An Interview with Mark Scruggs, Senior Claims Attorney

At Lawyers Mutual, we recognize that receiving a grievance from the State Bar can be a stressful and unfamiliar experience for many attorneys. When your license and reputation are on the line, Lawyers Mutual is here to provide essential support. One of the unique benefits available to our insureds is disciplinary proceeding reimbursement—a resource designed to help offset legal fees and costs if you choose to retain disciplinary counsel to represent you before the State Bar. To explain how this benefit works and how attorneys can make the most of it, I spoke with Mark Scruggs, one of our Senior Claims Attorneys, who offers a wealth of knowledge and practical advice.

LM: What is the “disciplinary proceeding” benefit?

MS: The Lawyers Mutual Professional Liability Policy provides a “disciplinary proceeding” benefit for insureds who face disciplinary actions, such as a State Bar grievance. This benefit is listed in Section IV of the Insuring Agreement, titled “Additional Benefits.” (There are three other benefits in Section IV. We previously discussed the subpoena assistance benefit.)  

Here is the applicable policy language:

IV. Additional Benefits

Payments made pursuant to this section will not be subject to the deductible and will not reduce the limit of liability or aggregate set forth in the Declarations. The amount payable under this section shall not exceed a Policy aggregate of $5,000:

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• (c) Disciplinary Proceeding  — The Company will reimburse and Insured for legal fees and expenses incurred and paid to an attorney representing such Insured as a result of a disciplinary proceeding related to act(s) or omission(s) in the provision of legal services on or after the prior acts date of such Insured, and which disciplinary proceeding was first initiated against such Insured and reported to the Company during the policy period or any extended reporting period. The Company will not pay or reimburse an Insured for any costs, restitution, penalty or award of any kind or description that result from a disciplinary proceeding, not will the Company reimburse an Insured for any legal fees or expenses if: (1) the Insured has been convicted of a felony based in whole or in any part upon that conduct giving rise to the disciplinary proceeding; or (2) the proceeding results in discipline of the Insured in whole or in any part because of theft, embezzlement, misappropriation, or other unauthorized withdrawal or misapplication of funds.

LM: Why is it important?

MS: Unfortunately, lawyers are more often the subject of State Bar grievances than one might hope would be the case. And anyone can file a grievance against a lawyer; it doesn’t have to be the client. In 2023, the State Bar Grievance Committee opened 1,482 grievance files. It seems that at least once a week, an insured will call to report receiving a grievance. The call to Lawyer’s Mutual is usually because the lawyer recognizes they need to report a potential malpractice claim to us as soon as they become aware of it. Sometimes, a grievance feels too close to a claim for comfort. While we do not provide liability coverage for State Bar grievances or disciplinary proceedings, many insureds are surprised to learn that we offer an additional benefit that can help cover legal expenses and costs paid to a lawyer they retain for representation.

LM: How does it work?

MS: If you choose to retain counsel to represent you in the disciplinary proceedings, we will reimburse you for up to $5,000 in legal expenses and costs incurred and paid to your lawyer. You choose your lawyer.  We can recommend lawyers with whom we work and who regularly practice before the State Bar, but we don’t choose the lawyer. The Additional Benefits coverage, which includes disciplinary proceedings, subpoena assistance, and pre-suit (“claim repair”), is limited to $5,000 per policy year. So, if you use the $5,000 on any of the additional benefit categories in one policy year, that’s all there is. If the disciplinary proceeding benefit, or any of the additional benefits, exceeds the $5,000 per policy year limit, we may have to trigger your deductible for the overage. 

LM: Does using the disciplinary proceeding benefit impact my deductible or my coverage limits?

MS: The answer is “No.” Payments made under the Additional Benefits coverage are not subject to the deductible and do not reduce the policy liability limit. As I mentioned earlier, however, the Additional Benefits coverage is limited to $5,000 per policy year. 

LM: Are there any exceptions to the disciplinary proceeding benefit? 

MS: Yes. We will not pay or reimburse you for any costs, restitution, penalty, or award that result from a disciplinary proceeding. We also will not reimburse you for any legal fees or expenses if you have been convicted of a felony based upon the conduct giving rise to the disciplinary proceeding or if the proceeding results in discipline because of theft, embezzlement, misappropriation, or other unauthorized withdrawal or misapplication of funds. In my experience, we have never had to rely on these exceptions.

As our conversation with Mark Scruggs illustrates, the disciplinary proceeding benefit is just one example of how Lawyers Mutual goes beyond traditional coverage to provide practical, real-world support to our insureds. Whether you’re navigating a complex legal issue or simply unsure about your obligations, you don’t have to face it alone. Our experienced claims attorneys are here to help guide you through the process confidentially, professionally, and with your best interests in mind. If you receive a grievance or have questions about this benefit, don’t hesitate to reach out. That’s why we are here, “Lawyers Helping Lawyers”.