More than a few attorneys forget to take advantage of Disciplinary Coverage until it is too late. Attorney Malpractice Insurance policies that offer this coverage can be ‘Duty to Defend’ or ‘Reimbursement’. Even though the US Specialty Insurance malpractice coverage is ‘Duty to Defend’, the disciplinary coverage is ‘Reimbursement’. Policy wording for disciplinary coverage and reporting differs by carrier. The disciplinary coverage is not subject to the policy deductible.
Policy Coverage:
II. SUPPLEMENTAL COVERAGES
All payments made by the Company pursuant to coverage provided by Section II. shall not be subject to any Deductible and shall not operate to reduce this Policy’s Limit of Liability.
(A) Disciplinary Proceedings
The Company shall reimburse an Insured, upon written request, up to USD25,000 per disciplinary proceeding, subject to a maximum of USD50,000 in the aggregate under this Policy for reasonable and necessary legal fees and expenses incurred by an Insured, with the prior written consent of the Company, in responding to a disciplinary proceeding brought directly against an Insured by or before a state licensing board or professional self-regulating board with authority to regulate the Legal Services performed by an Insured, provided always that the following conditions are satisfied:
(1) the disciplinary proceeding arises out of an Insured’s Legal Services; and
(2) the disciplinary proceeding is first initiated against an Insured during the Policy Period and is also reported to the Company, in writing, during the Policy Period or within sixty (60) days after the end of the Policy Period.
After the Company has paid USD50,000 in the aggregate under this provision, the Company shall not be obligated to pay any further legal fees or expenses in connection with any disciplinary proceeding under this Policy.
When this provision applies, the Company shall have the right, but not the duty to defend any Insured in any disciplinary proceeding.
Definitions:
(J) Legal Services
“Legal Services” shall mean:
(1) those services, including eleemosynary (pro bono) services, performed by an Insured for others as a lawyer, arbiter, mediator, title agent or other neutral fact finder or as a notary public. Any title agency or company, on whose behalf an Insured acts as title agent or designated issuing attorney shall not be considered an Insured under this Policy;
(2) those services performed by an Insured as an administrator, conservator, receiver, executor, guardian, trustee or in any other fiduciary capacity and any investment advice given in connection with such services;
(3) those services performed by an Insured in the capacity as a member, director or officer of a bar association, ethics, peer review or similar professional board or committee; and
(4) those services as an author or publisher of legal research papers or legal materials or the presenter of legal seminars or materials, but only where such services are performed without compensation or compensation attributable per publication, presentation or seminar is less than USD25,000.
Not taking advantage of this policy coverage does not make sense. Firms have a fear that reporting disciplinary complaints can impact their attorney malpractice insurance premiums. While too many disciplinary reported complaints that do not result in an issue can cause problems. Not reporting issues that may lead to a proceeding may impact your malpractice insurance should the same issue turn into a malpractice claim at a later date. The other issue is that once a year you may need to attest on the renewal application about disciplinary issues.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080