Attorneys wear many hats. Attorney malpractice insurance provides coverage for most hats but not all. A malpractice insurer’s definition(s) of professional services may cause coverage issues for attorneys that perform certain client services. If the services are provided using a license other than a law license, it is a good bet that it is not covered. When looking for the appropriate insurer, check the Legal Services (Professional Services) definition against the services that your law firm provides.
Zurich defines Legal Services (Professional Services) as:
VIII. DEFINITIONS
E. Controlling Interest means the right of an Insured or a member of an Insured’s Immediate Family, directly or indirectly, to:
1. Own 10% or more of an interest in an entity;
2. Vote 10% or more of the issued and outstanding voting stock in an incorporated entity;
3. Elect 10% or more of the directors of an incorporated entity;
4. Receive 10% or more of the profits of an unincorporated entity; or
5. Act as general partner of a limited partnership, managing general partner of a general partnership, or comparable position in any other business enterprise.
K. Immediate Family means the natural person:
1. Insured;
2. Insured’s spouse or party to a civil union recognized under the applicable state law;
3. Insured’s parent(s), adoptive parent(s) or step-parent(s);
4. Insured’s sibling(s) or step-sibling(s); and
5. Insured’s child(ren), adoptive child(ren) or step-child(ren).
N. Legal Services, regardless of whether for compensation or pro bono, means those professional services performed by an Insured as a licensed lawyer in good standing, arbitrator, mediator, title agent, notary public, administrator, conservator, receiver, escrow agent, closing agent, title abstractor, title searcher, executor, guardian, guardian ad litem, trustee or in any other fiduciary capacity but only where the act or omission was in the rendition of services ordinarily performed as a lawyer. Legal Services shall include an Insured’s activities as a member of a formal accreditation, ethics, peer review, licensing, standards review, bar association or similar professional board or committee.
Legal Services shall not be extended to include services:
1. Rendered as a real estate agent or broker;
2. Rendered as an insurance agent or broker;
3. Rendered as the promoter, seller, and/or solicitor of securities, real estate or other investments; or
4. Performed as an investment or financial counselor/advisor, or Certified Financial Planner.
III. EXCLUSIONS
This Policy shall not apply to any Claim, Damages, Claim Expenses, Disciplinary Proceeding, or Subpoena Costs based upon or arising out of, in whole or in part:
D. Any Insured’s or former Insured’s capacity or status as:
1. An officer, director, partner, shareholder, manager or employee of a business enterprise, charitable organization or pension, welfare, profit sharing, mutual or investment fund; or
2. A public official, or an employee of a governmental body, subdivision or agency unless the Insured is privately retained solely to render Legal Services to the governmental body, subdivision or agency and the remuneration for the Legal Services is paid directly or indirectly to the Named Insured;
E. The alleged acts or omissions by any Insured, with or without compensation, in connection with any business enterprise (other than the Named Insured), whether for profit or not-for-profit, in which any Insured has or had a Controlling Interest;
F. Any alleged violation by any Insured of the Employee Retirement Income Security Act of 1974, and any rules or regulations promulgated thereunder, amendments thereof, or any similar federal, state or common law. This Exclusion shall not apply to any Claim where any Insured is deemed to be a fiduciary solely because of Legal Services rendered or that should have been rendered with respect to an employee benefit plan;
G. Any liability of any Insured resulting from any oral or written contract or agreement, including an attorney retainer agreement which provides for prevailing party fees, unless such liability would have attached to the Insured by law in the absence of such contract or agreement;
M. The rendering or failing to render investment advice;
N. Any inability or failure to safeguard or pay or collect any funds, notes, drafts, or other negotiable instruments, deposited in or payable from any Insured’s or former Insured’s account, including an attorney trust account, or any resulting deficiency, overdraft or default;
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This blog is an excerpt from the policy. The complete policy along with applicable endorsements could impact the information provided above.
Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080