A common misconception for law firms is when does the Attorney Malpractice Insurance policy coverage end once an attorney leaves? Some firm’s rationalize that the Attorney Malpractice coverage for an attorney continues until the end of the policy term because it is paid for.
Once an attorney leaves a law firm their work after they leave the firm is not covered. That attorney will need to purchase a new policy or be added to their new firm’s Lawyers Professional Liability Insurance policy to have coverage going forward.
With this stated, for most Attorney Malpractice Insurance policies the old law firm that the attorney left continues to have coverage under the old law firm’s Attorney Malpractice Insurance Policy as long as the law firm continues to maintain continuous clams-made Attorney Malpractice Insurance for work done at the old firm. This is because most Attorney Malpractice Insurance policies define as an ‘insured’ past and present attorneys, employees & partners for work they have done on behalf of the named insured firm. In many cases there is no need for the firm or the individual to purchase an individual extended reporting period endorsement (ERP or tail) for that departing attorney. In fact many carriers do not permit the purchase on an individual ERP only a firm ERP is permitted.
The parting attorney may have concerns that if the firm breaks up later or fails to maintain their Attorney Malpractice Insurance do they have a ‘right’ or are they able purchase an ERP later?
Once an attorney leaves the firm their ‘right’ to purchase an ERP under their old firm’s policy also ends. There are alternatives, such as a ‘Run Off’ policy that can provide that individual coverage for that attorney, but they are generally expensive and sometime difficult to obtain.
Attorneys leaving law firms need to keep this in mind to insure that they do not have a claim denied for no insurance coverage.