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Unriddling the Sphinx The Insured v. Insured Exclusion and the Multiple Capacities of D&Os
As directors' and officers' insurance is intended to provide coverage for claims by third parties, most, if not all, D&O policies contain an exclusion commonly referred to as an “insured v. insured exclusion.” The exclusion bars coverage for claims brought by one insured against another insured. Historically, the exclusion was drafted in response to “friendly” and collusive lawsuits arising out of the savings and loan bank crisis in the early to mid-1980s. Essentially, friendly lawsuits were being filed by the failed banks against their directors and officers in an effort to recoup loan losses from the proceeds of D&O policies. Thus, the primary purpose in drafting the insured v. insured exclusion was ' and continues to be ' to prevent a corporation from suing its own directors and officers to obtain the benefits of coverage for itself, rather than third parties.
The exclusion is fairly easy to apply where a solvent corporation brings suit against its current or former directors and officers for breaches of fiduciary duties or where a director or officer brings suit for termination or compensation-related issues. Where, on the other hand, the director or officer brings suit in his or her sole capacity as a shareholder of the corporation, the applicability of the exclusion is more complex. As the analysis of the two cases below indicates, there is little guidance for insurers, as well as insureds, as to how a court will apply the exclusion where the capacity of a director or officer is cloudy. Accordingly, rather than leave the interpretation of the exclusion up to a judge ' with all the subjectivity that may entail ' insureds and insurers are well advised to anticipate and resolve the scope of the insured v. insured exclusion during the negotiation and issuance of the policy.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.
Blockchain Domains: New Developments for Brand Owners
Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.