Legal malpractice carriers are always looking for a way out.  Coverage exclusions, notice provisions, each week out a very significant number of potential claims.  Notice provisions are found both in the initial [usually yearly] applications, as well as the obligation to inform the carrier as soon as a claim is even a potential.

Here is a case from the 9th Circuit, reported by Circuit Watcher Blog, 06-15622 James River Ins. Co. v. Hebert Schenk, P.C. Before: William C. Canby, Jr., David R. Thompson, and Milan D. Smith, Jr., Circuit Judges.
"In this appeal we decide whether the district court erred in granting summary judgment to a professional liability insurer on a claim seeking a declaration of no coverage, and on counterclaims for breach of contract and bad faith under Arizona law. The insurer argued that it could permissibly refuse to provide for its insured’s defense against a legal malpractice lawsuit because the insured failed to mention the possibility of the lawsuit in the insurance application. The district court agreed and held that Arizona Revised Statutes § 20-1109 permits a denial of coverage because the insured’s omission constitutes legal fraud. The court rejected the counterclaims because the insurer provided for the malpractice defense. We reverse and remand for trial."