Attorneys wear many hats. Attorney malpractice insurance provides coverage for most hats but not all. A malpractice insurer’s definition(s) of professional services may cause coverage issues for attorneys that perform certain client services. If the services are provided using a license other than a law license, it is a good bet that it is not covered. When looking for the appropriate insurer, check the professional services definition against the services that your law firm provides.
ProAssurance (Medmarc) defines Professional Services as:
SECTION 1. DEFINITIONS
Investment advice means giving advice regarding the value of an investment; or recommending investment in, purchase of, or sale of a particular investment; or managing any investment; or buying or selling any investment for another; or acting as a broker for a borrower or lender; or performing economic analysis of any investment; or inducing others to make a particular investment; or giving advice where the compensation for such advice is contingent upon the performance of a particular investment.
Professional services means services rendered by an Insured as a provider of legal services in a lawyer-client relationship. Professional services shall also include activities of an Insured as a mediator, arbitrator, title insurance agent, notary public, administrator, conservator, receiver, executor, guardian, or trustee, or in any similar fiduciary capacity, or as a member of a formal accreditation, ethics, peer review, licensing, standards review, bar association, or similar professional board or committee, or as an author, publisher, or presenter of legal research.
SECTION 4. EXCLUSIONS
4.1. WHAT THIS POLICY DOES NOT INSURE
This policy does not apply to:
c) any claim made against any Insured involving any Insured’s (1) activities or status as an owner, partner, officer, director, member, principal, stockholder, employee, or independent contractor of an entity (other than a prior law firm) not named in the Declarations, or (2) arising out of the provision, or failure to provide, professional services to such entity by an Insured;
d) any claim involving any Insured’s activities as a public official or employee of a governmental body, subdivision, or agency, except that this exclusion does not apply to any Insured who rendered professional services to a governmental body, subdivision, or agency solely in the capacity of retained outside counsel;
e) any claim involving any Insured’s activities and/or capacity as a fiduciary under the Employee Retirement Income Security Act of 1974, its amendments, and any regulation or order issued pursuant thereto, except if an Insured is deemed to be a fiduciary solely because of legal advice that was or should have been rendered with respect to an employee benefit plan;
f) any claim involving a public offering or sale, registration, or qualification of securities under any federal, state, or local law, rule, or regulation, including, without limitation, the Securities Act of 1933, as amended, the Securities Act of 1934, as amended, and any and all rules and regulations promulgated under any or all of the foregoing laws, including any claim involving any tax opinion, advice or analysis relating to a public offering or sale, registration, or qualification of securities, except that Exclusion f) does not apply to:
i. any claim involving the private placement of securities that has 15 or less investors and is exempt from registration under the Securities Act of 1933, as amended; or
ii. any claim involving the formation of a for profit or not for profit legal entity that has 15 or less shareholders and is exempt from registration under the Securities Act of 1933, as amended;
n) any claim involving any Insured’s activities as a Certified Public Accountant, Insurance Broker or Agent, or Real Estate Broker or Agent;
t) any claim or other request involving or relating to any conversion, improper commingling, theft, or misappropriation, whether by an Insured or any other person, and whether intentionally or not, of funds belonging to or owed to any Insured’s client, or trust account funds, or funds of any other person held by any Insured in any capacity;
u) any claim or other request relating to, based upon, arising out of, directly or indirectly resulting from, in consequence of, or in any way involving any improper transfer, payment or delivery of funds, money, securities or property caused or induced by false, fraudulent or unauthorized instructions.
Notwithstanding the above, this exclusion shall not apply to consequential damages incurred by a third party (or claimant) as a result of such improper transfer, payment or delivery of funds, money, securities or property caused or induced by false, fraudulent or unauthorized instructions: provided however in no event shall this Policy provide coverage for the amount of such funds, money, securities or property transferred.
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This blog is an excerpt from the policy. The complete policy along with applicable endorsements could impact the information provided above.
Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080