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 Westport Insurance policy excludes certain client ownerships, management and/or directors/officer legal work from coverage.
IV. EXCLUSIONS
This POLICY shall not apply to any CLAIM based upon, arising out of, attributable to, or directly or indirectly resulting from:
I. Any INSURED’S activities as a former, existing or prospective officer, director, partner, manager, employee or other fiduciary of any entity other than the NAMED INSURED or additional INSURED, including any such activities by any INSURED deemed or alleged to be PROFESSIONAL SERVICES on behalf of such entity.
K. any PROFESSIONAL SERVICES rendered or that should have been rendered to or on behalf of any entity other than the NAMED INSURED, which, at any time, was (1) ten percent (10%) or more owned by any INSURED or combination of INSUREDS and/or any spouse(s) or domestic partner(s) of any INSURED; or (2) directly or indirectly, held, controlled, managed or operated by any INSURED or any spouse(s) or domestic partner(s) of any INSURED.
M. any conduct by any INSURED committed within the scope of or while acting in a capacity as a public official or an employee of a municipality or governmental body, subdivision, agency, department or unit unless the INSURED’S conduct is deemed to be such solely because the INSURED has rendered PROFESSIONAL SERVICES to such governmental body and remuneration for such PROFESSIONAL SERVICES inures to the benefit of the NAMED INSURED.
III. DEFINITIONS
J. “INSURED” MEANS:
1. the NAMED INSURED;
2. any lawyer who is a past or present partner, officer, director, stockholder, shareholder, employee or “of counsel” of the NAMED INSURED, but only for PROFESSIONAL SERVICES rendered on behalf of the NAMED INSURED and only if a fee inured or would have inured (in the case of a contingency arrangement) to the NAMED INSURED for PROFESSIONAL SERVICES. No fee need inure to the INSURED for eleemosynary services performed with prior approval of the NAMED INSURED.
3. any lawyer listed in the application who is a partner, officer, director, stockholder, shareholder or employee of the NAMED INSURED at the time the CLAIM is made, but only for PROFESSIONAL SERVICES rendered by such individual while associated with a PRIOR FIRM;
4. any lawyer who has retired from the NAMED INSURED, but only for PROFESSIONAL SERVICES rendered prior to the date of retirement;
5. any past or present non-lawyer, employee or independent contractor attorney of the NAMED INSURED, but only for PROFESSIONAL SERVICES rendered on behalf of the NAMED INSURED; and
6. the heirs, executors, administrators and legal representatives of any INSURED, but only in their capacity as such in the event of any INSURED‘S death, incapacity or bankruptcy, and only for CLAIMS based on PROFESSIONAL SERVICES rendered prior to such INSURED‘S death, incapacity or bankruptcy, and only to the extent that such INSURED would otherwise be covered by this POLICY; and
7. the legal spouse or domestic partner of an INSURED but only for CLAIMS resulting from PROFESSIONAL SERVICES provided by any INSURED on behalf of the NAMED INSURED.
L. “NAMED INSURED” MEANS the person or entity listed in the Declarations and PREDECESSOR FIRM thereof.
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