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 Twin City Insurance policy excludes certain client ownerships, management and/or directors/officer legal work from coverage.
This insurance does not apply to claims:
7. Arising out of an insured's capacity as a public official or employee of a governmental body, subdivision or agency thereof unless the insured is deemed to be such solely by virtue of rendering professional legal services to such governmental body, the remuneration for which services inures to your benefit; or
8. Made by or on behalf of:
a. A non-profit entity or any of its affiliates or subsidiaries;
b. An attorneys' bar association; or
c. directors, officers or trustees of a non-Profit Entity or an attorneys' bar association;
in any insured's rendering of, or failure to render, non-profit services, provided that this exclusion will not apply if the claim is made and continued by or on behalf of such non-profit entity or attorneys' bar association without the solicitation, assistance, active participation or intervention of such non-profit entity or attorneys' bar association or their respective directors, officers or trustees.
11. Arising out of professional legal services performed for or on behalf of any organization other than you or a predecessor firm if, at any time when those services were performed, the organization was or was intended to be:
a. Directly or indirectly controlled, operated or managed by an insured; or
b. Owned by an insured, or by a spouse of any insured, in a percentage which exceeds:
i. five percent of the issued and outstanding voting stock of the shares of a publicly traded organization; or
ii. ten percent of the shares of a closely or privately held organization.
7. Insured means:
a. The named insured and predecessor firm(s);
b. Any lawyer who was, is now or hereafter becomes a principal, officer, director, employee, principal shareholder or member of yours, but only while acting within the scope of their duties for you;
c. Any lawyer who has retired from you, but only for professional legal services while acting within the scope of his or her duties for you;
d. Any lawyer retained as an of counsel, independent contractor or on a per diem basis by you, but only with respect to professional legal services while acting within the scope of their duties for you;
e. Any non-lawyer employees, but only while acting within the scope of their duties for you;
f. Any insurance risk manager who is an employee of the named insured; and
g. Any organization you newly acquire or form provided written notice is given to us within sixty (60) days of the acquisition or formation, the new entity meets our underwriting eligibility guidelines, and we provide you with our written acceptance. This provision applies to any principal, officer, director, employee, principal shareholder or member of such newly acquired or formed organization.
However, coverage under this provision does not apply to claims that occurred before you acquired or formed the organization.
10. Named insured means the individual or entity stated in the Declarations.
11. Non-profit entity means any non-profit corporation, community chest, fund or foundation that is exempt from federal income tax as an entity described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
12. Non-profit services means only services that the insured performs for others, with the knowledge and consent of, or as part of the duties regularly assigned by, the named insured, while serving
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
California License # 0D87292
L Squared Insurance Agency, LLC ® DBA in California as
L2 L Squared Insurance Agency, License # 0L93416
Managing Director, CEO
(616) 940-1101 Ext. 7080