Legal Defense Fund

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The Independent Insurance Agents and Brokers of California Board of Directors established a Legal Defense Fund to provide a ready source of funds to protect the common business interests of the membership when threatened.

Legal Defense Fund proceeds may be used to pay legal fees and related costs to outside law firms as well as to recover expenses for in-house legal costs and services associated with defending the members’ interests in the matter at hand.

Expenditures for threats resulting from litigation, regulation, legislation or referendum must be approved by majority vote of the Board of Directors or by a unanimous vote of the Executive Committee acting in its behalf between meetings.  Expenditures from the Legal Defense Fund for any other purpose must be approved by majority vote of the Board of Directors.

Contributions to the Legal Defense Fund may not be used to participate in a political campaign for public office nor in connection with any attempt to influence the general public with respect to legislation or initiative.

The Legal Defense Fund shall be maintained in a Segregated Funds Investment Account established for this purpose and interest earned thereon shall be added to the fund balance. 

Four Major Uses of LDF

There have been at least four major uses of the LDF over the last 20 years:

• First and foremost, the Legal Defense Fund was utilized to hire one of the preeminent law firms in California which helped us successfully prevent the California Department of Insurance from requiring or permitting insurers to force agents to pay "return commission" as part of the Prop. 103 rate rollback. This victory, by itself, saved broker-agents tens-of-millions of dollars.
• In addition, the LDF was used to hire counsel to intervene in our successful effort to "depublish" an opinion of the California Supreme Court (Alaniz v. Simpson) that suggested broker-agents could be liable to third parties (as opposed to their actual clients) for failing to secure insurance. Had this opinion not been depublished, broker-agents would today most likely by paying thousands more for E&O insurance.
• The LDF was also used to hire counsel to intervene in the federal 9th Circuit Court of Appeals in the Conestoga case, wherein an E&O insurer was attempting to avoid liability by misinterpreting an "insolvency exclusion." We took the lead in persuading every Big I association in the 9th Circuit to join in a "friend of the court" brief that helped to persuade the federal appeals court—whose authority is exceeded only by the US Supreme Court—to overrule a lower court's opinion.
• More recently, the LDF was used to hire outside counsel to do extensive research into fiduciary duty—research that proved to be crucial in persuading then-Commissioner Garamendi to abandon his attempt to impose ruinous fiduciary duties upon all brokers and agents.

Not one dollar of the LDF has ever been used on a political campaign—either involving a candidate or an initiative—nor will it ever be.