Claim time is not the time to find out the attorney has no malpractice coverage for the reported claim. Attorneys that do work for clients where the attorney is involved with client management or ownership may run afoul of attorney malpractice policy exclusions. As no two client relationships are the same and no two policies are alike, where an attorney is doing legal for clients with an ownership or management role it is wise to read the entire policy. Where one malpractice insurance policy may provide coverage, the same client relationship with another malpractice policy excludes coverage. Depending on the attorney’s attorney/client relationship(s) there may be no coverage provided by the attorney malpractice policy.
The Everest Insurance policy excludes certain client ownerships, management and/or directors/officer legal work from coverage.
SECTION III – EXCLUSIONS
This Policy does not apply to any Claim or Expense Event:
G. CONTROLLED ENTERPRISE
based upon, arising out of or attributable to any Professional Services rendered or that should have been rendered by an Insured to any Controlled Enterprise.
N. PUBLIC OFFICIAL/GOVERNMENT EMPLOYEE
based upon, arising out of or attributable to an Insured’s services or capacity as a public official or employee of a governmental body, subdivision or agency.
SECTION XX – DEFINITIONS
E. Controlled Enterprise means any entity other than the Named Insured, that at the time of the Wrongful Act or Expense Event;
a. is a publically traded entity and 5% or more of its issued and outstanding securities or voting rights to elect or appoint a board of directors or an equivalent governing body is owned or controlled, individually or collectively, by one or more Insured, or any natural person Insured’s spouse or domestic partner;
b. is not a publically traded entity and 25% or more of the legal, beneficial or equitable ownership of such enterprise is owned or controlled, individually or collectively, by one or more of the Insureds or any natural person Insured’s spouse or domestic partner;
Controlled Enterprise does not include any business enterprise in which the ownership, control, or management by an Insured is exclusively in a fiduciary capacity as an administrator, conservator, executor, trustee, guardian, receiver, or committee, or in a similar fiduciary capacity incidental to the practice of law by a Named Insured.
M. Insured means:
1. the Named Insured shown in the Declarations or any Predecessor;
2. any past, present or future partner, officer, director, shareholder, attorney, or member of the Named Insured but only with respect to Professional Services rendered on behalf of the Named Insured or any Predecessor;
3. an attorney acting as “Of Counsel” but only while performing Professional Services on behalf of the Named Insured;
4. all non-lawyer employees, interns, volunteers or independent contractors but only with respect to liability arising from and in the course of their services on behalf of the Named Insured or any Predecessor; and
5. the estates, heirs, executors, administrators, assigns and legal representatives of a natural person Insured in the event of such Insured’s death, incapacity, insolvency or bankruptcy, but only in their capacity as such, and only to the extent that such Insured would otherwise be provided coverage under the Policy.
R. Named Insured means the entity referenced in ITEM 1 of the Declarations.
Affected insured attorneys should not solely rely on the information provided in this blog. As facts may differ, determining malpractice coverage for each attorney client relationship requires a complete review of the malpractice policy. The facts that cause an alleged malpractice claim could also impact coverage.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080