Insurance for Legal Fees? Ask the Federal Government

Posted on October 22nd, 2014 by Legal Fee Advisors

An Above the Law blog dated September 11, 2014, written by Matt Kaiser, talks about the substantial amount of legal fees incurred by federal employees who may have not done anything wrong, but inevitably must defend themselves in litigation arising out of government investigations.  He maintains that due to the sensitive and serious nature of the allegations against federal agencies and the reputational risks posed to these employees, the lawyers hired to represent them are typically big name firms that charge hefty legal fees.  The solution?  Insurance for legal fees!

Federal employees are at risk of getting hit with exorbitant fees for something they cannot control.  M. Kaiser says the solution is purchasing insurance from a company called FEDS (Federal Employee Defense Services).  For a premium, FEDS will provide the employee with a lawyer and pay the bills.  In a political climate such as we have, many federal employees are finding themselves embroiled in litigation[1]. The blog points out that these employees, who have no choice but to defend the litigation, even in situations where they themselves may have done nothing wrong – are subject to massive legal fees.    M. Kaiser maintains in his blog that in his experience representing federal employees in government investigations, these types of lawsuits would never be brought against a private individual as there is not much to investigate.  But the pressure is there in the public sector and in fact, he points out that congressional investigations are mainly brought against staffers to make news, not because someone actually committed a wrongdoing.   A clear example – the Clinton White House years where legal bills were piling up against Bill Clinton’s staffers due to Whitewater and the Monica Lewinsky scandal[2]. Now that federal employees have the benefit of FEDS, they can breathe easier.   Unfortunately, it seems these kinds of lawsuits are not going away any time soon.

We have learned that federal employees can now purchase insurance as a way to mitigate their risks of investigations resulting in payment of substantial legal fees.  Which begs the question: what can be done to protect the private individual, middle or upper middle class, who is faced with hefty fees they cannot really manage to pay?  Legal fees are on the rise.  Billable hour rates are high and most often than not, the consumer is unaware whether the lawyer is overcharging for the work being performed.  In particularly sensitive matters such as divorce or employment, there is a lot at stake and the consumer wants to hire a lawyer they believe will do quality work.   Then the bill arrives and it’s unaffordable.   Perhaps it’s time to ask legal billing experts what can be done to address this problem.

Legal Fee Advisors © 2014

[1] M. Kaiser mentions Lois Lerner and Martha Johnson as examples of federal agency employees who were forced to hire top lawyers to defend them against allegations that could affect them professionally and damage their reputation.

[2] Legal bills are mounting for staffers at White House, Anne Gearen, Deseret News, National Edition. Oct. 22, 1998.

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