Trade‑Secret Conspiracy Allegations Against Georgia Attorney Do Not Arise from Professional Services and Do Not Trigger Duty to Defend
The U.S. District Court for the Southern District of Georgia held that a lawyers’ professional liability insurer owed no duty to defend or indemnify an attorney against trade‑secret and conspiracy claims because the underlying complaint did not allege a covered “wrongful act” in the performance of professional services. ALPS Prop. & Cas. Ins. Co. v. Cohen, 2026 WL 819957 (S.D. Ga. Mar. 25, 2026). The court also rejected the insured’s reliance on extrinsic “true facts,” explaining that an insured’s recharacterizations or explanations regarding the conduct alleged in the complaint do not constitute extrinsic “facts” that can be relied upon to transform a non-covered claim into a covered one.
The insured attorney was sued by a former client and related entities in an underlying action alleging that he knowingly received and retained confidential documents improperly forwarded by the lawyer’s spouse, assisted in violating restrictive covenants, and conspired to obtain the client’s proprietary information and trade secrets through the client’s employee. The attorney tendered the action to his professional liability insurer, which denied coverage and filed a declaratory judgment action seeking a determination that it owed no duty to defend or indemnify.
The policy provided specified coverage for claims arising from a “wrongful act,” defined as an act, error, or omission committed in the performance of “professional services.” Applying Georgia law, the court emphasized that coverage turns on the nature of the alleged conduct, not the insured’s professional status, and that the alleged acts must be “inextricably intertwined” with the rendering of legal services, not merely incidental to the insured’s role as an attorney. The court concluded that the allegations in the underlying complaint did not satisfy this standard. Although the complaint identified the insured as an attorney and referenced an attorney-client relationship, it did not allege that the claimed misconduct arose from the provision of legal services. Instead, the alleged conduct—receiving confidential documents, participating in a conspiracy, and recruiting an individual to access proprietary information—did not involve the application of legal skill or judgment and was, at most, “incidental” to the insured’s professional role. Accordingly, the court held that the claims did not arise from a covered “wrongful act.”
The court also rejected the insured’s attempt to rely on extrinsic “true facts” to establish a duty to defend. While Georgia law permits consideration of facts outside of the complaint in limited circumstances, the court explained that an insured may not “create coverage simply by ‘reinterpreting’ the factual allegations made so as to come within the scope of the insurance contract.” The insured’s proffered facts, such as asserting that he was acting in a legal capacity and conducting an internal investigation, were deemed “mere explanations for his conduct” and did not demonstrate that the alleged acts were performed as part of authorized legal services for the client. Because the underlying complaint alleged only unauthorized access to confidential information and participation in a conspiracy unrelated to the rendering of legal services, the court held that the insurer owed no duty to defend or indemnify.
