With an uptick in turnover at law firms there is a common misconception that can cause uninsured malpractice claims. Many attorneys and firms wrongly believe that the Attorney Malpractice Insurance coverage for a departing attorney continues until the end of the policy term because it is ‘paid for’. This is not the case, once an attorney leaves a law firm any work done for themselves or another firm is not covered. The departing attorney needs to purchase a new policy or be added to their new firm’s Attorney Malpractice Insurance policy for coverage. Attorney Malpractice is written for the law firm covering the work done on behalf of the law firm.
With this stated, for most Attorney Malpractice Insurance policies the old law firm continues to have past acts coverage for the departing attorney. This is as long as the old law firm continues to maintain continuous clams-made Attorney Malpractice Insurance. Most Attorney Malpractice insurance policies define as the “insured” past and present attorneys, employees & partners for work they have done on behalf of the named insured firm. Given this definition, there is no need for the firm or the individual to purchase an individual extended reporting period endorsement (ERP or Tail) for that departing attorney. In fact, many insurers do not permit the purchase of an individual attorney ERP.
The concern that the parting attorney may have is that if the firm they left breaks up later or fails to maintain their Lawyers Professional Liability policy do they have a ‘right’ or are they able purchase an ERP later. Unfortunately, once an attorney leaves a firm their ‘right’ to purchase an ERP under the old firm’s policy ends. There are alternatives, such as a ‘Run Off’ policy that can provide past acts individual coverage for that attorney, but they are generally expensive and sometime difficult to obtain.
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Lee Norcross, MBA, CPCU Managing Director, CEO (616) 940-1101 Ext. 7080 |
