Blawgletter disdains passive voice. If you don't believe us, look here, where we said:
[P]assive voice in legal writing shows disrespect to the reader. It lengthens, complicates, and obstructs writing; it forces the reader to remember too much, to fill too many gaps, to work too hard. The audience deserves better.
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Please use active voice always. Or consequences will be suffered.
But, really, you ask — does passive voice hurt anything?
It'll likely cost D&O insurers millions of dollars, per a Fifth Circuit decision on Monday. Does that count?
The case turned on whether the D&O (directors and officers) policy required the carriers to advance defense costs for former officers of Stanford Financial, which the U.S. accuses of running a Ponzi scheme (out of Antigua). The government shut down Stanford and brought criminal charges against founder Allen Stanford and two of his helpers. The insurers argued that they needn't front the cost of defense by pointing to a "Money Laundering" exclusion as a reason for refusing to advance criminal defense costs. The exclusion included this caveat:
Notwithstanding the foregoing Exclusion, Underwriters shall pay Costs, Charges and Expenses in the event of an alleged act or alleged acts until such time that it is determined that the alleged act or alleged acts did in fact occur. In such event the Directors and Officers and the Company will reimburse Underwriters for such Costs, Charges and Expenses paid on their behalf.
Alert readers will note that the p.v. shows up in "until such time that it is determined that the alleged act or alleged acts did in fact occur". The phrase doesn't say who will make the determination. The underwriters urged that they could decide; the Stanford ex-execs said only a judge could do that.
The Fifth Circuit agreed with the Stanfordites. It noted that courts construe unclear language in policy exclusions against the author — the insurers. Holding that the insurers must advance costs, the court (per Judge Higginbotham) said this:
[T]he underwriters — as drafters of the policy — could have unambiguously reserved a unilateral right to determine that the alleged acts in fact occurred. Rather than saying "until it is determined . . . in fact," they could have avoided ambiguity by providing "until we have determined" or "until Underwriters determined. The parties' word choice — "it is determined" — leaves us guessing, but it hardly seems a drafting error, at least not an inadvertent one.
Pendergest-Holt v. Certain Underwriters at Lloyds of London, No. 10-200069, slip op. at 13 (5th Cir. Mar. 15, 2010).
As we said: Consequences will be suffered.