More FAQ About Legal Malpractice Insurance
Legal malpractice insurance is a specialized form of professional liability insurance designed for legal professionals that protects them from lawsuits alleging sub-standard work or some mistake, such as failing to file a lawsuit within the statute of limitations. Such insurance typically pays both the legal fees and any settlement associated with a lawsuit covered by malpractice insurance up to the policy’s limits.
Lawyers in the market for legal malpractice insurance for the first time may want to check with the state insurance regulating agency to ensure that a carrier under consideration is presently in good standing in the state.
Here are more frequently asked questions and answers about legal malpractice insurance.
If I accept a job as in-house counsel and serve only one client, do I still need malpractice insurance?
There are special policies available for in-house counsel and is typically referred to as “Employed Lawyers Coverage” and may apply to moonlight and/or pro bono work.
What is a “retro date,” and why is it important?
A legal malpractice policy will usually specify the “retro date” – the date after which the alleged negligent act must have occurred. For example, if a policy’s period is 4/17/2019-4/17/2020, with a retro date on 1/1/2013. This means the claim must be made against the attorney between April 17, 2019, and April 17, 2020, and the acts complained of must have occurred on or after January 1, 2013. If the act did not occur within this time frame, the attorney may not have applicable coverage. The “retro date” should, if possible, extend back to the date a lawyer began practicing as an attorney, but still minimally cover the entire time-period of any work at the lawyer’s current firm.
Do all insurance policies similarly define “legal services” or “professional services”?
These definitions differ from policy to policy, so any policy must be reviewed to ascertain the precise language. These definitions are important because they determine the scope of coverage and the bottom line is ensuring that whatever is done recently at a firm, in terms of providing services to clients, falls within the definition.
What do I need to worry about in terms of malpractice coverage if I leave a law firm, and open my own practice?
Lawyers are generally covered for the work they did at another law firm under the law firm’s policy, even if the malpractice claim is not made until after leaving the firm since most policies are “claims made,” meaning that the policy covering the alleged negligent act is the one in place at the time the claim is made, rather than the policy in place at the time of the allegedly negligent work. However, if a lawyer’s prior firm dissolves or ceases carrying coverage, he or she would no longer have coverage for acts at the firm (prior acts coverage). The solution is an Extended Reporting Coverage Policy, otherwise known as “tail coverage,” for the work done at the prior firm.
Do all policies cover pro bono work?
If pro bono work is done under the purview of the lawyer’s firm (the named insured), it is most likely covered. Sometimes pro bono work may also be covered under a policy purchased by the pro bono organization (a volunteer lawyer society or a bar association, for example).
I work for a law firm, but moonlight on the side. Does the law firm’s malpractice policy cover me for this?
It may not, since any work done for someone other than the law firm (the named insured) may fall outside the parameters of coverage. You should check with your law firm as to whether its policies allow moonlighting; if so, under what circumstances; and to what extent the firm’s policy provides any protection. In the event it does not, you may need to purchase your own policy for this separate work.
Are attorneys who work under the designation, “of counsel” with another firm protected by that firm’s policy?
This depends, yet again, on the express language of the policy. Never assume coverage but, instead, specifically examine the definition of “named insured” and the definition of “professional services.”
I am doing “contract work” for another firm and paid hourly for work. Does this firm’s policy cover me?
This depends, yet again, on the express language of the policy. Never assume coverage but, instead, specifically examine the definition of “named insured” and the definition of “professional services.”
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