Filed Under:Markets, Litigation

Liberty Mutual Settles Lawsuit With Former Attorney

NU Online News Service, Sept. 13, 3:12 p.m. EST

Liberty Mutual Insurance Co. and an attorney it once hired to defend it have reached a settlement in a case involving alleged unpaid invoices and an alleged extortion attempt by one of the insurer’s executives.

According to court documents in U.S. District Court in the Southern District of New York, Liberty Mutual has informed the court it has reached a settlement to resolve the lawsuit filed by attorney Michael J. Devereaux.

Devereaux says he plans to issue a formal statement tomorrow, but adds that he is “happy with the outcome.”

“They are paying us; we’re not paying them,” Devereaux says. “They fired the executive.”

Liberty Mutual was contacted but could not immediately provide a statement.

According to Devereaux’s lawsuit, the attorney sought payment in excess of $75,000 and coverage under a professional-liability policy provided by Liberty International Underwriters Inc. (LIU).

Devereaux further alleges that an executive referred to in court papers as “Mr. X” attempted to induce Devereaux “to engage in commercial bribery, and by doing so, extorting” Devereaux.

Devereaux claims he and the unnamed Liberty Mutual executive had a professional and friendly relationship for many years and Devereaux’s firm represented LIU on many manners, always receiving payment.

“Mr. X” allegedly asked for Devereaux’s advice on matters of his employment with Liberty Mutual and then “started and repeatedly sought favors from [Devereaux], including, among other things, requests for [Devereaux’s] home apartment keys and use of [Devereaux’s] home apartment.”

For reasons unstated, the Liberty Mutual executive then allegedly began belittling Devereaux and allegedly demanded he pay $50,000 for every $1 million of fees incurred from representing Liberty Mutual. If this arrangement was not met, the executive allegedly told Devereaux he would not be paid.

Liberty Mutual also filed a claim against Devereaux. According to the documents, Liberty Mutual says it fired Devereaux because he wrongfully threatened to file a lawsuit alleging extortion and for breach of fiduciary duties such as allegedly making important decisions in cases without Liberty Mutual’s knowledge and “engaging in excessive and abusive billing.”

The insurer says it paid Devereaux’s firm more than $7 million for his services since retaining him in 2003.

Devereaux used the threat of litigation in an attempt to be paid, Liberty Mutual alleged.

According to the lawsuit, the unnamed executive denies the allegation against him.

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