What do you mean that Full Prior Acts might not mean Full Prior Acts. Legal Malpractice Insurance policies are similar but there is no common meaning to the terms. Full Prior Acts is a term that is often misunderstood and changes from insurer to insure as to its meaning. Each Attorney Malpractice policy defines the terms used in the policy in its own unique way. The devil is in the details.
Many insureds assume that Full Prior Acts means that the insured attorney is covered from the inception of their practice. While this might be true, it is not always the correct assumption. First you need to understand that for Lawyers Professional Liability Insurance, the policy is written for the firm. Attorneys that work for the firm are then covered under that policy. This is an important concept that many attorneys misunderstand. There may be separate endorsements listing the attorneys associated with the firm’s coverage or by the attorney malpractice insurance policy language that describes who is insured.
Give this, the term Full Prior Acts on an Attorney Malpractice policy provides prior acts coverage back to the inception date of the firm. Now if the attorney, whether a solo or a multi-person firm, has only practiced at the current firm, then the attorney and the firm have coverage back to the inception date of his or her practice. If this statement is not true, then the attorney may have a coverage issue with a Full Prior Acts policy.
If a new firm is formed with members of a prior firm and the new firm does not meet the criteria as a successor firm, the term Full Prior Acts, only applies to the inception of the new firm. You could have a Full Prior Acts policy that has no past acts coverage. If the prior firm had not purchased an Extended Reporting Period Endorsement, there is no coverage for past acts associated with the prior firm. Given this circumstance the member attorneys need to make sure that there “new” attorney malpractice policy is properly endorsed to at least cover the individual attorneys. This introduces the concept of career coverage. Career coverage covers the individual attorney for work that the individual attorney has done during their career.
If an attorney has left a firm and gets a new policy for his or her solo firm and the new policy states Full Prior Acts generally coverage is only from the inception date of the new solo firm. Past acts from the prior firm are not generally covered unless there is a specific career coverage endorsement attached to the policy.
It is possible to get endorsements to cover the prior firm or attorneys past acts, but this needs to be done at the inception of the new coverage. Discovering this problem a year or so into the new firm’s insurance coverage, makes it very difficult to correct. Sometimes the discovery of the prior acts coverage is uncovered when a claim is reported and coverage is denied. Usually a “Career Coverage” or Specific “Predecessor Firm” endorsement or policy language is needed to address the issues with past acts from prior firms. These endorsements need to be maintained when you switch insurers and/or renew coverage from year to year.
Without such endorsements, Full Prior Acts are Full Prior Acts only for the current law firm.
If all of this is confusing, when you are moving from your current firm and/or forming a new firm contact L Squared Insurance Agency to help you navigate through the Prior Acts conundrum and make sure that your new Full Prior Acts policy does not expose your assets.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
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