A recent Thomson Reuters story, “Who’s Likely Footing News Corp’s Legal Bills? The Insurers”,reports that with News Corp executives heading for the exits, the hacking scandal legal bills are no doubt stacking up.  But depending on the companies’ directors and officers (D&O) insurance coverage, News Corp and its divisions aren’t likely to be responsible for paying the legal fees.  At least for now.

The D&O insurance policies at companies like News Corp cover the legal fees for executives and board members.  Large corporations such as News Corp, usually buy at least $100 million in D&O insurance.  In most cases, the coverage includes defending criminal charges for current and former executives.  Former executive are covered so long as the alleged misconduct occurred within the policy term.  Under the D&O policy, the legal fees will be covered by the insurance carrier and high-profile white-collar attorneys can charge as much as $1000 per hour.

But that’s all theory.  What often ensues, and is a real possibility in the News Corp action, are battles between the variety of insurance companies providing coverage for a company about who is going to pay what.  Sometimes insurers and insured executives can end up on opposite sides.  Such was the case between an insurer and Sprint Nextel Corp executives in a securities litigation settlement and between an insurer and Stanford Financial Group executives.