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 Travelers Insurance policy excludes certain client ownerships, management and/or directors/officer legal work from coverage.
V. EXCLUSIONS:
J. Management Capacity
This policy does not apply to any Claim based upon or arising out of any Insured’s capacity as a director or officer of any entity other than the Named Insured, provided that this exclusion will not apply to the Insured’s capacity as a director or officer of a Non-Profit Entity.
K. Management Or Equity Interest
This policy does not apply to any Claim based upon or arising out of Professional Services or Publishing for any entity that, at the time of the Wrongful Act, any Insured, or any Insured Person’s spouse, individually or collectively with one or more Insureds, manages, controls or has an equity interest which exceeds 15%.
L. Public Official Or Government Employee
This policy does not apply to any Claim based upon or arising out of any Insured’s capacity as a public official, or employee of a government body, subdivision or agency, provided that this exclusion will not apply to an Insured’s Professional Services for such government body, subdivision or agency if:
1. the Insured is deemed to be a public official or employee of such government body, subdivision or agency solely because of Professional Services to such entity; and
2. the remuneration for such Professional Services, if any, inures to the benefit of the Named Insured.
IV. DEFINITIONS
J. Insured means any Insured Person, Named Insured, or Predecessor Firm.
K. Insured Person means any natural person who:
1. is the sole owner of, or is or was a partner in, the Named Insured or Predecessor Firm;
2. was or is a member of the board of managers, director, executive officer, or shareholder of the Named Insured or Predecessor Firm;
3. was or is an employee of the Named Insured or Predecessor Firm; or
4. was or is an Independent Contractor or Of Counsel attorney,
provided that such person is acting within the scope of their duties on behalf of the Named Insured or Predecessor Firm.
M. Named Insured means the person or entity set forth 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