Retrocessionaire May Sue Law Firm for Legal Malpractice, N.Y. Appellate Division Rules

NEW YORK — In a case of first impression, a New York appellate court has ruled that a retrocessional insurer, under an equitable subrogation theory, can maintain a legal malpractice claim against a law firm that represented the insured in an underlying personal injury action.

In a Feb. 15 opinion, the New York Appellate Division, First Department, explained that “where a reinsurer, or retrocessionaire, has paid a claim on behalf of an insured, equitable principles demand that the reinsurer be entitled to equitable subrogation on behalf of the insured.”

The case stems from an underlying personal injury action in the …