A solo attorney who currently has a Wesco Attorney Malpractice policy is contemplating merging his practice into another firm and becoming "of counsel" to that firm. The attorney may have a legal matter or two that is not included in the merger and will be maintaining their current LLC. The attorney wants to know if he can maintain legal malpractice insurance that covers work for the legal matters that are done for the merged firm and the legal matters that are not done for the merged firm. How does this work?
Remember an attorney malpractice policy covers the firm and all members that work for the firm.
Work for the merged firm needs to be covered by the newly merged firm’s insurance policy. Even if the attorney continues to maintain separate coverage for the LLC, it will not provide the merged firm coverage for the work done for the merged firm. If you are continuing to practice some law under a separate LLC, you likely should maintain your own separate policy.
The following is the pertinent section on your current Wesco policy:
G. “Insured” means the Named Insured, predecessor firm and the persons or entities described below:
1. Any lawyer, partnership, professional corporation, professional association, limited liability corporation or limited liability partnership who is or becomes a partner, officer, director, stockholder- employee, associate, manager, member or salaried employee of the Named Insured during the policy period shown in the Declarations;
2. Any lawyer previously affiliated with the Named Insured or a predecessor firm as a partner, officer, director, stockholder-employee, associate, manager, member or salaried employee but only for legal services performed on behalf of the Named Insured or a predecessor firm at the time of such affiliation;
3. Any lawyer, law firm, partnership, professional corporation, professional association, limited liability corporation or limited liability partnership who acts as Of Counsel to the Named Insured or any non-employee independent contractor attorney or per diem attorney to the Named Insured but only for legal services performed on behalf of the Named Insured;
One other consideration is that the old firm likely will need to buy an Extended Reporting Period (ERP) or Tail when the old firm is dissolved, and you cease doing work on the side.
Note: The above response is to a specific situation. Always check your policy and check with your malpractice insurance agent about the malpractice insurance ramifications of merging your firm or selling your firm.
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Lee Norcross, MBA, CPCU
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