Attorneys wear many hats. Attorney malpractice insurance provides coverage for most hats but not all. A malpractice insurer’s definition(s) of professional services may cause coverage issues for attorneys that perform certain client services. If the services are provided using a license other than a law license, it is a good bet that it is not covered. When looking for the appropriate insurer, check the professional services definition against the services that your law firm provides.
AIG (National Union) defines Professional Services as:
II. DEFINITIONS
18. Professional legal services means legal services performed for others as:
a. a lawyer;
b. a notary public;
c. an arbitrator;
d. a mediator;
e. a title insurance agent;
f. a designated issuing lawyer to a title insurance company;
g. a court-appointed fiduciary;
h. a member of a bar association, ethics, peer review, formal accreditation or licensing, or similar professional board or committee;
i. an author, strictly in the publication or presentation of legal research papers or similar legal materials and only if the fees generated from such work are not greater than ten thousand dollars ($10,000); or
j. an administrator, conservator, receiver, executor, trustee, guardian, or any similar fiduciary capacity.
Services performed by you in a lawyer-client relationship on behalf of one or more clients shall be deemed for the purpose of this section to be professional legal services in your capacity as a lawyer, although such services could be performed wholly or in part by nonlawyers.
V. EXCLUSIONS
2. Certain Services and Capacities.
To any claim against you in your capacity as:
a. an officer, director, partner, manager, operator, or employee of an organization other than that of the named insured;
b. a public official, or an employee of a governmental body, subdivision, or agency; or
c. a fiduciary under the Employee Retirement Income Security Act of 1974 and its amendments thereto, or similar federal, state, local or common law, or any regulation or order issued pursuant thereto, except if you are deemed to be a fiduciary solely by reason of legal advice rendered with respect to an employee benefit plan.
3. Equity Interests.
If a person insured under this policy owns alone or together with his or her spouse or Domestic Partner, ten percent (10%) or more of the issued and outstanding shares, units or other portions of the capital of an organization, and that person simultaneously provides professional legal services with respect to such an organization, this policy will provide no coverage to that person for any claims based upon or arising out of such professional legal services.
If the collective equity interest of:
a. all persons and entities insured under this policy;
b. spouses of persons insured under this policy; and
c. the named insured
is thirty-five percent (35%) or more of the issued and outstanding shares, units or other portions of the capital of an organization, and any person insured simultaneously provides professional legal services with respect to such an organization, this policy will provide no coverage to any person insured or to the named insured for any claims that result therefrom.
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This blog is an excerpt from the policy. The complete policy along with applicable endorsements could impact the information provided above.
Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080