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 Westfield Insurance policy excludes certain client ownerships, management and/or directors/officer legal work from coverage.
IV. EXCLUSIONS
The Insurer shall not be liable for Loss on account of any Claim:
B. Director/Officer/Fiduciary and Outside Capacity
based upon, arising from, or in consequence of:
(1) any Insured acting or allegedly acting in the capacity as a director, officer, shareholder, partner, manager, or member of any entity (other than the Named Insured), a lawyer disciplinary board or committee, or a professional legal association, its governing board or any of its committees;
(2) a trustee of a pension, welfare, profit-sharing, mutual, or investment fund or investment trust;
(3) a fiduciary under the Employee Retirement Income Securities Act of 1974, any rules or regulations promulgated thereunder, all as amended, or any similar federal, state, local, or foreign law, common law, or regulation (“ERISA”); or
(4) the performance of any services or duties by any Insured Person on behalf of or in the name of an entity (other than the Named Insured);
provided that this Exclusion B shall not apply to any Claim arising out of a Wrongful Act committed, attempted, or allegedly committed or attempted by any Insured in the course of providing Professional Services to such entity in the name of or on behalf of the Named Insured;
F. Capacity as Public Official
based upon, arising from, or in consequence of any Insured acting or allegedly acting in the capacity as a public official or an employee or representative of a governmental body, subdivision, or agency unless such Insured is deemed as a matter of law to be a public official or employee or representative of such entity solely by virtue of rendering Professional Services to it;
H. Business Enterprise
based upon, arising from, or in consequence of any Wrongful Act committed, attempted, or allegedly committed or attempted by an Insured in connection with any business entity (other than the Named Insured) if at the time of such Wrongful Act:
(1) the percentage of ownership of one or more Insureds exceeds fifteen percent (15%) of such business enterprise;
(2) any Insured is a partner or employee; or
(3) any Insured controlled, operated, or managed such business enterprise in a non-fiduciary capacity;
III. DEFINITIONS
G. Insured means the Named Insured, any Predecessor Firm, and any Insured Person.
H. Insured Person means any natural person who was, now is, or shall become:
(1) a partner, owner, director, officer, principal, shareholder, member, member of the board of managers, or principal of the Named Insured;
(2) associate, “counsel”, or “of counsel” of the Named Insured and designated as such;
(3) compensated by the Named Insured through wages, salary, or commissions and whose labor or service is directed by the Named Insured, including paralegals and legal paraprofessionals, whether such labor or service is on a part-time, temporary, seasonal, or full-time basis;
(4) a volunteer whose labor or service is directed by the Named Insured; and
(5) contracted to perform work for the Named Insured or independent contractors for the Named Insured, but only if prior to any Claim against such natural person the Named Insured has agreed in writing to indemnify such natural person for matters within the scope of coverage of this Policy.
Insured Person includes the natural persons acting in the capacities described in Paragraphs (1) through (5) above for a Predecessor Firm.
J. Named Insured means the person or entity identified 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