The law firm and/or the attorney may perceive that the Lawyers Professional Liability Insurance Coverage (LPL) for the departing attorney continues until the end of the policy term. This misconception may be because the policy for which the law firm paid includes the attorney for the entire policy term. Once an attorney leaves a law firm no coverage exists for their future work outside the firm. The attorney needs to purchase a new policy and/or gain coverage under the attorney’s new firm’s LPL.
Likely the LPL for the prior law firm continues coverage for prior work done at the firm assuming the firm maintains continuous clams-made LPL. The definition of who is an ‘insured” is important. The definition should define the LPL “insured” as past and present attorneys, past & present employees & past & present partners for work they have done on behalf of the named insured firm. Given similar LPL wording, there is no need for the firm or the individual to purchase an individual extended reporting period endorsement (ERP) “tail” for the departing attorney. Note: Insurers differ as to whether there is an ability to purchase on an individual ERP and may only permit a firm ERP. On the rare occasions when the LPL “insured” definition does not include past attorneys, employees & partners purchase the ERP.
Once the parting attorney leaves the firm so does the “right” to purchase an individual ERP. If the firm breaks up after an attorney leaves or fails to maintain their LPL policy the parting attorney has no standing to then purchase an ERP. Alternatives, such as an individually underwritten “Run Off” policy may provide individual coverage for that attorney. “Run Off” policies are generally expensive and sometimes difficult to obtain.
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Lee Norcross, MBA, CPCU
California License # 0D87292
L Squared Insurance Agency, LLC ® DBA in California as L2 L Squared Insurance Agency, License # 0L93416
Managing Director, CEO
Lee@L2Ins.com
616-726-7080
