Every month or so we have a Law Firm that we insure that has hired a Suspended Attorney, one that was recently suspended or had other disciplinary actions. While it is the firm’s prerogative to hire anyone they want, they should know about the disciplinary actions prior to making an offer.
Some of the recent issues are:
1. Law Firm hired an attorney that was currently suspended from the practice of law. Law Firm is slow to notify us, L Squared Insurance Agency, about the hire and consequently the carrier is in the dark about the hire. About 3 months after the firm hires the attorney, firm finds out that the attorney is suspended from practice when the new attorney supplement is partially completed and then finally completed. Carrier at this point threatens to either cancel coverage midterm or not renew and/or at the same time rescinding any coverage for attorney that is currently not licensed to practice. The impact long term for the firm that has never had a claim may force them into surplus lines or at the very least a much higher premium.
2. Firm and insurance carrier find out after attorney was hired that attorney had a suspension on their record. At renewal, law firm with no claims history is non-renewed because of the past attorney suspension. Firm is now in surplus lines with a much higher premium and less coverage.
3. Firm hires an attorney that had a number of “private” admonishments for notarizing documents that were not witnesses personally. Law Firm’s incumbent professional Liability Insurance carrier does give renewal terms that are about 25% higher with a very high deductible.
4. Firm knowing hired a suspended attorney as a paralegal. As attorney is not currently licensed to practice, all is well as most insurance carriers do not ask about hiring a paralegal. After a couple of years, attorney’s suspension ends and attorney malpractice insurance carrier is promptly notified of new attorney on firm’s roster. Law Firm’s attorney malpractice carrier refuses to renew coverage. Firm is now in surplus lines.
It is normally a simple matter for a law firm to check the state bar website about the status and history of a new attorney. Checking up front will save the law firm from surprises with the Lawyers Professional Liability Insurance coverage and premiums. Also allowing an unlicensed attorney practicing law for the firm can open the firm up to many other issues.