Insurers have been ordered to pay the legal fees of a FIFAofficial arrested in a wide-ranging criminal corruption case,likely opening the door for other FIFA officers and their attorneysto tap the $50 million policy for legal fees.

Eastern District Judge Raymond Dearie last weekgranted Eduardo Li's preliminary injunction motion to requireinsurers to pay his fees, totaling hundreds of thousands ofdollars, under an insurance policy sold to the FédérationInternationale de Football Association, or FIFA, internationalsoccer's governing body.

"Because the insurers have refused to advance any defense coststo Li," the judge said in Li v. Certain Underwriters at Lloyd's London,15-cv-0609, "Li faces an actual and imminent injury and hasestablished irreparable harm."

Dearie, who is also presiding over the FIFA criminal case,added, "The stability of the attorney-client relationship duringthis critical time cannot be overstated. The strong local interestin seeing that litigants before this court are appropriatelyrepresented, officers are appropriately compensated, and thatcriminal matters are not unnecessarily hindered cannot beignored."

Li and about 40 other defendants have been charged withracketeering, wire fraud or money laundering conspiracies, amongother offences, for an alleged scheme to enrich themselves throughthe corruption of international soccer.

Li, a FIFA executive committee member-elect, is accused of usinghis position to obtain bribes and kickbacks. He was extradited,arraigned in the Eastern District, and detained in Brooklyn untilhis release on bail in March.

Last summer, Li notified insurers, which had provided adirectors-and-officers liability policy, of his indictment. Herequested payment under the policy, which has a $50 million limit,for the cost of his defense.

The policy provides world-wide coverage for costs incurred todefend any actual or alleged wrongful acts, investigation costs andreasonable legal fees related to extradition proceedings.

In August, the insurers, including certain underwriters atLloyd's London and Axis Specialty Europe Se, denied obligation topay. They argued that coverage was barred by an exclusion in thepolicy for any damages tied to the Racketeer Influenced and CorruptOrganizations Act, or RICO.

Li filed suit in Brooklyn state Supreme Court to enforce thepolicy; the insurers had the suit placed in the EasternDistrict.

Li is represented by Robin Cohen and Burt Garson, principals atMcKool Smith, in the insurance coverage case and Samuel Rosenthal,partner at Squire Patton Boggs, in the criminal case.

In March 10 court papers in the insurance case, Rosenthal saidLi has "incurred legal fees of hundreds of thousands of dollars,which remain unpaid."

Given the length and complexity of the allegations in the FIFAindictment naming many defendants, Rosenthal said, "Li will beseverely hampered in his ability to defend himself withoutadditional funds."

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Republished from the New York LawJournal, a sister publication of PropertyCasualty360.com. Toread the full story, click here.