Time to Boost Protection for Your Lawyer Clients?
Similarly, an executive might ask an in-house attorney for thoughts or even help on areas ranging from a traffic violation to establishing a trust to a divorce. Engaging in those conversations and offering advice or support could open them up to a lawsuit for negligence.
The third area encompasses moonlighting or other engagements outside their company work. In these cases, the attorney is not acting as a sole proprietor, but may be assisting a friend or family member with a personal legal matter or possibly providing advice or support as a member of a not-for-profit organization.
As an example, an in-house transactional attorney for a financial institution defended an indigent client in a felony assault matter under a state bar association’s suggested pro bono legal services guideline. After the client was convicted, he sued the attorney for malpractice, alleging ineffective assistance of counsel.
Mind the Gaps
While in-house attorneys may believe that their work is covered by the company’s directors and officers liability policy, the unfortunate reality is that it may only apply to very select executives. Further, it may not provide coverage for the performance of legal services, and it generally does not extend to claims arising out of personal legal services, moonlighting, or pro bono legal services.
In addition, the attorney’s personal umbrella liability policy typically does not extend coverage related to the provision of legal services. This results in a significant gap that could expose in-house attorneys to a substantial loss. It’s not unusual for these types of lawsuits to produce six- or even seven-figure losses, which could deliver a devastating hit to an attorney’s personal wealth.
The good news is that there is a specific type of coverage available and in many cases the company purchases it for their legal department. It’s called employed lawyers professional liability and it features broad definitions of “insured” (employed lawyers, their legal support staff, independent contractor attorney, temp attorney, and notaries), “professional services”, “claim” and “loss” to encompass a wide range of scenarios related to their in-house legal work, personal interactions and pro bono or moonlighting endeavors.
It’s well worth it for in-house attorneys, including those working in advisor firms, to check whether their company has this coverage. If not, it’s best to contact an insurance agent to see if there’s a way it can be purchased.
While your in-house attorney wealth management clients may not expect this type of insurance recommendation from you, it may prove to be a value-added service that could further cement a trusted relationship with them for the long term.
Steven F. Goldman is division president, North America Financial Lines at Chubb. Reach him at [email protected]
(Image: Adobe Stock)
