We advise, defend, and prosecute insurance-related claims regularly. Lawyers sometimes do not pay close enough attention to their own coverages, however. You should have a basic system to review and check all your coverages on a regular basis. We were trained as lawyers, not business owners.
Recently an Illinois Supreme Court case (Ill. State Bar Ass’n Mutual Ins. Co. v. Law Office of Tyzzolino & Terpinas, 2015 BL 44614, Ill. 117096, 2/20/15, released 3/31/15) invalidated the firm’s professional liability policy for all the lawyers when one of the lawyers falsely denied knowing of any circumstances that might led to a malpractice claim. The court took away the coverage of the other lawyers and denied them the “innocent insured” doctrine. Frequently claims against a firm arise out of the acts of a “lone wolf” doing things unknown to the others. Here, the application process was flawed by just one lawyer not being truthful. I have often said in law practice, you really do become your brother’s and sister’s keeper.
To maintain a modern practice, you should protect yourself with coverage. Often without regard to facts or legal basis, claims get made. Of course, mistakes often happen. You do not want to risk your likelihood and your assets by not having adequate coverage, whether it is general liability, employment practices, errors and omissions, or cyber insurance.
With regard to the legal malpractice coverage part, speakers at the National Legal Malpractice Conference in Washington, D.C. recently emphasized that timing is everything. With claims made and reported coverage, the covered act needs to have occurred during the policy period and the claim reported within the period. So, you need to know if a “claim” has been made to one of your lawyers and need to know how and when to report it. You need to see your policy and make sure you have timely reported, with the required specificity. In my view, that requires some looking and asking in a firm and the establishment of a culture where concealment is not tolerated.
I can see staff, or your outside agents or brokers, handling some of your insurance requirements. With the important professional liability coverage, I suggest you need knowledgeable lawyers and a required overview of the other lawyers. I find lawyers to be an independent lot who often chaff at oversight of them. The issues are too important to leave to a laissez faire approach. You really need a strong loss prevention culture in your firm, regardless of its size. Part of that is the oversight on coverage and the individual accountability of reporting a claim to others in the firm. The individual lawyers who gloss over a claim feeling there was no merit to it, or hope it will go away can bring down the house of others. As they said at the end of the annual conference, “Communicate with your carrier and report everything.” Expensive coverage is better than no insurance.”
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