Claim time is not the time to find out the attorney has no malpractice coverage for the reported claim. Attorneys that do work for clients where the attorney is involved with client management or ownership may run afoul of attorney malpractice policy exclusions. As no two client relationships are the same and no two policies are alike, where an attorney is doing legal for clients with an ownership or management role it is wise to read the entire policy. Where one malpractice insurance policy may provide coverage, the same client relationship with another malpractice policy excludes coverage. Depending on the attorney’s attorney/client relationship(s) there may be no coverage provided by the attorney malpractice policy.
The Hanover Insurance policy excludes certain client ownerships, management and/or directors/officer legal work from coverage.
E. EXCLUSIONS
1. This Policy does not apply to Claim(s) or Supplemental Coverage Matter(s) based upon, arising out of, or in any way relating to, directly or indirectly:
m. Related Entities
Services rendered to or failed to be rendered to, or claims made by, any business enterprise, charitable organization, pension, welfare, profit sharing, mutual or investment fund, or any entity not named in the Declarations in which any past or present lawyer, employee or other person affiliated with the Named Insured:
1) Hold an interest of more than 15%, as a partner, member, principal or stockholder;
2) Are an employee, manager, officer, or director at any time Professional Services were rendered or failed to be rendered; or
3) Directly or indirectly control, operate or manage;
However, this exclusion 1.m. does not apply to a Claim by a non-profit entity for which You are only an officer or director.
o. Public Official
Any Insured’s services or capacity as a public official or employee of a government body, subdivision or agency thereof, unless:
1) The Claim is brought by the government body, subdivision or agency thereof solely for rendering Professional Services to such governmental body, subdivision or agency on behalf of the Named Insured; or
2) The Insured is deemed to have such capacity solely by rendering Professional Services to such governmental body, subdivision or agency on behalf of the Named Insured;
D. DEFINITIONS
Insured, also referred to herein as You or Your, means the Named Insured and:
1. Any Predecessor Firm;
2. Any individual, who was, is or becomes an owner, partner, officer, director, shareholder, associate, paralegal, manager, member or employee of the Named Insured, solely while acting in a professional capacity on behalf of the Named Insured or a Predecessor Firm;
3. The Named Insured’s part-time, intern, temporary or leased employees, but only while acting on behalf of the Named Insured;
4. Your lawful spouse or Domestic Partner, solely for liability arising from any Wrongful Act of an Insured committed without the participation of such spouse or Domestic Partner;
5. Your heirs, assigns, and legal representatives in the event of Your death, incapacity or bankruptcy to the extent that You would have been covered; or
6. A past or present Independent Contractor or Of Counsel attorney, but solely while acting in such capacity on behalf of the Named Insured.
Insured does not mean any title agency, title insurance company or any other entity on whose behalf an Insured acts as a title agent or designated issuing attorney, unless specifically scheduled as an Insured on this Policy.
Named Insured means the sole proprietor, entity, partnership, or corporation designated on the Declarations page.
Affected insured attorneys should not solely rely on the information provided in this blog. As facts may differ, determining malpractice coverage for each attorney client relationship requires a complete review of the malpractice policy. The facts that cause an alleged malpractice claim could also impact coverage.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080