Do Not Pass Go! Duty to Defend in a Professional Services Agreement (law note)

Businessman holding up his hand

Think about whether this clause is a risk you can afford to take.

April 3, 2019
Melissa Dewey Brumback - Construction Law in North Carolina

Recently a client asked me to review a contract for his Firm. The Owner, who had prepared the draft, had inserted a rather stringent “duty to defend” clause.

As I told my client, a duty to defend clause is not a good idea for a couple of reasons. First, if you agree to provide a defense, what that means is that you are footing the bill for the Owner if the Owner is sued by another party. Think about that for a minute. You are paying legal fees for someone else’s legal defense. You may or may not be able to direct the litigation or have a say in who is hired. Can you say open check book?

Secondly, and more importantly, the duty to defend is almost never insurable. What that means is that your professional liability carrier will not be footing the bill—your Firm will be doing it. This is not a case of adding the Owner as an additional insured, so do not confuse the two. Agreeing to a duty to defend is an extremely burdensome, and potentially costly, mistake.

Ms. Brumback may be contacted at mbrumback@rl-law.com



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