Archive for February, 2012

Does My Policy Cover Work I Did at My Old Firm?

February 10, 2012

Kelan J. Vorbach, CIC
Professional Liability
Program Manger,
John B. Wright Insurance

The firm that called this morning was established recently. The attorneys left a firm where they had been associates together. Now the old firm is initiating collections against several clients the attorneys had handled. The attorneys in the newly formed firm, concerned that the collection activity will result in counterclaims, wanted to know how they would be covered.

The answer doesn’t lie in their new policy. Because the new firm is not a successor firm, their policy only covers services performed by the new firm once the new firm’s policy started. Any coverage that may exist for services performed at the old firm is on the old firm’s policy. Lawyers Professional Liability Policies are designed to cover former partners and employees. However, there are several ways coverage could be impaired.

• The old firm’s policy might have a fee suit exclusion. Such exclusions for counter claims are generally applied if a firm has a lot of fee suits.
• The old firm may have cancelled or lapsed its coverage or may have impaired limits of insurance.
• A poorly completed renewal application can compromise coverage.

The fact of the matter is that attorneys who are not owners (or are not part of the majority ownership group) are not in control. They don’t control the insurance and both prior acts coverage, and coverage for departed attorneys follows the firm where the legal services were performed or its successor. That is the bad news. The good news is that the old firm (or its successor) normally can’t impair coverage for former partners & associates without impairing coverage for current partners & associates.

The content of this post is general in nature and may not apply to your policy or situation. To discuss specifics or to learn more about this or other topic involving insurance for the legal profession please call me at 732-223-6611 ext. 108.