So, if I understand correctly, the abstractor provided a copy of the lien with the report, but somehow forgot to write it up on as an encumbrance.  If that is the case, I would probably agree with the abstractor's E&O carrier - it is the abstractors job to provide the information and the attorney's job to 'examine' it.  It sounds like a thorough examination would have discovered the lien.  When I examine an abstractor's search, I always read the report and review all of the copies.

However, whether or not the abstractor is liable depends on whether he was negligent in failing to write the lien on the report.  I wouldn't say the abstractor is blameless, but I'm not sure if rises to the level of negligence that would make him legally liable. 

Maybe a more fair resolution would be for the attorney and the abstractor to split the deductible.

Best,
Robert A. Franco
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