Many law firms misunderstand as what is and is not covered when a firm has an ‘Of Counsel’ attorney working for them. Attorneys continue to construct ‘creative’ relationships for attorney malpractice coverage under this mistaken belief. Believing something is covered versus being covered are two different things.
Of Counsel doing no work for the law firm
Frequently law firms’ lawyers professional liability insurance policies have ‘Of Counsel’ attorneys listed that do no work for the firm. When this relationship is queried further the expectation is that all work done by the ‘Of Counsel’ attorney is covered under the law firm’s attorney malpractice policy because they are listed on the policy.
The reality could not be further from the truth. An ‘Of Counsel’ attorney that does no work for the law firm has no coverage under the law firm’s attorney malpractice policy. Even if the ‘Of Counsel’ attorney is listed on the attorney schedule for the firm, there is still no coverage. The ‘Of Counsel’ attorney needs to purchase their own lawyers professional liability insurance policy. ‘Of Counsel’ work is covered for work done on behalf of the named insured firm. If no work for the named insured firm, no coverage.
The reasons vary for a law firm wanting to list an ‘Of Counsel’ on the firm’s letterhead, but just listing an ‘Of Counsel’ attorney on the letterhead can open the law firm up to vicarious liability from the ‘Of Counsel’s’ actions. The allegations against the firm for an “Of Counsel’s’ acts for work not done for the firm might get tossed. But it still could push up the law firm’s malpractice insurance premiums.
Of Counsel does some work for the law firm
In this case the law firm has attorney malpractice coverage for the covered work that the ‘Of Counsel’ does for the firm. The malpractice insurer may or may not even ask for the ‘Of Counsel’ attorney’s name. Just remember that only work done on behalf of the named insured firm is covered. Depending on the number of hours the ‘Of Counsel’ provides services for the firm a particular insurer may determine there will be a charge for the attorney.
The ‘Of Counsel’ attorney needs to have their own attorney malpractice coverage for any work that is not done on behalf of the named insured firm. As a side light, the ‘Of Counsel’s’ attorney malpractice policy does not provide coverage for the law firm.
Of Counsel does all of their work for the law firm
The ‘Of Counsel’s’ covered work is covered by the firm’s attorney malpractice insurance policy. The law firm needs to make sure they have disclosed the ‘Of Counsel’ to their malpractice insurer. Depending on the number of hours worked the insurer will determine if there is any charge for the attorney.
In the misguided attempt to reduce a law firm’s insurance premiums, some law firm’s require the ‘Of Counsel’ to have their own malpractice coverage even though all of their work is for the law firm. Although some insurer’s will write an attorney malpractice policy for the ‘Of Counsel’ malpractice coverage, it is of limited value. The law firm still has no coverage under the ‘Of Counsel’s’ coverage, nor will an insurer name the law firm as an additional named insured on the ‘Of Counsel’s’ policy.
Even if the law firm mistakenly expects coverage from the ‘Of Counsel’s’ attorney malpractice policy, the firm needs to remember that all attorney malpractice policies sold in the United States are ‘claims-made’ forms. If the ‘Of Counsel’ and the law firm part company and the ‘Of Counsel’ decides at a later date to end their attorney malpractice policy without purchasing an extended prior acts endorsement (ERP), the law firm’s mistaken expectation of coverage ends when the coverage ends.
Other Of Counsel limitations of coverage
Normally the ‘Of Counsel’ cannot purchase an ERP under the firm’s attorney malpractice policy. Or qualify for a non-practicing ERP. Coverage for the ‘Of Counsel’ is limited to work done on behalf of the named insured firm. If the ‘Of Counsel’ has any work they do for another firm (including their own), they need to have a separate policy to cover that work.
Note: The above is general information about a Claims Made Insurance policy concept. Different insurance policies and different situations may or may not treat these concepts in a similar manner.
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Lee Norcross, MBA, CPCU Managing Director, CEO (616) 940-1101 Ext. 7080 |
