It is not a good idea to pick up an attorney’s past acts exposure for Lawyers Malpractice Insurance for a number of reasons:
1. It immediately will increase the firm’s Lawyers Professional Liability Insurance premium. Many Malpractice insurance carriers will add an attorney without prior acts at no cost midterm, if it is a multiple person law firm. Any change in premium will come at the next renewal. With prior acts coverage, the firm will be charged for the additional exposure immediately by the insurance carrier and significantly more than without prior acts coverage.
2. Some Malpractice carriers will not add prior acts coverage for new attorneys. This can be because of the Professional Liability Insurance Carrier’s underwriting practices, loss history of the attorney, or the past areas that the attorney practiced.
3. If the attorney that is being added to the Lawyers Malpractice coverage is coming on as an “Of Counsel” attorney then most carriers will not honor a request for adding prior acts coverage. One of the main reasons for this is that an “of Counsel” attorney’s coverage is only for work done on behalf of the named insured firm. Given this, there can be no coverage for the “of counsel’s” attorneys past acts for work done outside of the firm.
4. Most importantly, adding an attorney’s prior acts exposure can open the Law Firm up to malpractice claims from the attorney’s prior firm. In some cases the new attorney may not have even worked on the case. It opens up your Lawyers Professional Liability coverage up to claims that are totally outside of the new Law Firm’s control. We have seen this have a significant impact on insurability of the Law Firm based on some of these claims.
Based course of action is for the new attorney to purchase and Extended Reporting Period Endorsement (Tail) for past acts.