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 LMIC (Lawyers Mutual Insurance Company) Insurance policy excludes certain client ownerships, management and/or directors/officer legal work from coverage.
ARTICLE 3
The Exclusions
THIS POLICY DOES NOT APPLY:
3.2 To any Claim by the Named Insured, Predecessor Firm, any current or former shareholder in, partner in, member of, Of Counsel to, independent contractor to or Employee of the Named Insured or Predecessor Firm, any Related Individual, or any entity of which an Insured is an officer, director, owner, beneficiary, trustee, trustor or employee,
3.6 To any Claim made against or by any business enterprise (other than the Named Insured or Predecessor Firm), any not-for profit organization, or any plan, fund or trust in which an Insured or Related Individual is or was a director, officer, employee, trustee, administrator, partner, manager or with respect to which an Insured or Related Individual has or had any ownership interest (whether through ownership of stock, partnership shares or otherwise), other than a beneficial ownership of securities of a class registered under Section 12 of the Securities Exchange Act of 1934 or exempted from registration by Section 12(g)(2)(A) thereof, if, taking into account the beneficial ownership interest of each and every Insured and the beneficial ownership interest of their respective Related Individuals as a group, such group does not beneficially own more than 1% of the outstanding securities of such class.
3.7 To any Claim arising out of or relating to an Insured’s services and/or capacity as:
(a) an officer, director, partner, trustee, or employee of a business enterprise (other than the Named Insured or Predecessor Firm) or not-for profit organization or any plan, fund or trust;
(b) a public official, or an employee of a governmental body, subdivision, or agency;
(c) a fiduciary under the Employee Retirement Income Security Act of 1974 and its amendments or any regulation or order issued pursuant thereto, except if the Insured is deemed to be a fiduciary solely by reason of legal advice rendered with respect to an employee benefit plan; or
(d) a securities or commodities broker or dealer, investment advisor, accountant, real estate broker, real estate agent, business manager, personal manager, entertainment agent, literary agent, sports agent, insurance agent or escrow holder, or any similar services or capacities.
ARTICLE 1.
The Definitions
1.15 “Insured” means:
(a) the Named Insured;
(b) any Lawyer who is a shareholder in, partner in, member of or Employee of the Named Insured at the Effective Date, for so long as such Lawyer remains a shareholder in, partner in, member of or Employee of the Named Insured, but solely with respect to Professional Services on behalf of the Named Insured. The individuals listed in Item 2 of the Declarations will be conclusively presumed to constitute all such individuals at the Effective Date.
(c) any Lawyer who becomes a shareholder in, partner in, member of or Employee of the Named Insured during the Policy Period, for so long as such Lawyer remains a shareholder in, partner in, member of or Employee of the Named Insured, but solely with respect to Professional Services on behalf of the Named Insured. A Lawyer shall be an Insured pursuant to this subsection 1.15(c) if and only if, within 30 days after the date of such Lawyer becoming a shareholder in, partner in, member of or Employee of the Named Insured, the Named Insured and such Lawyer have submitted appropriate underwriting information to the Company and the Company has approved said Lawyer as an Insured;
(d) any Lawyer who was formerly a shareholder in, partner in, member of, Employee of or Of Counsel to the Named Insured or Predecessor Firm, but solely with respect to Professional Services on behalf of the Named Insured or Predecessor Firm and if and only if such person qualified as an Insured under the policy or policies in effect when such person was a shareholder in, partner in, member of, Employee of or Of Counsel to the Named Insured or Predecessor Firm;
(e) any Employee or former Employee of the Named Insured or Predecessor Firm who is not a Lawyer, but solely with respect to acts on behalf of the Named Insured or Predecessor Firm which are within the course and scope of his or her employment and in the performance of the Named Insured’s Professional Services;
(f) any Predecessor Firm;
(g) any Lawyer who acts as Of Counsel or an independent contractor to the Named Insured or Predecessor Firm, for so long as such Lawyer remains as Of Counsel or an independent contractor to the Named Insured or Predecessor Firm, but solely with respect to Professional Services on behalf of the Named Insured or Predecessor Firm, and under the name of the Named Insured or Predecessor Firm. The individuals listed in Item 2 of the Declarations will be conclusively presumed to constitute all such individuals as of the Effective Date. Any Lawyer who acts as Of Counsel or an independent contractor to the Named Insured subsequent to the Effective Date shall be an Insured pursuant to this subsection 1.15(g) if and only if, within 30 days after the date of such Lawyer becoming an Of Counsel or an independent contractor, the Named Insured and such Lawyer have submitted appropriate underwriting information to the Company and the Company has approved said Lawyer as an Insured.
1.16 “Lawyer” means:
an individual licensed and eligible to practice law or professional corporation owned by such a person.
1.20 “Named Insured” means:
the entity or individual named in Item 1 of the Declarations.
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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