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.
Everest defines Professional Services as:
SECTION XX – DEFINITIONS
E. Controlled Enterprise means any entity other than the Named Insured, that at the time of the Wrongful Act or Expense Event;
1. is a publically traded entity and 5% or more of its issued and outstanding securities or voting rights to elect or appoint a board of directors or an equivalent governing body is owned or controlled, individually or collectively, by one or more Insured, or any natural person Insured’s spouse or domestic partner;
a. is not a publically traded entity and 25% or more of the legal, beneficial or equitable ownership of such enterprise is owned or controlled, individually or collectively, by one or more of the Insureds or any natural person Insured’s spouse or domestic partner;
Controlled Enterprise does not include any business enterprise in which the ownership, control, or management by an Insured is exclusively in a fiduciary capacity as an administrator, conservator, executor, trustee, guardian, receiver, or committee, or in a similar fiduciary capacity incidental to the practice of law by a Named Insured.
W. Professional Services means services provided to others by an Insured in their capacity as such:
1. as a licensed attorney in good standing or notary public;
2. as a mediator, arbitrator, or other neutral fact finder;
3. as a title agent pursuant to a written agreement with a licensed title insurance company, and provided that such title insurance company is not an Insured under this Policy;
4. as an administrator, conservator, executor, guardian, trustee, receiver, or in any similar court appointed fiduciary capacity, provided such services are performed in connection with and incidental to Professional Services provided by the Named Insured;
5. as an author, but only for the publication or presentation of legal research papers and legal writing materials or the presenter of legal seminars or materials, but only where such services are performed without compensation or for compensation less than $10,000;
6. as a member of a bar association or other ethics, peer review, accreditation, licensing or similar board, committee or organization;
7. as a licensed attorney on a pro bono basis that is approved in writing in advance by the Named Insured or any Predecessor;
8. as a lobbyist or government affairs advisor;
Professional Services do not include:
(a) the providing or failure to provide any financial or investment advice or financial management; or
(b) services rendered as a real estate or insurance agent or broker or as a promoter, seller, and/or solicitor of securities, real estate or other investments.
SECTION III – EXCLUSIONS
C. CAPACITY
based upon, arising out of or attributable to an Insured’s services or capacity as an officer, director, partner, trustee, manager, owner, or employee of a corporation, partnership, association, trust or fund, including a pension, welfare, profit sharing, mutual or investment fund or trust, or any other business enterprise or charitable organization of any kind other than the Named Insured, provided this exclusion shall not apply to Professional Services provided by the Insured to such other entity.
G. CONTROLLED ENTERPRISE
based upon, arising out of or attributable to any Professional Services rendered or that should have been rendered by an Insured to any Controlled Enterprise.
N. PUBLIC OFFICIAL/GOVERNMENT EMPLOYEE
based upon, arising out of or attributable to an Insured’s services or capacity as a public official or employee of a governmental body, subdivision or agency.
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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