well.

“We have 300 or 400 lawyers who've bought it several times over the years,” van Wert said.

The coverage is available to purchasers online. Georgia is the second state where the insurance is being offered, van Wert said, although he expects it to be offered elsewhere in the future.

Insurance broker Ed Alden of Roswell's Alden & Associates, who is the sole marketer of the policies in Georgia, said the coverage is not regulated by Georgia's insurance commissioner, but must be sold by an authorized insurance carrier.

“It's essentially a contract between two private parties,” Alden said.

So far, he said, only a couple of policies have been sold in Georgia.

An advisory opinion from the Florida Bar offers “no opinion on whether the insurance product is legal,” but does state that its premium constitutes a cost of litigation and ,may be advanced by a litigation funding companies.

State Bar of Georgia General Counsel Paula Frederick said she was not prepared to offer any opinion concerning the insurance at this point.

Van Wert counts several attorneys with Florida-based Morgan & Morgan, which has offices in 14 states including Georgia, among his clients.

Firm partner Matt Morgan said his clients have bought the coverage in several cases.

“My clients are the individuals who purchased the policies, and I've never become aware of any complaint from them,” said Morgan. “They've always indicated to me that the process was seamless.”

Morgan said he “absolutely” supports the coverage, primarily because we try a large number of cases, and we want out our clients to be aware of every possible outcome, including that a party could file an offer of judgment that could be in the hundreds of thousands of dollars.

But most attorneys queried by the Daily Report were either unaware of the insurance or knew little about it.  

“I don't have any personal knowledge [or] experience with this type of product,” said Georgia Trial Lawyers Association President Laurie Speed of Speed + King, who specializes in medical malpractice cases.

But, she said, “I understand that GTLA elected not to establish a relationship with these folks when approached several years ago.”

Speed said queries to fellow officers indicated that most seldom dealt with offers of settlement by defense counsel.

Several defense lawyers were similarly unfamiliar with the insurance, and indicated that it might deliver mixed results for plaintiffs.

“I've heard about this from some Georgia plaintiff attorneys, [but] have not understood it is being done in Georgia,” said Gray, Rust, St. Amand, Moffett & Brieske partner Matt Moffett, a former president of the the Georgia Defense Lawyers Association.

Moffett said an argument could be made that “it's a contract void as against public policy here if the policy behind our statute is to facilitate settlement and put those at risk who refuse reasonable offers.”

But Jonathan Adelman of Waldon Adelman Castilla Hiestand & Prout said the coverage might be a boon for the defense.

“I have not heard of this, despite obtaining what we assumed were uncollectable, numerous attorney's fees awards,” Adelman said.

“However, another purpose of the [offer of judgment] statute is to shift the expense of litigation to the loser,” he said. “Traditionally, this meant nothing to the defendant as plaintiffs are routinely judgment proof. This type of insurance may now allow for a recovery.”