Many law firms hold attorneys that leave the firm responsible for the attorney malpractice claims deductible should a claim be made against the firm for work that the attorney did while at that law firm. In most cases smaller law firms carry deductibles of $10,000 or less so although this could hurt the departing attorney’s pocket book it would not be catastrophic financially. Many larger law firms carry deductibles that can be north of $100,000. Don’t know about you but writing an unexpected check for over $100,000 hurts.
If the departing attorney is joining another law firm, the attorney may be able to look at the new law firm’s policy for coverage. Unfortunately, most attorney malpractice policies are written in such a way to only cover work done by the attorney on behalf of the named insured firm. If this is the case then the new law firm’s policy will not provide coverage. The other problem can be, even if there is coverage a prior acts endorsement for the new firm does not go far enough back.
For those attorneys that are concerned about this deductible exposure, it is possible to obtain an attorney malpractice policy that will provide specific coverage for this gap. These claims-made attorney malpractice policies are subject to underwriting and will not cover previously reported or known claims. If a departing attorney is concerned about this coverage it should be purchased at departure. This standalone claims-made coverage is usually written on an annual basis meaning that it will continue to require subsequent renewals until the attorney is no longer worried about being named in a claim at the old firm.