Professional Services On Behalf of the Named Insured, that term or similar term is in most, not all, but most lawyers malpractice insurance policies. It is intended to limit the policy coverage to lawyers in the law firm that are providing legal services to clients of the law firm only. Keep in mind that the name of the law firm is usually the name of the Named Insured listed on the policy.
This term usually is a good thing for the law firm in that it does limit the exposure and coverage to the law firm business. It can however be quite a surprise to any firm lawyers working outside the law firm in a “side” venture and moonlighting situation. The policy will not cover professional services performed for anyone that is not a client of the Named Insured/Law Firm.
There are instances where lawyers have worked in a law firm and also maintain a solo part time law practice away from the law firm. Thinking that they had malpractice insurance coverage with the law firm, did not bother to purchase a separate policy for their part time solo work. They did not realize they had no coverage until they were sued for work performed in their part time solo capacity. Ouch! That is a hard lesson.
This situation can also occur if when working in a firm the lawyer agrees to provide legal service for a friend or family member and doesn’t run the business through the firm or sign the client up as a client of the firm.
So check who is the Named Insured on your legal malpractice policy. Make sure it is correct, again it is usually the name of the law firm. Be certain that all lawyers in the firm know that they are NOT or may not be covered by the law firm policy for legal services they perform for others who are not client’s of the firm.
I was recently at a malpractice program given by a carrier we use and they were talking about where their claims are coming from. One of the top 3 causes they presented was conflict of interest. I can’t say that this shocked me but I was a little bit surprised this was in the top 3!
Back in the 90’s conflicts of interest was a huge risk management topic and was on everyone’s radar. For the past several years however the topic seemed to cool when discussing legal malpractice, so to hear it was in the top 3 did catch my attention. It should also catch your attention too!
Conflicts of interest are easy to get caught up in if you’re not careful. They come in many different disguises right? Representing both parties in the same case be it divorce or accident, representing a new client against a former client, having an ownership interest in your client, managing and or directing a clients business. The list can go on and on.
Be careful to not get caught up in the friends and family plan either. You may have had this happen to you when a family member might say “My wife and I want a quick divorce, here is what we agreed to. Can you draw up the paperwork and we’ll both sign and be done?” or a similar situation where you are asked to help save your friends money by representing both sides in any transaction. Friends and Family can and do sue.
So just a heads up to stay vigilant with COI checks so you don’t become part of the top 3.
I have an easy and surprisingly somewhat overlooked risk management tip for you. Read your policy. When was the last time you read yours?
I’m always a little bit surprised that when I speak to prospects and clients alike, how many of them tell me they never or very rarely ever read their policy. Look, I know that we are all busy because our reading stack is very high. And after going through the application and quoting, no one is thinking about finishing the process by reading the policy.
Reading your policy is essential to the process and should supplement any risk management technique you utilize in your offices. The policy tells you who’s insured, what’s insured, what you’re supposed to do when and if you do get sued, your coverage limits, your deductible, and how much it actually costs. These are just to name a few.
The policy is also going to tell you what’s not covered, referred to as exclusions in the policy. And perhaps this is even more important than knowing what is covered.
So, don’t ignore my comments and do nothing. Take a moment and read it. You don’t need to become an expert in legal malpractice insurance. Just an informed consumer. A little knowledge in this matter will go a long way in your risk management efforts to avoid legal malpractice.