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Name GameAn often overlooked item is what entities are actually insured under the Attorney Malpractice Insurance Policy? 

Attorney Malpractice Insurance policies are written on behalf of the named insured firm.  All attorneys that work for the firm are insured for the work that they do for the firm under that policy.  This simple concept when not followed can cause problems at claim time.

With a law firm’s legal malpractice policy, it is important for the “Named Insured” to be properly listed on the declarations page and/or any applicable endorsement attached to the policy.  Believing that just because an attorney listed on the malpractice policy has malpractice coverage for all work performed is invalid.   If the entity that the attorney is doing the work for is not listed on the declarations page or an endorsement there is likely no coverage.  The following is an example of typical entity exclusions for entities not listed on the declarations page:

“any claim made by or against any entity not named in the Declarations in which any Insured is a ten percent (10%) or more owner, partner, member, principal, or stockholder; or in which any Insured is an employee; or that is directly or indirectly controlled, operated, or managed by any Insured;

 

any claim made against any Insured involving any Insured’s activities 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;”

 

For instance if the law firm is a PLLC, and has a number of PC’s underneath the PLLC, then the PLLC and all the PC’s need to be listed on the declarations page and/or an attached endorsement.  If an “of Counsel” attorney is merely on the firm letterhead and does no work for the firm but has an independent PC that has its own ‘clients’ and independent billing , it is a good bet that  there is no coverage for the independent PC.  That “Of Counsel” needs to have a policy that lists his or her own PC for that work.

If the declarations page lists the individual attorney, but the attorney actually has another entity that the business is run through such as an LLC, then the LLC is the proper entity that needs to be listed on the declaration page.  If the firm has a number of LLC’s or tradenames, then all of the entities that the firm does business as should be listed.

Then there is the attorney that is working for a law firm as an independent contractor (IC).  The attorney is told by the law firm to get a malpractice policy to cover the firm and the work that the IC is doing for the firm.  Insurers will not knowingly endorsement a law firm on to a solo’s policy to provide coverage for the law firm.  The IC likely has coverage for the work they do, but the law firm will not have coverage through the IC’s policy.

If the firm owns a Title Agency, unless it is listed on the policy declarations page or endorsed, there will be no coverage.

A little upfront work when properly completing the application and making sure the policy reflects the firm’s intent can prevent a problem at claim time.

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